In the regular course of business, an assessee has to continually book tickets for travelling. Travelling expense is incurred by all most all the entities to expand their business. The question is, in case the amount of ticket is more than Rs. 30000 will the provisions of section 194C apply?

As per Section 194C, any person responsible for paying any sum to any resident for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to—

(i) one per cent where the payment is being made or credit is being given to an individual or a Hindu undivided family;

(ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family,

of such sum as income-tax on income comprised therein.

Definition of shall include carriage of goods or passengers by any mode of transport other than by railways.

As per the above section TDS needs to be done.

However, Clarification regarding applicability of section 194C in case of tickets sold by airlines and travel agents to customers issued by the Board via circular no. 713 dated 2-8-1995 applies here. As per the circular, it is clarified that the provisions of section 194C do not apply to the payments made to the airlines or the travel agents for purchase of tickets for air travel of individuals. The provisions shall, however, apply when payments are made for chartering an aircraft for carriage of passengers of goods.

Accordingly, no TDS needs to be done in case of booking an air ticket whether directly with airlines or by the help of the agent.

Circular 713 of the Income Tax Act, 1961 reads as under:

Clarification regarding applicability of section 194C in case of tickets sold by airlines and travel agents to customers.

• The Finance Act, 1995 has amended the provisions regarding tax deduction at source contained in section 194C of the Income-tax Act. As per the amended provisions, deduction of tax at source is to be made, inter alia, from payments made in respect of contracts for carriage of goods and passengers by any mode of transport other than Railways.
• A number of queries have been received as to whether tax has to be deducted at source from payments to travel agents or the airlines for purchase of tickets for travel by air.
• The matter has been examined by the Board. It is clarified that the provisions of section 194C do not apply to the payments made to the airlines or the travel agents for purchase of tickets for air travel of individuals. The provisions shall, however, apply when payments are made for chartering an aircraft for carriage of passengers of goods.
• The clarification in para 3 (above) shall apply mutatis mutan­dis to the tickets for travel of individual by any other mode of transport also.