TDS on Hotel Expenses

Hi,
 

Refer this link, It might be helpful to you...

https://law.incometaxindia.gov.in/TaxmannDit/DispCitation/ShowCit.aspx?fn=https://law.incometaxindia.gov.in/Directtaxlaws/cbdt/dtccontents/Para1126New.htm

Thanks

Yes TDS is deductible on Payment of Hotel expenses.Refer Sec 194 I or Sec 194C in few cases.

TDS is not required to deduct while making payment to hotel for usage of facilities / amenities.The Bombay High Court recently in a writ petition has recently delievered  an important judgement in the case of East India Hotels Ltd. quashing circular no.681 dated 8th March 1994 to a limited extent.

Payment made for hotel accomodation on "Regular Basis" would attract Sec 194 I provided it breaches the threshold amount. Rooms earmarked by hotel for a specified rate & specified period is construed as on "Regular Basis". Similiar would be the case, where rooms are not earmarked, but the hotel has the legal obligation to provide such type of rooms during the currency of the agreement.

Please correct me if i m wrong!!

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

ALSO NOTE THAT

Where an employee or an individual representing a company (like a consultant, auditor, etc.) makes a payment for hotel accommodation directly to the hotel as and when he stays there, the question of tax deduction at source would not normally arise (except where he is covered under section 44AB as mentioned above) since it is the employee or such individual who makes the payment and the company merely reimburses the expenditure.

No TDS is deductible.

Yes, TDS is applicable

No need to deduct TDS on Hotel Expenditure

every one is confused.

i also ask a query about it.

please answer it.

Well, TDS is on Rent. Rent means [explanation (i) of Section 194 I], any payment ....... under lease, sublease,tenancy or any other agreement or arrangement. Payment to room tariff charges in a hotel doesnt fall under the definition of rent.

"Please explain it "

No one has given clear answer

Weather we have to deduct TDS on hotel Expenses !!!!!!!!!!!!!!!!!!!!!!!!!

Originally posted by : Lalit
	TDS is not required to deduct while making payment to hotel for usage of facilities / amenities.The Bombay High Court recently in a writ petition has recently delievered  an important judgement in the case of East India Hotels Ltd. quashing circular no.681 dated 8th March 1994 to a limited extent.

I would like to know about this case.

I am not aware of this circular, so i really would appreciate it if you could give the details

But here is the set of rules followed for TDS on payment to hotels.

Payments for hotel accommodation - Circular No. 715, dated 8-8-1995 has been issued by the Central Board of Direct Taxes to clarify various provisions relating to tax deduction at source under various provisions of the Income-tax Act. Question No. 20 of the aforesaid Circular related to applicability of the provisions of section 194-I in respect of payments made to a hotel for rooms. The relevant question and answer is reproduced below :—

“. . . 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.” [Emphasis supplied]

In this context, doubts have been raised as to what constitutes “hotel accommodation taken on regular basis” for the purpose.

The Board have considered the matter. First, it needs to be emphasised that the provisions of section 194-I do not normally cover any payment for rent made by an individual or HUF except in cases where the total sales, gross receipts or turnover from business and profession carried on by the individual or HUF exceed the monetary limits specified under clause (a) or clause (b) of section 44AB. Where an employee or an individual representing a company (like a consultant, auditor, etc.) makes a payment for hotel accommodation directly to the hotel as and when he stays there, the question of tax deduction at source would not normally arise (except where he is covered under section 44AB as mentioned above) since it is the employee or such individual who makes the payment and the company merely reimburses the expenditure.

Furthermore, for purposes of section 194-I, the meaning of ‘rent’ has also been considered. “‘Rent’ means any payment, by whatever name called, under any lease . . . or any other agreement or arrangement for the use of any land. . . .” [Emphasis supplied]. 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.

However, often, 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.

(My note - Where rate contract is taken we deduct u/s 194C to be on safe side.. though it does not come within the ambit of "work", it is in pursuance of a contract)

 Thanks GK 

But if company is not having any Contract with Hotel paying more then one crore then wat we have to do