TDS ON HOTEL BILLS

This query is : Resolved

VIPIN GUPTA (Querist)
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09 September 2020 Dear sir,

One of our party is in the business of Erection and commissioning. The staff goes to various location at that places they hire rooms and pay the amount to hotel and after that they are reimbursed by the company. The payment to hotel are some times more than Rs 50000/-. Do we need to deduct TDS and how to deduct as whole of the payment is made by employee at that place itself.

CA KARAN SINGH

CA KARAN SINGH (Expert)
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09 September 2020 TDS is not required to be deducted. Because there is no agreement between the hotel and the employees of the company. In this situation, the hotel is not obliged to employees for providing rooms. Rooms will be available as and when available.

Even if the company directly hires hotel rooms for its employees, still the company is not required to deduct TDS, because of of no agreement or contract with the hotel.

For more clarification please refer to Circular No. 5/2002, dated 30/07/2002 issued by CBDT and you can also refer the judgment of ITAT Mumbai in the case of Red Chillies Entertainment Pvt. Ltd. Vs ACIT.(TDS) which was also decide on the basis of the above circular.