TDS on hotel room rent

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This discussion clarifies whether a tour operator needs to deduct Tax Deducted at Source (TDS) when paying for hotel room rentals. While Section 194I typically mandates a 10% TDS on rent, an important distinction is made for 'rate contracts'. If the agreement between the tour operator and the hotel is classified as a rate contract, TDS under Section 194I may not be applicable, as per CBDT Circular 5.

R S Pandi

R S Pandi (Querist)
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01 February 2021 Dear Sir,

A tour operator company lodging their guest in other hotels , and they are paying monthly once to hotel.

now hotel bill approx. 90,000/-. Any TDS will deduct on the hotel charges. ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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02 February 2021 TDS applicable under section 194I 10%.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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02 February 2021 But if the agreement between the tour operator company and the hotel is in the nature of 'RATE CONTRACT' no need to deduct tax u/s 194I. Inference :- CBDT Circular 5, dated 30-07-2002.

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