TDS relating to Tour Operating Services

[gururaj Bhat]

Dear Sir,

Presently i am handling a client who is into tour operating business. I have some query relating to TDS applicability. Can you please advise.

Scenario 1:

ABC Pvt Ltd is engaged in providing Tour Operating Services located in India

Mr D customer of ABC Pvt Ltd approaches for a package tour to Italy.

Tour Package includes Flight, Cruise, Hotel, Visa etc.

ABC Pvt Ltd approaches below vendors for:

EFG Pvt Ltd is providing Air Ticket Booking Services located in India (Pays them 70k for ticket + 5k for handling charges)

LMN Pvt Ltd is providing Visa Services located in India (pays them 30k for visa + 5k for handling charges)

XYZ is a destination tour management company located in Italy and has no Indian PAN, Cruise Booking & Hotel booking is done by XYZ (pays them 60k through forex)

Should i make payment u/s 195 for XYZ

Whether TDS is applicable on the above transaction? If yes for which value TDS need to be deducted and under which section TDS need to deducted?

Scenario 2:

ABC Pvt Ltd is engaged in providing Tour Operating Services located in India

Mr D customer of ABC Pvt Ltd approaches for a package tour to Italy.

Tour Package includes Flight, Cruise, Hotel, Visa etc.

ABC Pvt Ltd approaches below vendors for:

EFG Pvt Ltd is providing Air Ticket Booking Services located in India (pays them 70k for ticket + 5k for handling charges)

LMN Pvt Ltd is providing Visa Services located in India (pays them 30k for visa + 5k for handling charges)

PQR Pvt Ltd is providing Cruise Booking Service located in India (pays them 30k for cruise bookings) who is acting as a booking agent only

STU Pvt Ltd is providing Hotel Booking Service located in India (pays them 30k for cruise bookings) who is acting as a booking agent only

Whether TDS is applicable on the above transaction? If yes for which value TDS need to be deducted and under which section TDS need to deducted?

Thanking you,

AI Summary

Tax Deduction at Source applicability for payments to non-resident suppliers in tour packages, questioning withholding scope under law. Applicability of Tax Deduction at Source on payments by an Indian tour operator to a foreign destination supplier paid in foreign exchange without Indian PAN, versus payments to domestic suppliers and agents; core issues are whether withholding under section 195 applies to the foreign supplier, which value is subject to deduction, and how handling charges and agent bookings are treated for TDS purposes.