TDS Applicability on Hotel Room Rent Exceeding Rs 240000 in FY 2024-25

Under Section 194I of the Income Tax Act, 1961, TDS is applicable on payments for hotel accommodation if it is taken on a “regular basis,” which means rooms are earmarked or the hotel is legally obligated to provide rooms as per an agreement.

TDS under Section 194-I applies if the total rent paid or payable during the financial year exceeds ₹2,40,000. TDS at 10% on the rent paid. The limit has exceeded to Rs. 6 lakhs applicable for FY 2025-26 onwards,

Yes, if rooms are booked on a regular basis, with the updated threshold:

• CBDT Circular 5/2002 (Q&A): hotel accommodation taken on a regular basis (rate contract, blocked rooms, long-stay) is "rent" under Sec 194I(b), at 10%. Occasional or casual bookings at the hotel's standard tariff aren't rent arrangements, and TDS isn't applied in practice.

• Threshold:

– FY 2024-25: Rs 2.4 lakh in aggregate in the FY per payee (as you mention)

– from 1 April 2025: Rs 50,000 per month or part of a month (Finance Act 2025).

• Composite bills with food: rent under 194I on room charges. Food or catering may fall under 194C if under a contract. Ask for separate billing.

• Deduct on the amount excluding GST (CBDT Circular 23/2017).

• From 1 April 2026: Sec 393 of the Income-tax Act, 2025.

Not merely because the hotel room charges exceed ₹2,40,000. Section 194-I’s ₹2,40,000 annual threshold and 10% rate apply to rent for the use of land or a building, but a hotel’s ordinary room accommodation is generally treated as a service, not rent, so that threshold does not by itself trigger TDS. Check the substance of the arrangement: a separately let room or premises under a tenancy or similar arrangement may be different. Also consider section 194C if the hotel arrangement is part of a contract for services.

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