Tds u/s 194c

PAYMENT MADE BY ONE TRAVEL AGENT "a"  TO ANOTHER TRAVEL AGENT "b" FOR BOOKING OF 5 ROOMS IN A HOTEL OF HIS AREA . BILL RAISED BY "b" BY CHARGING SERVICE TAX .PAYMENT MADE  BY "a" TO "b" AGAINST BILL RAISED.  IS "a" REQUIRED  TO TDS ON SUCH PAYMENT ?

Replies (5)

It depends whether there is a contract between them or not.
If there is a contract between them, then TDS is to be deducted subject to the threshold limits provided u/s 194C of Income Tax Act, 1961.

Yes on payments made a to b for services of booking rooms then tds u/s 194 H required to be deducted @ 10% only if the travel agent is not an individual. If the travel agent is an individual then tds needs to be deducted of if tax audit applicable. As far as room rent is concerned then no tds needs to be deducted on room rent portion.

if there is a contact i.e. work  sub-contracted to other agent- Sec. 194C

incase of commission payment then Sec. 194H shall arise for TDS

Yes, the tds needs to be deducted. If the bill reads as commission charges then u/s 194 H only on the commission amount and no tds on rent paid but if it says something like Charges for room rent........ etc... then u/s 194 C for the entire amount. It all depends on how billing is done to you. Existence of a contract between them is immaterial.

Agreed that the nature of billing is crucial here, but in order to deduct TDS u/s 194C, contract between the parties plays a vital role. Kindly refer to the below text.
Section 194C (1) reads as-

Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to—

 (i) one per cent where the payment is being made or credit is being given to an individual or a Hindu undivided family;

(ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family,

of such sum as income-tax on income comprised therein.

Hence, existence of contract is one of the condition to deduct tax at source u/s 194C.

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