Goa is one of India’s most popular tourist destinations, home to thousands of hotels, guest houses, restaurants, and service providers catering to domestic and international travellers. With such thriving business activity, one area that often gets overlooked is TDS (Tax Deducted at Source) compliance.
Whether you run a boutique hotel, a large resort, or provide services like event management, catering, or housekeeping, understanding TDS obligations is crucial to avoid penalties and maintain financial discipline.
This article provides a detailed overview of TDS compliance for hotels and service providers in Goa, including applicable sections, rates, due dates, and practical compliance tips.
Legal Requirement: As per the Income Tax Act, every business making specified payments is required to deduct TDS and deposit it with the government.
Avoid Penalties: Non-compliance leads to interest, late fees, and even disallowance of expenses.
Transparency: Proper TDS compliance builds trust with vendors, contractors, and authorities.
Smooth Operations: Timely deductions and filings avoid disputes and financial disruptions.
TDS on Rent (Section 194-I)
Applicable if your hotel or service provider pays rent for land, building, or equipment exceeding Rs. 2,40,000 per year.
Rate: 10% for building/land rent, 2% for machinery/equipment.
TDS on Contractors (Section 194C)
Applicable when hotels engage contractors for catering, housekeeping, travel, laundry, or event management.
Rate: 1% (if contractor is individual/HUF), 2% (others).
Threshold: Rs. 30,000 per payment or Rs. 1,00,000 in a financial year.
TDS on Professional Services (Section 194J)
If you pay consultants, chartered accountants, lawyers, interior designers, or IT professionals.
Rate: 10% if payment exceeds Rs. 30,000 annually.
TDS on Payments to Non-Residents (Section 195)
If your hotel deals with international bookings or pays foreign service providers.
Rate depends on the nature of payment and applicable DTAA (Double Taxation Avoidance Agreement).
TDS on Commission or Brokerage (Section 194H)
Applicable when hotels pay commission to travel agents, online booking platforms, or sales agents.
Rate: 5% if commission exceeds Rs. 15,000 annually.
TDS on Salaries (Section 192)
Hotels and service providers employing staff must deduct TDS on salaries based on employee’s applicable income slab after considering exemptions and deductions.
TDS Deposit: 7th of the following month (30th April for March deductions).
Quarterly TDS Returns:
Q1 (Apr-Jun): 31st July
Q2 (Jul-Sep): 31st October
Q3 (Oct-Dec): 31st January
Q4 (Jan-Mar): 31st May
Issue of TDS Certificates (Form 16/16A): Within 15 days from the due date of filing TDS return.
Late Deduction/Deposit: 1% per month interest for late deduction, 1.5% per month for late deposit.
Late Filing of Returns: Rs. 200 per day (u/s 234E) until filed, subject to the amount of TDS.
Disallowance of Expenses: Expenses may be disallowed if TDS is not deducted or deposited on time.
Penalty u/s 271H: Rs. 10,000 to Rs. 1,00,000 for failure to file TDS returns.
Maintain Proper Records: Keep vendor invoices, rent agreements, contracts, and salary sheets well-organized.
Automate TDS Deduction: Use accounting or hotel management software that automatically calculates TDS.
Verify PAN & TAN Details: Always collect PAN details of vendors and ensure your TAN is active.
Consult a Tax Expert: For complex transactions like foreign remittances or composite hotel bills, take expert guidance.
Plan Cash Flows: Factor in TDS liabilities while negotiating with contractors and vendors to avoid disputes.
TDS compliance is not just a legal formality but an essential part of responsible business management for hotels, resorts, and service providers in Goa. From rent and contracts to commissions and salaries, TDS touches almost every payment made by hospitality businesses.
By maintaining timely compliance, businesses can avoid penalties, build trust, and focus on growth in Goa’s thriving hospitality sector.
If you are a hotel or service provider in Goa and need assistance with TDS compliance, return filing, or advisory, our team at TAXAJ can guide you end-to-end.