Tds on hotel rent

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Querist : Anonymous

Querist : Anonymous (Querist)

04 November 2011 Whether TDS is applicable on hotel room rent ?

Vivek Mehta (CA, DISA,CS, MBA)

Vivek Mehta (CA, DISA,CS, MBA) (Expert)
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04 November 2011 the Issue is a complex one and there are ways to avoid the same...and there are various issues and cases in which the rate of TDS is different so its hard to say just with this point and the question that whether TDS applicable or not?

Querist : Anonymous

Querist : Anonymous (Querist)

04 November 2011 instution has to make the payment of fooding and lodging bill of legal advisor, whether TDS is applicable on payment of bill ? pl advice.

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CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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04 November 2011 Where the assessee-hotel received payments from corporate customers under an agreement for use of the rooms in the hotel by such customers on regular basis, such payments would squarely fall within the term ‘rent’ as defined under the Explanation to section 194-I, and would hence attract deduction of tax at source. If such deduction results in any hardship or financial burden to the assessee, the proper remedy is to apply to the Assessing Officer under section 197 for the issue of certificate for deduction at lower rate or nil rate - Krishna Oberoi v. Union of India [2002] 257 ITR 105/123 Taxman 709 (AP.).

The CBDT have clarified that, while section 194-I would be attracted to payments received for providing hotel accommodation on a regular basis under lease/licence agreements, the said provision would not apply to cases where only ‘rate contract’ agreements are entered into, under which only room tariffs are fixed, because, where an agreement is merely in the nature of a rate contract, it cannot be said to be accommodation ‘taken on regular basis’ - Circular No. 5/2002, dated 30-7-2002.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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04 November 2011 No TDS on payment of Lodging and Fooding Bill.

Vivek Mehta (CA, DISA,CS, MBA)

Vivek Mehta (CA, DISA,CS, MBA) (Expert)
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04 November 2011 Well if the arrangments are made by the institution itself and the bills are paid in such cases the institution shall be liable for deduction of TDS on such Lodging bilss but not in respect of the fooding bills

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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04 November 2011 The CBDT have clarified that, while section 194-I would be attracted to payments received for providing hotel accommodation on a regular basis under lease/licence agreements, the said provision would not apply to cases where only ‘rate contract’ agreements are entered into, under which only room tariffs are fixed, because, where an agreement is merely in the nature of a rate contract, it cannot be said to be accommodation ‘taken on regular basis’ - Circular No. 5/2002, dated 30-7-2002.