tds on accomodation - arranged and paid by travel agent
This query is : Resolved
18 December 2009
should we deduct tds on payment which made by travel agent for accomodation for employees on behalf of company?
20 December 2009
Please tell, whether it is nature of reimbursement?,any supportings they are providing to claim?
27 July 2025
Good question! Here’s how TDS applies when a **travel agent arranges and pays for accommodation on behalf of a company** for employees:
---
### Key points:
1. **Who is making the payment to the accommodation provider?**
* If the **travel agent pays directly** to the hotel/accommodation provider, and the company reimburses the travel agent, then **the travel agent is the payer** from the hotel’s perspective.
* The company’s payment to the travel agent is for their service (travel agent’s fees), not directly for accommodation.
2. **TDS on accommodation charges:**
* As per Income Tax rules, **TDS is required to be deducted when paying rent or accommodation charges exceeding Rs. 2,40,000 in a financial year (Section 194I).**
* The **liability to deduct TDS is on the person making the payment to the landlord/hotel**, i.e., the payer of rent/accommodation charges.
3. **In this case:**
* Since the **travel agent pays the accommodation provider**, the **travel agent should deduct TDS on the rent/accommodation charges** if applicable.
* The **company pays the travel agent’s invoice**, which includes accommodation charges + agent’s fees.
* The company should **deduct TDS only on the travel agent’s service charges**, if applicable (Section 194C for contractors or 194J for professional fees depending on nature).
4. **If company deducts TDS on full amount paid to travel agent:**
* This may be incorrect because part of the amount is actually paid by the travel agent to the hotel.
* TDS on accommodation portion is responsibility of travel agent.
---
### Summary:
* **Company pays travel agent:** Deduct TDS only on agent’s service charges (if applicable).
* **Travel agent pays hotel:** Travel agent should deduct TDS on accommodation charges if above threshold.
* Company **need not deduct TDS on accommodation paid by travel agent.**
---
Let me know if you want me to help draft a formal note or explanation for your accounting or tax team!
---
### Key points:
1. **Who is making the payment to the accommodation provider?**
* If the **travel agent pays directly** to the hotel/accommodation provider, and the company reimburses the travel agent, then **the travel agent is the payer** from the hotel’s perspective.
* The company’s payment to the travel agent is for their service (travel agent’s fees), not directly for accommodation.
2. **TDS on accommodation charges:**
* As per Income Tax rules, **TDS is required to be deducted when paying rent or accommodation charges exceeding Rs. 2,40,000 in a financial year (Section 194I).**
* The **liability to deduct TDS is on the person making the payment to the landlord/hotel**, i.e., the payer of rent/accommodation charges.
3. **In this case:**
* Since the **travel agent pays the accommodation provider**, the **travel agent should deduct TDS on the rent/accommodation charges** if applicable.
* The **company pays the travel agent’s invoice**, which includes accommodation charges + agent’s fees.
* The company should **deduct TDS only on the travel agent’s service charges**, if applicable (Section 194C for contractors or 194J for professional fees depending on nature).
4. **If company deducts TDS on full amount paid to travel agent:**
* This may be incorrect because part of the amount is actually paid by the travel agent to the hotel.
* TDS on accommodation portion is responsibility of travel agent.
---
### Summary:
* **Company pays travel agent:** Deduct TDS only on agent’s service charges (if applicable).
* **Travel agent pays hotel:** Travel agent should deduct TDS on accommodation charges if above threshold.
* Company **need not deduct TDS on accommodation paid by travel agent.**
---
Let me know if you want me to help draft a formal note or explanation for your accounting or tax team!
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