TDS ON PACKAGE TOUR OPERATORS

This query is : Resolved

Sanjeev Kumar Varshney (Querist)
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19 November 2007 We have hired the services of a Packaged Tour Operator for organising our Dealers meet in Bangkok. Tour Operator offered us price of Rs 27775 - per person for expenses and Rs 500/- per person as his service charge. After completion of tour he raised the bill as follow

1. One bill for his service charges @ Rs 500/ - per person
2. One bill for tour arrangement @ Rs 27775 / - per person. He has not provided any supporting documents for claiming expenses reimbursement i.e. Airlines bill, Hotel bill, transport arrangement bills etc.

Please advise us whether we should deduct TDS on first bill only or on both the bills ? Does providing only detail of expenses without any supporting documents makes any difference ?
Further whether TDS will be deducted u/s 194 C or any other section ?

CA. Vineet Grover

CA. Vineet Grover (Expert)
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19 November 2007 The nature is contractual and hence TDS u/s 194C shall be applicable. There are no supporings for re-imbursements claimed. Where supportings are not attached to the re-imbursement bill the same is considered as an allowance hence TDS shall also be deducted on the re-imbursement. Incase of non-deduction, the entire expense may be disallowed u/s 40(ia).

R.V.RAO

R.V.RAO (Expert)
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19 November 2007 reimbusements if not claimed separately and if claimed along with original bill, the total amount is liable for tds.
hence pl. ask the agent to claim reimbursements separately, to avoid TDS liability.
TDS IS APPLICABLE ON BOTH BILLS AS PER SEC 194 C.ONLY REIMBURSEMENTS CAN BE AVOIDED FROM TDS BY FOLLOWING ABOVE METHOD.
PL. VERIFY SERVICE TAX LIABILITY OF THE SERVICE PROVIDER IF HIS GROSS TAXABLE SERVICES EXCEED THE EXEMPTION LIMIT OF RS. 8 LAKHS PER ANNUM.
R.V.RAO

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Sanjeev Kumar Varshney

Sanjeev Kumar Varshney (Querist)
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19 November 2007 Thanx for immediate replies

Tour operator is raising bill in which he is mentioning the detail of expenses incurred in tour. He has no original bills as he has also contacted with a local Bangkok tour operator. He has no Invoices / expenses bills etc. He is simply charging Rs 27775/- per person in a bill.