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Tds applicable for room rent

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(Querist)
13 June 2014 Dear Sir,

Whether Tds rate 10 %(1941) is applicable for hotel rooms which is renting to the customer or whether it can be treated as a contract under section 194c(@ 2%)

Thanks
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Vishnu Saboo

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Vishnu Saboo (Expert)
13 June 2014 Where earmarked rooms are let out for a specified rate and specified period, they would be construed to be accommodation made available on ‘regular bases. 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. However, 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. Consequently, the provisions of section 194-I while applying to hotel accommodation taken on regular basis would not apply to rate contract agreements. Please refer Circular: No. 5/2002, dated 30-7-2002.
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Vishnu Saboo

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Vishnu Saboo (Expert)
13 June 2014 Where earmarked rooms are let out for a specified rate and specified period, they would be construed to be accommodation made available on ‘regular bases. 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. However, 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. Consequently, the provisions of section 194-I while applying to hotel accommodation taken on regular basis would not apply to rate contract agreements. Please refer Circular: No. 5/2002, dated 30-7-2002.
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Rupesh Jain

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Rupesh Jain (Expert)
13 June 2014 you are taking hotel room on regular basis then you have to deduct the tds u/s 194I @ 10%
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