Tds
This query is : Resolved
26 February 2013
If Any event management company make any payment to any foreign travel agent to book hotel on the behalf of there client whether TDS is applicable or not & if yes under which section
26 February 2013
yes applicable under section 194C
26 February 2013
if such payment is made for the purpose of visa ,passport & other services?
26 February 2013
Hi
You also have to check DTAA provision for that country.
Thanks!!
You also have to check DTAA provision for that country.
Thanks!!
26 February 2013
tell me whether the agent is indian or NRI.
because if indian then 194C with no DTAA
but if NRI then sec 195 and DTAA
because if indian then 194C with no DTAA
but if NRI then sec 195 and DTAA
28 February 2013
event managment company-indian & foreign trael agent is from dubai & hongkong
27 July 2025
Here’s the detailed take for your scenario:
---
### Situation:
* **Event management company (Indian entity)**
* Making payment to **foreign travel agents** (Dubai & Hong Kong)
* Payment is for **booking hotels on behalf of clients**
* Query: Is TDS applicable? If yes, under which section?
---
### Analysis:
#### 1. **TDS Applicability on Payments to Foreign Entities**
* Payments to non-residents are governed by **Section 195** of the Income Tax Act.
* Section 195 mandates **tax deduction at source on payments to non-residents** which are chargeable to tax in India.
* So, if the payment is taxable in India, TDS under Section 195 applies.
---
#### 2. **Nature of Payment:**
* Booking hotel accommodation on behalf of clients is typically considered a **service** provided by the foreign travel agent.
* It may be considered under **Fees for Technical Services (FTS)** or **Business Connection** depending on the facts.
* However, simply booking hotel accommodation usually does not amount to technical services or royalties.
---
#### 3. **Whether Payment is Taxable in India?**
* If the foreign travel agent has **no Permanent Establishment (PE)** in India, and the services rendered are outside India, then this may not be taxable in India.
* If services are considered as rendered outside India, then payment is **not taxable in India**, so **no TDS under Section 195**.
* **DTAA (Double Tax Avoidance Agreement)** between India and the country of the foreign agent also plays a role.
* Check the relevant DTAA with UAE (Dubai) and Hong Kong.
* Many DTAAs provide exemptions for certain income types or require tax only if the foreign entity has PE in India.
---
#### 4. **If Payment is for Visa, Passport & Other Services:**
* Usually, payments related to visa/passport services are **personal services** and not taxable under Indian tax laws.
* But if services are business-related and taxable, then TDS under Section 195 may apply.
---
### Conclusion and Recommendation:
| Situation | TDS Applicability | Relevant Section |
| ------------------------------------------------------------------- | --------------------------------------------- | ---------------- |
| Foreign travel agent has no PE in India, service outside India | No TDS required | Not applicable |
| Foreign travel agent has PE in India or payment is taxable in India | TDS applicable at rates as per IT Act or DTAA | Section 195 |
| Payment is for visa/passport (personal services) | Generally no TDS | Not applicable |
---
### Action Steps:
1. Verify whether the foreign travel agent has **Permanent Establishment (PE)** in India.
2. Check the **DTAA provisions** for India-Dubai and India-Hong Kong agreements.
3. If taxable, deduct TDS under **Section 195** at the prescribed rate.
4. Obtain **Tax Residency Certificate (TRC)** from foreign agent for DTAA benefits.
5. Consult a tax expert if uncertain about classification.
---
Would you like help drafting a formal note on this for your management or client?
---
### Situation:
* **Event management company (Indian entity)**
* Making payment to **foreign travel agents** (Dubai & Hong Kong)
* Payment is for **booking hotels on behalf of clients**
* Query: Is TDS applicable? If yes, under which section?
---
### Analysis:
#### 1. **TDS Applicability on Payments to Foreign Entities**
* Payments to non-residents are governed by **Section 195** of the Income Tax Act.
* Section 195 mandates **tax deduction at source on payments to non-residents** which are chargeable to tax in India.
* So, if the payment is taxable in India, TDS under Section 195 applies.
---
#### 2. **Nature of Payment:**
* Booking hotel accommodation on behalf of clients is typically considered a **service** provided by the foreign travel agent.
* It may be considered under **Fees for Technical Services (FTS)** or **Business Connection** depending on the facts.
* However, simply booking hotel accommodation usually does not amount to technical services or royalties.
---
#### 3. **Whether Payment is Taxable in India?**
* If the foreign travel agent has **no Permanent Establishment (PE)** in India, and the services rendered are outside India, then this may not be taxable in India.
* If services are considered as rendered outside India, then payment is **not taxable in India**, so **no TDS under Section 195**.
* **DTAA (Double Tax Avoidance Agreement)** between India and the country of the foreign agent also plays a role.
* Check the relevant DTAA with UAE (Dubai) and Hong Kong.
* Many DTAAs provide exemptions for certain income types or require tax only if the foreign entity has PE in India.
---
#### 4. **If Payment is for Visa, Passport & Other Services:**
* Usually, payments related to visa/passport services are **personal services** and not taxable under Indian tax laws.
* But if services are business-related and taxable, then TDS under Section 195 may apply.
---
### Conclusion and Recommendation:
| Situation | TDS Applicability | Relevant Section |
| ------------------------------------------------------------------- | --------------------------------------------- | ---------------- |
| Foreign travel agent has no PE in India, service outside India | No TDS required | Not applicable |
| Foreign travel agent has PE in India or payment is taxable in India | TDS applicable at rates as per IT Act or DTAA | Section 195 |
| Payment is for visa/passport (personal services) | Generally no TDS | Not applicable |
---
### Action Steps:
1. Verify whether the foreign travel agent has **Permanent Establishment (PE)** in India.
2. Check the **DTAA provisions** for India-Dubai and India-Hong Kong agreements.
3. If taxable, deduct TDS under **Section 195** at the prescribed rate.
4. Obtain **Tax Residency Certificate (TRC)** from foreign agent for DTAA benefits.
5. Consult a tax expert if uncertain about classification.
---
Would you like help drafting a formal note on this for your management or client?
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