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TDS on Travel bills

yadagiri (Article Assistant) (33 Points)

03 June 2010

Hi,

I need clarification about whether TDS is to be deducted on the travel bills...If yes what is the rate....

Example.A client has bookeda ticket through travel Agency for Rs.2232 which is inclusive of Stax. Then what is the rate applicabl;e for TDS...

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7 Replies

Divya sharma (CHARTERED ACCOUNTANT) (250 Points)
Replied 03 June 2010

TDS IS NOT DEDUCTED ON AIR TICKETS. ALSO REGARDING HOTEL STAY THAT IS BOARDING & LOADGING IT DEPENDS IF EMPOLYEE DIRECTLY MAKES PAYMENT AT HOTEL AND WE REIMBURSE THAN TDS NEED NOT BE DEDUCTED BUT IF PAYMENT IS MADE BY COMPANY DIRECTLY TO HOTEL THAN TDS TO BE DEDUCTED AS PER 194C.

HOPE IT'LL SOLVE UR DOUBT.

llllVICTORllll (Internal Auditor) (511 Points)
Replied 03 June 2010

I Differ on point said above,

i am of the view that if the travel bill is above the TDS limit and expense is incurred on behalf of the company, then TDS will be applicable irrespective of the fact that employee has paid and company has just refunded, (on common sense, company can always avaoid TDS when ever needed by saying that employee has paid it and escape, thus i dont think Department will leave that loophole open)

and TDS is to be deducted on amount including service tax.

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 03 June 2010

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.

llllVICTORllll (Internal Auditor) (511 Points)
Replied 03 June 2010

hmm, ha ha we both were wrong...

thank you sir for your clarification

shailendra (Accounts Executive ) (128 Points)
Replied 03 June 2010

i agree with Sir Aditya Maheshwari

Divya sharma (CHARTERED ACCOUNTANT) (250 Points)
Replied 10 June 2010

Well i agree with air tickets and same thing i said that tds need not b deducted on air tickets but as far boarding and loadging is concerned i am confused. also clarify if person stayed outside india. payment made through his credit card and later reimbursed.

Divya sharma (CHARTERED ACCOUNTANT) (250 Points)
Replied 10 June 2010

Take an exemple

Our employee went on official tour to banglore. He made payment through his personal credit card and later after 30 days he came office submitted his bills and reimbursed by company now what will u say employee deduct tds and bal pay by credit card and than tds kaun depposit karega and whn . i mean when he'll return from his trip or during his official trip tds deposit karne jaayega.

take it as query , i am confused

kindle clear my doubt