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TDS WHEN PAYMENT MADE TO HOTEL

CA. Vikas Sharma (Chartered Acountant) (93 Points)

24 September 2009

I HAVE TO MAKE PAYMENT TO A HOTEL AND SHOULD I DEDUCT TAX ON IT? IF YES, UNDER WHICH SECTION? I THINK IT IS 194-I. AM I RIGHT?

PLEASE HELP ME FATS.......

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8 Replies

ashish gupta ( student) (1922 Points)
Replied 24 September 2009

I dont think TDS provisions will b applicable for the payment made to a hotel. I have never heard this type of case. but this is my personal view only.

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 24 September 2009

one of the vague thing here food doesnot attract TDS .But as far as room rent is concerned and if you have a contract with the hotel and the rooms are ear marked for your organisation TDS gets attracted under 194 I provided it crosses the threshold limit of Rs 1,20,000/= p.a

CA Mahesh Rathi (Service) (54 Points)
Replied 24 September 2009

Yes, I Agree with Mr. Sivaram.

Sorabh Gupta (Manager ( Taxation )) (877 Points)
Replied 24 September 2009

Dear Vikas

As no TDS shuld be dedcuted on payment to hotel . For ur clarification please refer the below mention lines

"payment made for hotel accomodation taken on regular basis is liable to TDS u/s. 194I" Hope ther is no doubts.......

If you make payment to a sigle hotel on regualr basis ie.........say like that you take 10 rooms of hotel on hire & told the hotel management that our company guest always use to come & stay in your hotel & in that case hotel must provide a room to your guest then in that case TDS is laible & dedcution u/s 194I

CA.Parsun Garg (JOB) (1380 Points)
Replied 24 September 2009

No TDS will be deducted when payment made to hotel. if u have a contract for rooms then TDS will be deducted at TDS rate for Rent. Generally, companies are deducting tax at TDS rate for contract if the booking is on ad-hoc basis. but in any case threshold limit is applicable.

Aarush (Delhi) (1566 Points)
Replied 24 September 2009

They always charge service tax @ 10.3% on room rent services, hence deduction in the form of tds is liable , except food and beverages

Amit Mukim (Article) (40 Points)
Replied 24 September 2009

Dear Vikas,

If we have made Contract with Hotel then TDS should be deducted u/s 194 C but if we are paying to Hotel & don't have any Contract then TDS should be deducted u/s 194 I.

Generally during Audit you will get to see that Company is not deducting TDS on Expenses for Hotel the reason is that Companyu is making Reimbursement to the Employee or Person who have Actually Paid to Hotel, if the Threshold Limit of Rs. 1,20,000 is Crossed then the Employee or Person (who is actually making payment to Hotel) should deduct TDS while making payment to Hotel.