If company paid rent for Hotel Room for guest which goes above Rs. 180000/- for 2 days, TDS applicable u/s 194I?
Deepak Tapse (Accounts Manager - Taxation) (1771 Points)
28 April 2012If company paid rent for Hotel Room for guest which goes above Rs. 180000/- for 2 days, TDS applicable u/s 194I?
CA Akshay Kumar Mishra
(Chartered Accountant )
(1784 Points)
Replied 28 April 2012
Prashanth
(Chartered Accountant)
(2322 Points)
Replied 28 April 2012
Hi,
As per this circular no. 5/2002 dated 30.7.2002, company is liable to deduct the TDS on such rent only if such accomodation is on regular basis....Other wise no need of deducting TDS....In your case if it is the 1s time if u have taken acccomodation then no TDS
Anumanchipalli Sathikonda
(Tax Consultant)
(1349 Points)
Replied 29 April 2012
Mr.Deepak Tapse, Mr.akshay, Ms.Anupama and Mr.Prashanth
Please let me clarify the matter contributed by you all in respect of Deduction of Tax at source u/s 194I in respect of payment of rent to hotel rooms wherever the payment exceeds the limit provided in the section.
The question of Mr.Deepak is –
If company paid rent for Hotel Room for guest which goes above Rs. 180000/- for 2 days, TDS applicable u/s 194I?
He has asked clarification whether tax has to be deducted at source if a company pays rent for hotel room for guest which exceeds Rs.180000/- for two days.
The circular No.5/2002 dated 30.07.2002 is a clarifactory circular to Circular No.715 dated 8.08.1995. In the circular No.5/2002 clarification has been given to the answer given to Question No.20 in the Circular No.715 dated 8.08.1995. The clarification is –
“The meaning of ‘rent’ in section 194-I is wide in its ambit and scope. For this reason, payment made to hotels for hotel accommodation, whether in the nature of lease or licence agreements are covered, so long as such accommodation has been taken on ‘regular basis’. Where earmarked rooms are let out for a specified rate and specified period, they would be construed to be accommodation made available on ‘regular basis’. Similar would be the case, where a room or set of rooms are not earmarked, but the hotel has a legal obligation to provide such types of rooms during the currency of the agreement.”
Mr.Deepak has not mentioned in his question that the rooms are taken by the company on regular basis. The company has paid the room rent on the occasion of visit of guests only for two days. Hence TDS provisions are not applicable.
The reason is-
The FEDERATION OF HOTEL AND RESTAURANT ASSOCIATION OF INDIA has got stay order on the applicability of TDS provisions on payment of room rent to hotels. Then in pursuance of the Stay Order CBDT has clarified in the Circular No.5/2002 dated 30.07.2002 that only when the rooms are takenon regular basis the the person who has taken the hotel rooms on rent will be under legal obligation to deduct tax at source u/s 194I but not when the rent is paid on such occasions as mentioned by Mr.Deepak.
To make the matter explicit I am attaching the copies of both the circulars and also the copy of stay order.
Best Wishes
Sathikonda
Ashok Kumar Bharti
(Finance & Admin Head)
(33 Points)
Replied 11 June 2012
Dear Sathikonda
Thank you very much for your kind feed back! Its really matter for all professionals related with TDS on rent.
Ashok Bharti
CAclubindia
