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Tds on travel agent

Yash jagati (CA ) (86 Points)

26 February 2016

Recently, our company has appointed a travel agent for booking of all the hotel stay requirement of company's employee, when they go out of city for office work. Agent raises a invoice on a monthly basis for all the booking done by him. However in his invoices, he doesn't show his service charges separately.
For 1st & 2nd invoice, we have deducted TDS @ 194C on whole amount of invoice. Is this correct approach?

Please tell me tds will be attracted for such payment & under which section?

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12 Replies

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 26 February 2016

Actual ticket fare and flight or transportation cost deducted from invoice value shall be his comission. Tds should be deducted u / s 194 H. It can noway be deducted u/s 194c

Sunil (CA) (185 Points)
Replied 26 February 2016

As the travel agent is giving bill without mentioning his service charges, it'll be in the nature of contract and Section 194C will be applicable. If he is giving the service charges seperately, the Section 194H will apply on the Service Charges. The problem the travel agent may face in future is related to Service Tax as he may end up in paying service tax on whole amount.

vipin patole (Self Employed) (72 Points)
Replied 27 February 2016

Travel agent simply arranges tickets for you on the basis of COMMISSION.

And the commission a very specific word has been used under section 194H hence TDS should be deducted u/s 194H.

However in your case you have made a contract with agent and payment of such contract is made on monthly basis which give your arrangement a specific nature i.e. contract of work and when it is contract of work then you will have to deduct tax u/s 194c.

Mere invoicing will not change nature of recipts or contract.

Yash jagati (CA ) (86 Points)
Replied 27 February 2016

It will not be covered under 194H, as we have three year contract with agent.....However problem is agent doesn't claim it as a reimbursement i.e. he attach bill raised by him for each hotel booking & here we don't know what is the rate hotel & agent agreed between them.

vipin patole (Self Employed) (72 Points)
Replied 27 February 2016

You have to deduct tax u/s 194c on total amount of the invoice.

And the contract is principal to principal basis then why would he claim it as reimbursement.

Also in ACC Ltd Vs CIT (1993)201 ITR 435 (S.C.) it is held that the deductor does'nt required to segregate the income element from gross amount.

So you have to deduct tax u/s 194c on gross amount.

1 Like

vaibhav (student) (253 Points)
Replied 29 February 2016

U/s 94C on whole amount. If he raise separate invoice for actual exp incurred and service charges den tds only upon service charge bill.

Niraj Jain (CA Business) (22 Points)
Replied 31 May 2017

Payments to airlines/travel agents - The provisions of section 194C do not apply to the payments made to the airlines or the travel agents for purchase of tickets for air travel of individuals. The provisions shall however apply when payments are made for chartering an aircraft for carriage of passengers or goods. This clarification will apply mutatis mutandis to the tickets for travel of individual by any other mode of transport also—Circular : No. 713, dated 2-8-1995.

The payments made to a travel agent or an airline for purchase of a ticket for travel would not be subjected to tax deduction at source as the privity of the contract is between the individual passenger and the airline/travel agent, notwithstanding the fact that the payment is made by an entity mentioned in section 194C(1). The provisions of section 194C shall however apply when a plane or a bus or any other mode of transport is chartered by one of the entities mentioned in section 194C—Circular : No. 715, dated 8-8-1995.

ankit goyal (Student CA Final ) (23 Points)
Replied 23 April 2018

1. whether tds is duducted on invoice raise by travesl agency.??

even if there is no contract made with travel agency or /and the invoice raised by agency is for composite amount.(as we dont knw thw amount of commission)

2. the proceesing charges charged by same travel agency on same bill is is liable foe deducton od TDS ???

Pls reply as soon as possible.

ESG Airtravel (2 Points)
Replied 23 September 2019

Hi Everyone We have hired a Air Travel Agency for our section and they do not charge any Service Tax for any of the ticket booked. Is TDS applicable on the same.

Thanks

debora M (BUSINESS DEVELOPMENT MANAGER) (1697 Points)
Replied 26 September 2019

So you have to deduct tax u/s 194c on gross amount.

debora M (BUSINESS DEVELOPMENT MANAGER) (1697 Points)
Replied 26 September 2019

So you have to deduct tax u/s 194c on gross amount.

ankit kanojia (2 Points)
Replied 21 August 2022

I am a Travel Agent, we booked flight ticket, hotel booking and transportation booking in a year for a our corporate customer (NGO) total yearly transaction 10 lakhs but in that our commission is only 20,000/- now they saying they will deduct TDS on total 10 lakhs 2%, kindly adv. Is it correct ???