Deduction of tds 194c/194i

Originally posted by : sachin
	If company is paying for accomodation for his staff at variosu hotels allover india and if teher is tie up with different hotels tehn under which section comapny has to deduct TDS S.194C or 194I? Please elaborate the provisions in thsi regard. Thanks

Question No. 20 of Circular No. 715, dated 8-8-1995

“.Q. No. 20: Whether payments made to a hotel for rooms hired during the year would be of the nature of rent?

Ans. : Payments made by persons other than individuals and HUF for hotel accommodation taken on regular basis will be in the nature of rent subject to TDS under section 194-I.”
.
Explanations:-

An employee or an individual representing a company makes a payment for hotel accommodation directly to the hotel as and when he stays there.	No TDS, since it is the employee or such individual who makes the payment and the company merely reimburses the expenditure.
Payment made to hotels for hotel accommodation, whether in the nature of lease or licence agreements.	Covered u/s 194I so long as such accommodation has been taken on ‘regular basis’.
Where earmarked rooms are let out for a specified rate and specified period.	Covered u/s 194I as it means accommodation made available on ‘regular basis’.
Where a room or set of rooms are not earmarked.	Covered u/s 194I IF the hotel has a legal obligation to provide such types of rooms during the currency of the agreement.
Where corporate employers enter into agreement with hotels with a view to merely fix the room tariffs of hotel rooms for their executives/guests/customers.	Rate-contract agreements.* Not Covered u/s 194I as there is no accommodation ‘taken on regular basis’ and there is no obligation on the part of the hotel to provide a room or specified set of rooms.

* A rate-contract is a contract for providing specified types of hotel rooms at pre-determined rates during an agreed period. The occupancy in such cases would be occasional or casual.

—Circular : No. 5/2002, dated 30-7-2002