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Hotels paying Booking.com (Netherlands), Agoda (Singapore), and Expedia (US or UK) must withhold tax at source on commission, but from April 1, 2026 the section reference moves from 195 to 413 of the Income Tax Act 2025, the rate is the lower of the Act rate or DTAA treaty rate, royalty vs FTS vs business-income classification is contested, and Form 168 will not show these credits because the deductee is non-resident — leaving the hotel with a separate outbound TDS register and a 15CA/15CB evidence trail.
For each foreign OTA, store treaty article, TRC validity, Form 10F date, and classification position in the vendor master. On every commission remittance, apply the lower of the Act rate or the DTAA rate, generate Form 15CA and Form 15CB where required, deposit Challan 281 under code 1041 routing, file Form 27Q, and record the deduction in the outbound TDS register against the foreign OTA. Route deductions on date — pre-April 1, 2026 entries stay under Section 195; April 1, 2026 onwards under Section 413.
Foreign OTA vendor master with treaty article, TRC, Form 10F, classification position; DTAA rate table with Netherlands, Singapore, US, UK entries; Form 15CA Part C generator; Form 15CB capture; outbound TDS register that reconciles to bank remittance and Form 27Q line items; cross-era routing rule on deduction date.
An outbound TDS register where every foreign OTA commission remittance is tagged with the correct section (Section 195 for legacy entries, Section 413 from April 1, 2026), the applicable DTAA treaty rate is documented with TRC and Form 10F, Form 15CA and 15CB acknowledgements are linked, Challan 281 reconciles to Form 27Q, and the bank-confirmed remitted amount matches the gross commission less withheld tax.
A 140-room luxury property in Goa pays Booking.com B.V. (Netherlands) and Agoda (Singapore) a combined monthly commission that easily crosses the Form 15CB threshold. Each remittance leaves Indian shores after withholding tax, Form 15CA Part C filing, and a chartered accountant’s Form 15CB certificate. From April 1, 2026 the section reference on Challan 281 moves from Section 195 of the Income Tax Act 1961 to Section 413 of the Income Tax Act 2025 — the structural successor for non-resident TDS. This article is for hotel finance teams reconciling the outbound TDS register on foreign OTA commission in India.
The Income Tax India e-filing portal is the authoritative source for the Section 413 text, the DTAA treaty list, and Form 15CA/15CB schemas. For the broader resident-side framework, see Section 393 under the new Income Tax Act 2025 and the TDS payment codes 1001–1092 reference — both prerequisites for understanding how the new code framework sits alongside Section 413.
What Section 413 Means for Hotels Paying Foreign OTAs
Section 413 of the Income Tax Act 2025 consolidates non-resident TDS — payments to non-residents covering royalty, fees for technical services, interest, dividends, and other income chargeable in India. From April 1, 2026, every commission remittance from an Indian hotel to Booking.com B.V., Agoda, Expedia, or another foreign-entity OTA references Section 413 on Challan 281 and on Form 27Q.
The 1961 Act equivalent — Section 195 — continues to apply only as a legacy reference for any deduction made up to March 31, 2026. Cross-era cases (a December 2025 invoice paid in May 2026, for example) need careful date routing because the deduction-date determines which section governs.
DTAA Treaty Rate Determination
The rate applied is the lower of the Act rate or the DTAA treaty rate. The treaty depends on the OTA’s tax residency:
| Foreign OTA | Tax residency | Indicative DTAA cap (royalty/FTS) |
|---|---|---|
| Booking.com B.V. | Netherlands | 10% |
| Agoda | Singapore | 10% (with MFN logic) |
| Expedia | US or UK | 15% (US Article 12) / 10% (UK) |
Treaty rate eligibility is conditional. The hotel needs a valid Tax Residency Certificate from the OTA plus Form 10F filed on the Indian e-filing portal by the OTA. Without these, the higher Act rate applies. The vendor master must store the treaty article, TRC validity period, and the Form 10F date for each foreign OTA.
The Royalty vs FTS vs Business Income Debate
The classification of OTA commission as Indian-source income is contested. Three positions exist:
- Business income, no PE — the conservative-but-defensible hotel position. Under most DTAAs this is not taxable in India for an OTA without a Permanent Establishment, so no withholding is required. This is the position taken by many large Indian hotel chains.
- Royalty — the argument that the OTA’s database, ranking algorithm, and brand constitute intellectual property used in India. If sustained, this triggers DTAA royalty-rate withholding.
- Fees for Technical Services — the argument that the OTA provides technical and consultancy services to the hotel. If sustained, this triggers DTAA FTS-rate withholding.
Where doubt exists, the hotel can apply for a lower withholding certificate under Section 393(2) of the 2025 Act (the successor to Section 197 of the 1961 Act) or proceed with treaty-rate withholding to manage downside risk. The chosen position must be documented in the vendor file and applied consistently across all months.
Form 15CA and Form 15CB
Form 15CA is required for every remittance to a non-resident that is chargeable to tax in India. Form 15CB — a chartered accountant’s certificate — is required where the cumulative remittance to a single non-resident exceeds ₹5,00,000 in a financial year. For an active hotel with ten or more bookings a day across Booking.com, Agoda, and Expedia, this threshold is crossed within the first quarter, so Form 15CB becomes the operating norm.
The 15CA Part C and 15CB pair must reference the DTAA article, the treaty rate applied, the TRC, and Form 10F. The hotel’s bank uses these as the basis for clearing the outward remittance. A reconciliation that does not link 15CA/CB acknowledgements at month-end will leave a gap between the outbound TDS register and the bank-confirmed remittance value.
Why Form 168 Will Not Show These Credits
Form 168 is the deductee-side annual statement under the new Act. It exists for resident deductees with an Indian PAN. Foreign OTAs without Indian PAN do not have a Form 168. Their Indian-source TDS evidence is the Form 131 issued by the hotel (the deductee certificate under the 2025 Act), the Form 15CA acknowledgement, and the Form 15CB certificate.
This means the reconciliation is one-sided — the cross-check available for a domestic OTA (deductor’s Form 131 vs OTA’s Form 168) is not available here. The hotel must keep its outbound TDS register, Challan 281 receipts, Form 27Q line items, Form 15CA acknowledgements, and Form 15CB certificates as the complete evidence trail. An audit traces from the bank remittance, back through Form 15CA/15CB, into Form 27Q, then to the challan deposit, with the outbound TDS register as the spine.
Cross-Era Date Routing
| Element | Up to March 31, 2026 | From April 1, 2026 |
|---|---|---|
| Section reference | Section 195, IT Act 1961 | Section 413, IT Act 2025 |
| Quarterly return | Form 27Q | Form 27Q (refreshed schema) |
| Lower withholding certificate | Section 197 | Section 393(2) |
| Deductee-side statement | None for non-residents | None for non-residents |
| Hotel-issued certificate | Form 16A | Form 131 |
| 15CA / 15CB requirement | Same threshold logic | Same threshold logic |
India Compliance Angle: One Vendor, Two Regimes
A foreign OTA that has been a vendor since 2023 will straddle the regime change. December 2025 commission invoices remitted in February 2026 sit under Section 195. April 2026 commission invoices remitted in May or June sit under Section 413. The reconciliation engine must tag each line with its deduction date and route on date. A vendor master with one fixed section field will produce false mismatches across the transition.
Reconciliation software India platforms with multi-currency and treaty-rate support can absorb this without a manual re-tagging exercise. For hotels where the foreign OTA also handles guest collection through virtual cards, the payment gateway reconciliation pipeline can carry both the inbound card MDR and the outbound commission TDS in a single reconciliation cycle. The pillar hotel reconciliation in India sets out how this fits with the rest of the hospitality finance stack.
For the broader hotel industry reconciliation surface, see the Hotels & Hospitality industry guide.
The following questions address the foreign-OTA TDS issues hotel controllers encounter most frequently.