TDS on hotel rent

[Rajeev Khulbe]

Good evening to all my great experts

I have doubt something about TDS on hotel .hare is brief summary

Our company organized a tour for employees.so we hired a hotel . At the time of making payment

Total bill amount was 262000 ( two lakh SIXTY two thousand).

My question is that will company deduct TDS on that amount.

[Ganeshan Kalyani]

Sir, if you have any contract with that hotel then TDS is deductible. Thanks

[DR.MARIAPPAN GOVINDARAJAN]

In my view TDS is not deductible by the Hotel.

[Ganeshan Kalyani]

Sir, I am also of the same view. Thanks.

TDS ON HIRE OF HOTEL
Circular No. 715 dated 8-8-1995
Payments made by persons other than individuals and HUF for hotel accommodation taken on regular basis will be in the nature of rent subject to TDS

Circular : No. 5/2002, dated 30-7-2002.

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.
where corporate employers, tour operators and travel agents enter into agreements with hotels with a view to merely fix the room tariffs of hotel rooms for their executives/guests/customers. Such agreements, usually entered into for lower tariff rates, are in the nature of rate-contract agreements. A rate-contract, therefore, may be said to be a contract for providing specified types of hotel rooms at pre-determined rates during an agreed period. Where an agreement is merely in the nature of a rate contract, it cannot be said to be accommodation ‘taken on regular basis’, as there is no obligation on the part of the hotel to provide a room or specified set of rooms. The occupancy in such cases would be occasional or casual. In other words, a rate-contract is different for this reason from other agreements, where rooms are taken on regular basis. Consequently, the provisions of section 194-I while applying to hotel accommodation taken on regular basis would not apply to rate contract agreements.

Honorable Delhi high court in case of APEEJAY SURRENDERA PARK HOTELS vs UOI 2016 (3) TMI 880 - DELHI HIGH COURT confirm the validity of circular and clarify that the onus would be on the concerned hotel to show, whether the payment made by the customers to the hotel includes any payment that can be said to be outside the ambit of Section 194-I

[Ganeshan Kalyani]

Nice reply in detail covering all aspect. Thanks.

AI Summary

TDS on hotel accommodation may apply where rooms are taken on a regular basis; rate contracts may be exempt.
TDS applies to hotel payments treated as rent when accommodation is taken on a regular basis-characterised by an obligation to provide specified or earmarked rooms during the agreement-whereas mere rate contract arrangements that only fix tariffs without such an obligation are not within that scope; the hotel must demonstrate that payments fall outside withholding treatment.