TDS on payment to Hotel

This query is : Resolved 

07 July 2007

Whether payment of Rs 1.50 Lacs for hiring of a Hotel for one day for organizing a Conference will be subject to TDS u/s 194I ?

shipra walia (Expert)
08 July 2007

As per sec 194I-

Any person, not being an individual or a Hindu undivided family, who is

responsible for paying to [a resident] any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier,
[deduct income-tax thereon at the rate of

(a) fifteen per cent if the payee is an individual or a Hindu undivided family; and

(b) twenty per cent in other cases :]

Provided that no deduction shall be made under this section where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the aforesaid person to the account of, or to, the payee, does not exceed one hundred and twenty thousand rupees :

[Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such income by way of rent is credited or paid, shall be liable to deduct income-tax under this section.]

Explanation.For the purposes of this section,

(i) rent means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or any building (including factory building), together with furniture, fittings and the land appurtenant thereto, whether or not such building is owned by the payee;

(ii) where any income is credited to any account, whether called Suspense account or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.]

Therefore the payment made for hiring a hotel is chargeable to tax u/s 194I as it includes the use of building in it.

However as you have not specified if this 1.5 lac is paid as room rent then its not taxble as a notification was issued by CBDT xplaining that there will be no TDS deduction on Hotel room rent.

Sanjeev Kumar Varshney (Querist)
09 July 2007

It is paid as Rooms and Conference hall booked for one day. Will it be treated as on REGULAR BASIS?

Shashi Mohan Jha (Expert)
11 July 2007

Please refer circular No 5/2002 dt 30.7.2002 accordingly a banquet hall/hotel hire to attract TDS u/s 194I @20%+surcharge

26 July 2012

not require . because it s daily basis

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