On going through some of the circulars of the department for TDS under Section 194 I and 194 C I have come across the following:-
194I
Where an employee or an individual representing a company (like a consultant, auditor, etc.) makes a payment for hotel accommodation directly to the hotel as and when he stays there, the question of tax deduction at source would not normally arise (except where he is covered under section 44AB as mentioned above) since it is the employee or such individual who makes the payment and the company merely reimburses the expenditure.
Has anyone ever had any problems where payment for casual occupancy to hotels have been disallowed to proprietors or professionals subject to tax audit u/s 44AB? Say a Taj group charges Rs.15k / day for casual bookings at various properties, if an individual stays aggregate mor than 8 days a year collectively in all properties he overshoots this limit of 120,000. As this section is silent on personal non-business stays, what is the consequences if individual does not deduct TDS on personal stays with the hotel?
194-C : Airlines Tickets
The board in its circular 715 of 1995:-
Question 6 : Whether payment under a contract for carriage of goods or passengers by any mode of transport would include payment made to a travel agent for purchase of a ticket or payment made to a clearing and forwarding agent for carriage of goods ?
Answer : The payments made to a travel agent or an airline for purchase of a ticket for travel would not be subjected to tax deduction at source as the privity of the contract is between the individual passenger and the airline/travel agent, notwithstanding the fact that the payment is made by an entity mentioned in section 194C(1). The provision of section 194C shall, however, apply when a plane or a bus or any other mode of transport is chartered by one of the entities mentioned in section 194C of the Act. As regards payments made to clearing and forwarding agent for carriage of goods, the same shall be subjected to tax deduction at source under section 194C of the Act.
Section 194C(1) has undergone changes after this circular and audited individuals / huf are also listed as an entity in this section. Now as far as personal expenses are concerned this section is clear. However if the privity of the contract is between an audited individual and airline for purchase of travels, say we book tickets of over Rs.50000 a year with Jet Air or Air India for travel of the audited individual, is TDS applicable? Have suitable clarifications been made for this. Obviously if the audited individual pays for travel of his employee then TDS is not applicable vide this circular.
CAclubindia
