Tds u/s 194i
This query is : Resolved
25 February 2014
Is TDS applicable on payment made to hotel for room rent charges. My owner company book rooms in bulk for seminar, training and other curriculum for its employees and Its total amount is more than Rs. 1,80,000/-.
IT'S URGENT
IT'S URGENT
25 February 2014
Yes! it is 10% u/s 194I
25 February 2014
Its ok sir. But I confused because in Circular No. 5/2002 it is mentioned that TDS is applicable if accommodation taken on regular basis. If a company book hotel room in bulk for its employees is it for regular basis?
02 August 2025
Your confusion is understandable — the applicability of **TDS under Section 194-I** on **hotel room payments** has been subject to multiple circulars and judicial interpretations. Let’s clarify it **clearly and precisely**.
---
## ✅ **Issue:**
Is **TDS under Section 194-I** applicable on **payments made to hotels for room rent**, especially when booked in **bulk** for company events (seminars, training, etc.)?
---
## 🔍 **Relevant Legal References:**
### ✅ 1. **Section 194-I** – Rent includes:
> "Any payment under lease, sublease, tenancy or any other agreement for **use of land or building**..."
Hotel room rent **technically qualifies as rent**, so **Section 194-I** can apply.
---
### ✅ 2. **CBDT Circular No. 5/2002 dated 30.07.2002**:
> TDS **is not required** to be deducted if the **rooms are taken occasionally and not under a regular arrangement**.
🔹 **“Regular basis”** means:
* A **formal agreement or understanding** with the hotel
* For use of rooms over a period (e.g., monthly blocks, annual tie-up)
🔹 If rooms are **booked as per need** (even in bulk), **without a contract or fixed reservation arrangement**, then **no TDS** under 194-I.
---
### ✅ 3. **CBDT Circular No. 1/2014 dated 13.01.2014** (clarification):
> If a contract is entered into **with hotels** for **hiring rooms on a regular basis**, it would be treated as rent and **TDS under 194-I is applicable**.
So if:
* You **book rooms regularly**, or
* There is **a contract or fixed arrangement** with the hotel
👉 Then **TDS under 194-I is applicable** at **10%**.
---
## 📌 Your Case – Analysis:
You said:
> "Company books rooms in **bulk** for **seminars, training**, etc. and total payment > ₹1,80,000."
Now ask:
### ✅ Is there a **formal agreement** with the hotel?
* If **yes** → TDS under **Section 194-I** applies @10%
* If **no**, and booking is **occasional**, even in bulk → **No TDS** (as per Circular 5/2002)
---
## 📊 Threshold (as per FY 2013–14):
| Criteria | Rule |
| --------------------- | ----------------------------------------------------------------------------------------------------- |
| Annual room rent paid | If **> ₹1,80,000**, TDS applies **only if** regular arrangement exists |
| Rate of TDS | **10%** (under 194-I) if individual/HUF, **2%** if company/hotel is contractor (rare case under 194C) |
| PAN not provided | TDS at **20%** u/s 206AA |
---
## ✅ Final Conclusion:
> If your company has a **contractual or regular arrangement** with the hotel (e.g., monthly/annual block booking), **TDS @10% u/s 194-I is applicable**.
>
> If bookings are made **occasionally**, even in bulk (without a tie-up), **TDS is not required**, based on **CBDT Circular No. 5/2002**.
---
Let me know if you want a **template for declaration or agreement** to clarify this with the hotel/vendor or for audit documentation.
---
## ✅ **Issue:**
Is **TDS under Section 194-I** applicable on **payments made to hotels for room rent**, especially when booked in **bulk** for company events (seminars, training, etc.)?
---
## 🔍 **Relevant Legal References:**
### ✅ 1. **Section 194-I** – Rent includes:
> "Any payment under lease, sublease, tenancy or any other agreement for **use of land or building**..."
Hotel room rent **technically qualifies as rent**, so **Section 194-I** can apply.
---
### ✅ 2. **CBDT Circular No. 5/2002 dated 30.07.2002**:
> TDS **is not required** to be deducted if the **rooms are taken occasionally and not under a regular arrangement**.
🔹 **“Regular basis”** means:
* A **formal agreement or understanding** with the hotel
* For use of rooms over a period (e.g., monthly blocks, annual tie-up)
🔹 If rooms are **booked as per need** (even in bulk), **without a contract or fixed reservation arrangement**, then **no TDS** under 194-I.
---
### ✅ 3. **CBDT Circular No. 1/2014 dated 13.01.2014** (clarification):
> If a contract is entered into **with hotels** for **hiring rooms on a regular basis**, it would be treated as rent and **TDS under 194-I is applicable**.
So if:
* You **book rooms regularly**, or
* There is **a contract or fixed arrangement** with the hotel
👉 Then **TDS under 194-I is applicable** at **10%**.
---
## 📌 Your Case – Analysis:
You said:
> "Company books rooms in **bulk** for **seminars, training**, etc. and total payment > ₹1,80,000."
Now ask:
### ✅ Is there a **formal agreement** with the hotel?
* If **yes** → TDS under **Section 194-I** applies @10%
* If **no**, and booking is **occasional**, even in bulk → **No TDS** (as per Circular 5/2002)
---
## 📊 Threshold (as per FY 2013–14):
| Criteria | Rule |
| --------------------- | ----------------------------------------------------------------------------------------------------- |
| Annual room rent paid | If **> ₹1,80,000**, TDS applies **only if** regular arrangement exists |
| Rate of TDS | **10%** (under 194-I) if individual/HUF, **2%** if company/hotel is contractor (rare case under 194C) |
| PAN not provided | TDS at **20%** u/s 206AA |
---
## ✅ Final Conclusion:
> If your company has a **contractual or regular arrangement** with the hotel (e.g., monthly/annual block booking), **TDS @10% u/s 194-I is applicable**.
>
> If bookings are made **occasionally**, even in bulk (without a tie-up), **TDS is not required**, based on **CBDT Circular No. 5/2002**.
---
Let me know if you want a **template for declaration or agreement** to clarify this with the hotel/vendor or for audit documentation.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- GSTR-1A How to update Invoice
- Excess salary payment.
- TDS on Purchase of Immovable Property by NRI from NRI
- Stamp Paper for partnership firm change new income tax 2025
- Current Account Opening for Sole Proprietorship with Udyam Certificate - Zero Turnover
- INTEREST APPLICABLE ON ITC REVERSAL PORTION
- Capital gain from sale of house property
- FORM 26A APPLICABILITY
- Annual return in Gst
- When TDS on GST applied
- TDS APPLICABILITY......
- Copyright software
- Cash gift by grand mother to her grand daughter
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
- No Compliences after incorporation
- USEFUL LIFE OF USED/SECOND HAND COMMERCIAL VEHICLES
- Claiming TDS deducted by builder on Hardship compensation and Corpus
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
