Understanding TDS on Service Charges: Are Employers or Employees Responsible for Tax Deductions?

We have a proprietor concern organization (Hotel) where we collect a 3% service charge from the guest on the bill and distribute that entire amount among the staff. Now I want to confirm whether we have to deduct TDS on the amount paid to employees (who are eligible to pay tax), or are employees solely responsible for paying tax on the service charge amount?

Kindly confirm this with me at [Email Removed For Privacy Reasons].

Warm Regards,
Zaheer
Human Resource

Being a proprietary concern, you are exempt from TDS deduction. However, if your accounts get audited, then you have to include this in their salary income and deduct the tax appropriately.

Poonam

Hi Sudhakar Shetty,

I am working as an HR Executive in a hotel. In our firm, we collect service charges from guests on the bill and distribute the entire amount among the staff. Now, I want to confirm whether we should deduct TDS on the amount paid to employees who are eligible to pay tax (TDS), or if the employees are solely responsible for paying tax on the service charge amount.

Kindly confirm this for me.

Thank you,
Sudhakar Shetty
HR