Updated on November 28, 2024 01:20:32 PM
Corporates use portals for conducting events or making their executive stays. These stays for the hotel can be long-term and short-term. In which case there can be an implication to deduct TDS on the hotel room rent under Section 194-I of the Income Tax Act. In order to file the TDS return, a qualified Chartered Accountant is preferred, as they are experts in income tax and can guide you on how to comply with the tax provision. In this article, we will provide you with complete insights into the TDS hotel room rent.
What is Section 194-I TDS on Rent? Under Section 194-I, TDS on rent states that the tenant who gains the right to occupy the property in exchange for the rental payment is liable to deduct TDS. Before the payment is made to the landlord, it is important to deduct TDS from the payment that would be deposited to the central government.
Under Section 194-I, the rent means any payment by whatever name called under any lease, sublease, tenancy, or any other agreement or arrangement for the use of (either separately or together) any: land, building, (including factory and building), land appurtenant to a building, machinery, equipment, furniture, and fitting.
Section 194-I is applicable to the person (not being an individual and HUF) who pays rent amounts exceeding Rs. 2,40,000 per annum to a resident person (payee) and is liable to deduct tax at source.
Individuals or HUFs who are liable for tax audits are responsible to deduct tax at source under Section 194-I. HUF and Individual are covered under this section in case total sales, gross receipts, or turnover (for individual or HUF) exceed the threshold limit, which is mentioned as below:
Particular | Income turnover |
---|---|
In the case of business | Rs. 1 crore |
In the case of the profession | Rs. 50 lakhs |
Some important considerations on the applicability of Section 194-I for the hotel room rent:
Here are the rates and calculations for TDS on hotel room rent under Section 194-I:
Nature of Property | TDS Rates |
---|---|
TDS rate on Hotel Room rent (194-I) | 10% |
In case PAN is not provided by landlord or by the person receiving rent to the payee. (206AA) | 20% |
According to Section 194-I, the hotel is considered under the category of building, which requires the TDS of @10% on the amount of rent that exceeds Rs. 2,40,000 per annum during the financial year.
Where the share of each co-owner in the property is definite and ascertainable, the limit of Rs. 2,40,000 will be applicable to each co-owner separately.
TDS is deducted at the time of payment of hotel room rent in cash, check, cheque or by any other mode, or hotel rent is credited in the books of the hotel, whichever is earlier.
Here are the details given at the time of deposit of TDS on hotel room rent:
A deduction shall not be made on the following exemption made under Section 194-I:
Here are the penalties and fines under TDS on hotel room rent:
At Bizfoc, we specialize in providing you the best accounting services in filing your TDS for the purchase of property. Here are the reasons why we are known for our services to our clients on filing TDS:
In general, we assist the client to solve their queries and doubts regarding the documentation, procedures, and fees for filling out the form. Other than making your filing successful, we help you make a better decision by covering every aspect of what you actually need to get your TDS.
TDS on rent for hotel room rent is an important tax issue that is handled under Section 194-I. The TDS deduction is critical for upholding tax norms and standards outlined in the Income Tax Act. Filing TDS by an individual can be a time-consuming and exhausting process. To make submitting TDS easier, it is suggested that you seek the assistance of CA professionals and experts.
Under Section 194-I, TDS on rent states that the tenant who gains the right to occupy the property in exchange for the rental payment is liable to deduct TDS. Before the payment is made to the landlord, it is important to deduct TDS from the payment that would be deposited to the central government.
Form 26-QC is a challan cum statement that is used for depositing the TDS amount with the government within 30 days from the end of month in which TDS is deducted.
Yes, as per Indian tax laws of Section 195, the TDS is applicable on rental income earned by an NRI from property in India. The tenant or the person responsible for making the payment is required to deduct TDS before making the rental payment to the NRI landlord.
No, the TDS will not be applicable in this case because this is a personal expenditure that is limited to only employees and is not endorsed for business transactions that will be rendered by business later.
The Challan ITNS 281 refers to the form that is used for making the tax payment. This form is issued to reduce the method for filing tax collection details, deposition, or collection manually and encourage filing the tax online to eliminate the usual chance of errors.