Tds on hotel rent

19725 views 14 replies

vikas

Accounts Executive

25 Points Posted on 15 February 2013

Dear Sir,

Kindly guide for TDS deduction on Hotel Stay.

our engineer are staying in different location for servicing. they are going at site on gap of 15day to 1 Month.

we have to deduct TDS @ 2% or 10%

Replies (14)

Anil Dandu

CA FINAL

205 Points Posted on 15 February 2013

as per 194i(Rent) TDS is apllicable 10% only.it applicable only when rent is exceds 180000 per annum per hotel.

CA Parul Saxena

8527 Points Posted on 15 February 2013

TDS to be deducted under sec.194C

CA Neil Ganatra

Partner - Gautam Joshi & Co.

871 Points Posted on 15 February 2013

It depends on the contract that you have entered into with the hotel. The contract can be for two types.

1. As per contract, hotel is bound to give room to your engineer despite of the room availability. That means hotel management has to give room to them in whatsoever occupancy position. This contract also mentions specific tariff. If this is the case, then tds would be under section 194 I i.e. rent.

2. As per contract hotel will give room to your engineer only if there is availability of room. They are not bound to arrange for room and provide which was there in first contract. Here the contract will be for tariff only that is if the room is provided then it will be at some specific rate. If this is the contract then it will be covered u/s 194C.

venkatesh

learner

116 Points Posted on 15 February 2013

Yes, i agreed the statement of CA Neli ganatra.

Biju P

CA IN PRACTICE

71 Points Posted on 15 February 2013

CA.Biju P

In the given case TDS deduction is depended upon the contract which you have netered with the Hotel. If there is no agreement between the hotel and they are charging the tariff similar to other person, then no need to deduct TDS even though the total aggaragate payment exceeed sthe thereshold limit Rs.180000/-. The contract may be oral or written.

Guest

TDS on payments for hotel accommodation [Circular No. 5/2002, dated 30-7-2002]

Payments made for hotel accommodation, taken on regular basis will be in the nature of rent subject to TDS under section 194-I. Where earmarked rooms are let out for a specified rate and specified period, they would be construed to be accommodation made available on "regular basis". Similar would be the case, where a room or set of rooms are not earmarked, but the hotel has a legal obligation to provide such types of rooms during the currency of the agreement.

Often, there are instances, where corporate employers, tour operators and travel agents enter into

agreements with hotels with a view to merely fix the room tariffs of hotel rooms for their

executives/guests/customers. Such agreements, usually entered into for lower tariff rates, are in the nature of rate-contract agreements. A rate-contract, therefore, may be said to be a contract for providing specified types of hotel rooms at pre-determined rates during an agreed period. Where an agreement is merely in the nature of a rate contract, it cannot be said to be accommodation 'taken on regular basis', as there is no obligation on the part of the hotel to provide a room or specified set of rooms. The occupancy in such cases would be occasional or casual. In other words, a rate-contract is different for this reason from other agreements, where rooms are taken on regular basis