Tds applicability on bills of hotels

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Querist : Anonymous

Querist : Anonymous (Querist)

23 December 2014 a company is continously paying to hotel bills regarding stay , food etc of its clients
whether tds is attracted on such payments by the company to hotels

Please Advice
Thank You

Querist : Anonymous

Querist : Anonymous (Querist)

23 December 2014 somebody please reply

CA Parul Saxena

CA Parul Saxena (Expert)
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23 December 2014 yes under section 194C tds to be deducted.

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Querist : Anonymous

Querist : Anonymous (Querist)

23 December 2014 THANKS MAM FOR THE ADVICE

Guest

Guest (Expert)

23 December 2014 TDS on hotel needs to be deducted under Section 194I (TDS on Rent) since hotel accomodation mainly results in rental of immovable property with ancillary services involved.

However, the same needs to be deducted only if the accommodation is taken on a regular basis. (Refer Circular No. 715, Year 1995)

if the transaction involved results in catering, then TDS shall be deducted u/s 194C as the same is included in the definition of Work u/s 194C of the act.

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Querist : Anonymous

Querist : Anonymous (Querist)

23 December 2014 Dear Adit

The payments are made for clients, auditors etc whoever visit the company for any purpose
& the bills include their for their room charges, food,etc

so whether this will cover in 194c or 194i

Guest

Guest (Expert)

23 December 2014 I would quote Circular No 5/2002,

"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."

So if you have a contract or the hotel is obligated to provide you rooms of your specification everytime you seek them, then its rent u/s 194I. If however, you have an arrangement for a specified rate(after discount) and you only take the accomodation as needed but the Hotel could choose to deny your booking if it had alternative bookings or is fully booked, it is not rent u/s 194I and therefore no TDS is required to be deducted..

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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23 December 2014 Tds u/s 194C applicable once the threshold limit exceeds of rs 30,000 in 1 single bill or 75,000 Rs on p.a basis and along with stay other facilities like food etc is also provided to the customers.

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Guest

Guest (Expert)

23 December 2014 TDS u/s 194C is only applicable to catering services w.r.t. food, which is covered in the definition of work as per the Explanation to the section. Since the same is not the case in a restaurant/room service situation, you are not required to deduct TDS at a restaurant or for other services provided during the stay. There are several case studies around the same.

Querist : Anonymous

Querist : Anonymous (Querist)

23 December 2014 DEAR EXPERTS
THE EXACT SCENARIO IS THAT THE COMPANY IS CONTINUOUSLY MAKING PAYMENTS TO HOTELS W.R.T. BILLS RAISED RELATED TO CLIENTS, AUDITORS, FOREIGNERS VISIT REGARDING THEIR STAY,FOOD ETC.

HOTELS PROVIDE BUSINESS PROPOSAL LETTER TO THE COMPANY CONTAINING ALL DETAILS SUCH AS ROOM TARRIFS, FOOD, DISCOUNTS, PICK & DROP FACILITY ETC ON THE BASIS OF WHICH NEGOTIATIONS HAVE BEEN MADE ON EMAIL WITH HOTELS & A HARD COPY OF SUCH EMAIL IS SIGNED BY THE OFFICIALS OF THE COMPANIES.
ON THE BASIS OF WHICH HOTELS CHARGES BILLS TO COMPANY.

HOTELS CHARGES SERVICE TAX ALSO.

NOW PLEASE ADVICE WILL IT COVERED BY TDS PROVISION OR NOT

Guest

Guest (Expert)

23 December 2014 You would need to share the exact language of such emails exchanged/signed. There is a difference between rate-contracts and actual contracts resulting in nature being covered under rent 194I.

Ganeshbabu K

Ganeshbabu K (Expert)
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24 December 2014 Please refer my replies in below query

https://www.caclubindia.com/experts/tds-on-service-tax-component-1211489.asp

1)No TDS applicable if it is just rate contract agreement(Your case looks like rate contract agreements)

2)However some companies do deduct TDS on safer side even in case of Rate contract agreements,But please deduct as per section 194I and not as per Section 194C.

3)No TDS applicable on food,beverages etc.

4)if you want to deduct TDS in my opinion it should be @10% under section 194I.
(do we deduct tds under 194C just because we have contract for internal audit with chartered accountant?).
So pls deduct tds UNDER 194I

Pls refer to link given above.

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Querist : Anonymous

Querist : Anonymous (Querist)

25 December 2014 Thanx Mr. Ganeshbabu K