13 September 2008
No doubt the purchasing of tickets from the airline ticket agent or travel agent is a contract but tds is not deductible under section 194C on all the contracts so one should not conclude that if we are making a contract,then tds will also be applicable.This is my general reply .
But,I know you want specific ,the specific reason for not deducting the tax is circular no 715 dated 8.8.95 question number 6.which says that the contract of purchasing of ticket from travel agent or an airline is between the individual person and airline/travel agent though the payee is covered under person defined under section 194C(1),hence no tax is deductible u/s 194C.....
the above circular can also be made applicable for payment made to travel agent for railways,bus etc.
The relevant text of the circular is given hereunder
Question 6 : Whether payment under a contract for carriage of goods or passengers by any mode of transport would include payment made to a travel agent for purchase of a ticket or payment made to a clearing and forwarding agent for carriage of goods ?
Answer : The payments made to a travel agent or an airline for purchase of a ticket for travel would not be subjected to tax deduction at source as the privity of the contract is between the individual passenger and the airline/travel agent, notwithstanding the fact that the payment is made by an entity mentioned in section 194C(1). The provision of section 194C shall, however, apply when a plane or a bus or any other mode of transport is chartered by one of the entities mentioned in section 194C of the Act. As regards payments made to clearing and forwarding agent for carriage of goods, the same shall be subjected to tax deduction at source under section 194C of the Act.