For instance, although its published rate is Rs21,250 per night, the Taj Hotel is offering a sea-view room with breakfast for just Rs12,400. Similarly, the rack-rate for a sea-facing room in Oberoi has been revised downwards from Rs20,150 to Rs14,050 per night. Corporate houses with bulk booking contracts with specific hotels (based on assured minimum room nights per year) are able to negotiate even lower rates by threatening to take their business elsewhere. The CEO of an American MNC says that his firm has negotiated a rate of Rs7,000 per night at a five-star hotel near the Mumbai airport as against Rs12,000 per night that it charged during the boom to corporate customers as well. Five-star hotels are offering similar discounts even to their loyalty card holders. The Taj group of hotels also has a deal with Air India to offer incredible two-night packages for people travelling on free tickets through redemption of mileage points. Since the tickets are free, people are probably willing to splurge on a luxury hotel. The discounts are especially attractive at the favourite destinations of foreign tourists, who have not shown up this year due to the economic slowdown and security concerns. Corporate cost-saving measures have seen executives flying economy class and staying in budget hotels; hotels can retain these customers only by dropping rates.

a) Pay the TDS only electronically
b) Use a new challan form (No. 17) for paying the TDS
c) Fill in name, PAN and amount of TDS for each deductee while paying the TDS
d) Generate a Unique Transaction Number (UTN) for each TDS entry
e) Quote the UTN in the TDS certificate (Form 16/Form 16A) issued
f) Quote the UTN in the TDS returns (for which new form no. 24C was notified)

At the same time, the deductee, while filing his own return of income, was expected to quote the UTN for every item of TDS if he wanted to get credit for the TDS. This provision was made effective retrospectively i.e. w..e.f. Assessment Year 2008-09 (financial year ended 31st March, 2008 and all subsequent years).

All in all, the new rules would have certainly led to lot of problems for tax deductors as well as for deductees. Also, many tax payers were unable to file their returns of income for the year ended 31st March, 2009 even though the same were ready for filing simply because of the confusion about the generation of the UTNs.

Fortunately, now, the Government has acknowledged the plight of the tax deductors and the deductees and has, by issuing a Press Release on 30th June, decided to keep in abeyance the applicability of the new Rules which were notified on 25th March, 2009.

Therefore, now, till further notice,

a) All tax deductors can continue to deposit the TDS in the existing challan no. ITNS 281

b) All corporate tax deductors will continue to pay the TDS electronically. Similarly, Individuals and Partnership Firms will also pay the TDS electronically if they are subject to tax audit

c) All other tax deductors can continue to pay the TDS in physical mode as they have been doing uptill now.

d) The quarterly TDS statements that are required to be filed will continue to be so filed as per existing rules and no new forms are to be filed

e) The returns of income for A.Y. 2009-10 (i.e. for the year ended 31st March, 2009) can be filed without quoting the UTN (even though the form requires the assessee to fill up the same)

We hope that with this, all the confusion that has prevailed in the context of payment of TDS to the Govt. and generation of the UTNs stands cleared. If you have any doubts about the matter, please feel free to contact the undersigned.

INCOME TAX RATES
1. General Tax Payers
Up to Rs 160,000………………………NIL
Rs 160,001 to Rs 300,000………..10%
Rs 300,001 to Rs 500,000………..20%
Rs 500,000 and above………………30%

2 For Women
Up to Rs 190,000……………………….NIL
Rs 190,001 to Rs 300,000………..10%
Rs 300,001 to Rs 500,000…………20%
Rs 500,000 and above……………….30%