Tds on rent

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 September 2014 Bank has organised a meeting in the hotel. bank booked some rooms for the members in the hotel.
Hotel raises bill as
Room Rent 190500
Dinner charges 145800
photocopy charges 580

Now on what amount TDS will be deducted and on which section?

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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10 September 2014 for room rent u/s 194I and for dinner and photocopy will attract tds under sec 194C

Ganeshbabu K

Ganeshbabu K (Expert)
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10 September 2014 In my opinion,No TDS Applicable on this transaction.

If you booked rooms only for purpose of meeting it is just rate contract agreement
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And NO TDS applicable

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The provisions of section 194-I while applying to hotel accommodation taken on regular basis & would not apply to rate contract agreements.—Circular : No. 5/2002, dated 30-7-2002.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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10 September 2014 its only for 1 time transactiom hence circular is not applicable and tds is applicable.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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10 September 2014 the query doesn't suggest whether the transaction is one time or otherwise. So the point of difference between experts cannot be verified unless the querist provides additional facts.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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10 September 2014 Tushar Dinner and photocopy will attract 194C? Please explain.

In my view TDS should be deducted be deducted only on Room rent u/s 194I @10$. TDS should be deducted on amount excluding Service Tax.

Ganeshbabu K

Ganeshbabu K (Expert)
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10 September 2014 If payment was made to Event Manager for facilitating these we can clearly say TDS required to be deducted @10% under 194J or 2% under 194C considering it as service contract.

But in this case

Payment made to Hotel

1)It is General practice of corporates to agree with some rate and book rooms accordingly.

During accommodation what ever services availed by guests in hotel will be charged accordingly

So i came to my opinion like this

1)No TDS on Photocopy & Dinner charges

Just because they served directly to guest or arranged for dinner we cannot say service involved.It is the part of hotel to serve food to guests and serving to them is part of their work.

So i am of the opinion NO TDS for this

2)However on safer side TDS deduction may be prefered.

As hotel booked for meeting purpose.once the meeting (1-3)days what so ever is completed guests will vacate rooms.

and it can be taken as rate contract agreement only and not the accomodation taken on regular basis

**For their next visit Hotel may not be responsible to allot rooms if they are not vacant

Agreement entered may be merely for lowtariff rates and it is called rate contract agreement and it cannot be said as accommodation taken on regular basis

So vide circular quoted above by me i can say NO TDS on these transactions.
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Yes.definition of "accomodation taken on regular basis" looks little confusing"

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Ganeshbabu K

Ganeshbabu K (Expert)
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10 September 2014 1)The facilities/amenities made available by a hotel to its customers is not covered under any of the categories specified in the term ‘work’ in Explanation III to section 194C;

2)Consequently, the Circular No.681, dated 08-03-1994 to the extent it holds that the services made available by a hotel to its customers are covered u/s 194C must be held to be bad in law.

Please refer this case

http://taxguru.in/income-tax/tds-provisions-not-applicable-to-hotel-rent-mumbai-hc.html