LIVE GST Certification Course by CA Arun Chhajer begins 21st April. Register Now!!

TDS from payment to Hotel BIll

Tapan Amoria (Manager H.R.) (24 Points)

04 September 2009

Is there any ruling given by the Mumbai high court on TDS deducted from the payment towards hotel bill.

Is it compulsory to dedcut the TDS from the Hotel Bill (By Croporate) if the bill amount is in excess of Rs. 20000

What if there are more than 2 or 3 hotel bills in a month aggregating Rs. 20000

Reply
Follow
Share

4 Replies

Rajeev (www.rkmco.com) (985 Points)
Replied 25 September 2009

there are instances, where corporate employers, tour operators and travel agents enter into agreements with hotels with a view to merely fix the room tariffs of hotel rooms for their executives/guests/customers. Such agreements, usually entered into for lower tariff rates, are in the nature of rate-contract agreements. A rate-contract, therefore, may be said to be a contract for providing specified types of hotel rooms at pre-determined rates during an agreed period. Where an agreement is merely in the nature of a rate contract, it cannot be said to be accommodation ‘taken on regular basis’, as there is no obligation on the part of the hotel to provide a room or specified set of rooms. The occupancy in such cases would be occasional or casual. In other words, a rate-contract is different for this reason from other agreements, where rooms are taken on regular basis. Consequently, the provisions of section 194-I while applying to hotel accommodation taken on regular basis would not apply to rate contract agreements.

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

i think 194C will apply to rate contract agreements

1 Like

Sunil (Trader) (2611 Points)
Replied 26 September 2009

I think 194C may not apply to rate contract. The contract between the corporate and the hotel is only for the price of the room. It is an agreement to make room available at a particular price. However, the contract for accomodation is between the individual occupying the room and the hotel. Say if a foreign buyer stays at the hotel as booking is made by the corporate. However, the foreigner is charged a lower rate and he pays it directly himself and it is not paid by the corporate. Therefore the corporate is not to do any TDS as he has not paid at all. Whenever hotel takes a booking under a rate contract, they always mention payment as direct. In this case the hotel collects directly from the one staying. Even it if is a corporate employee he claims reimbursement for his hotel expense. He may pay by credit card of his own and company reimburses his expenditure. Now if corporate makes arrangement in the contract for billing to be charged to the corporate itself, section 194 i will be applicable and not 194c.

rajesh (C.A) (36 Points)
Replied 26 September 2009

i agree with Rajeev

Vadivel (Senior Executive - Finance) (23 Points)
Replied 07 July 2011

I too agree with Rajeev. Though this has been brought to this side by him, this is the actual note from the Government through the said notification. Hence there should not be second opinion on this...