CA SHREY RATHI TDS & TCS 13.

BILL GATES

CHAPTER 13
TAX DEDUCTION AT SOURCE &
TAX COLLECTION AT SOURCE

“Don’t compare yourself with anyone

in this world…if you are doing so, you
are insulting yourself”

PRACTICAL QUESTIONS
Q 1: DLF Ltd. has let out a commercial building to Vodafone Ltd. for ₹ 5,00,000 p.m. plus GST @ 12%. Compute the net
amount payable & tax to be deducted at source by Vodafone Ltd. for the P/Y 2022-23.

Sol 1: Computation of net amount payable & tax to be deducted at source by Vodafone Ltd. for the P/Y 2022-23:
Particulars (₹)
Rent payable by Vodafone Ltd. (₹ 5,00,000 x 12) 60,00,000
(+) GST @ 12% 7,20,000
Total amount payable 67,20,000
(-) TDS @ 10% u/s 194I (TDS shall not be deducted on the GST portion assuming it has been
separately shown in the invoice) (₹ 60,00,000 x 10%) 6,00,000
Net amount payable 61,20,000

Q 2: Mr. Bhaggu is doing clothing business. He submits you the following information:
Turnover for the financial year:
2021-22 - ₹ 1,00,10,000
2022-23 - ₹ 98,99,000
State whether the provisions of TDS are attracted for the following expenses incurred during the financial year 2022-23:
(Assuming all payments were made in the month of April 2022)
(i) Interest paid to Indian Bank on term loan – ₹ 71,900.
(ii) Advertisement expenses of two individual expenses to Mr. Ali of ₹ 28,000 & ₹ 39,000.
(iii) Factory rent paid – ₹ 3,00,000.
(iv) Brokerage paid to a sub-broker – ₹ 8,000.

Sol 2: As the turnover of Mr. Bhaggu for the previous F/Y 2022-22, i.e. ₹ 1,00,10,000, has exceeded the monetary limit of
100 lakhs, he has to comply with the tax deduction provisions during the F/Y 2022-23, subject to the exemptions provided
under the relevant sections for applicability of TDS provisions.
(i) Interest paid to Indian Bank on term loan – ₹ 71,900: TDS u/s 194A is not attracted in respect of interest paid to a
banking company.
CA SHREY RATHI TDS & TCS 13.2

(ii) Advertisement expenses of two individual expenses to Mr. Ali of ₹ 28,000 & ₹ 39,000: TDS provisions u/s 194C gets
attracted if the amount paid to a contractor exceeds ₹ 30,000 in a single payment or ₹ 1,00,000 in aggregate during
the financial year. TDS @ 1% is applicable in case of individual/HUF contractors & 2% in case of other contractors.
Therefore TDS @ 1% on ₹ 39,000 shall be levied. TDS = ₹ 390.
(iii) Factory rent paid – ₹ 3,00,000: TDS u/s 194I @ 10% shall apply as the rental payment exceeds ₹ 2,40,000. TDS = ₹
30,000.
(iv) Brokerage paid to a sub-broker – ₹ 8,000: No TDS u/s 194H shall be levied as the commission does not exceed ₹
15,000.

Q 3: Mr. Bhide is employed in a company in Jaipur. His income from salary is ₹ 8,00,000 annually. He made a payment of ₹
1,00,000 eligible for deduction u/s 80C. He also informed his employer that he has incurred a loss of ₹ 60,000 u/h house
property. Compute the amount of tax deductible at source per month.

Sol 3: Computation of tax deductible at source per month for Mr. Bhide:
Particulars (₹)
Annual salary 8,00,000
(-) Loss u/h house property 60,000
Gross Total Income 7,40,000
(-) Deductions u/c VI-A: 80C 1,00,000
Total Income
6,40,000
Tax liability:
Tax on ₹ 6,40,000 (assuming the age of Mr. Bhide is less than 60 years) 40,500
(+) Health & Education Cess @ 4% 1,620
Total tax liability
42,120
Average Rate of Tax (42,120 / 8,00,000 x 100) 5.265%
TDS to be deducted per month (₹ 8,00,000/12 x 5.265%) 3,510
Notes: Loss u/h house property can be deducted from the salary income provided the name, address & PAN of the lender
is obtained. Similarly, deductions u/c VI-A can be made provided proper evidences regarding the investments are
provided.

Q 4: Compute amount of tax to be deducted at source on the following payments made by XY Ltd. during the P/Y 2022-23
as per the provisions of Income Tax Act, 1961.
(a) Payment of ₹ 1,00,000 to Mr. Rajbeer, a transporter who furnishes his PAN on 28th July 2022.
(b) Payment of fee for professional services of ₹ 54,000 to Mr. Gagan who is having PAN on 13th May 2022.
(c) Payment of ₹ 22,000 to MN Ltd. for repair of building on 29th September 2022.
(d) Payment of ₹ 3,50,000 to Mr. Ajay for purchase of chemicals for business on 15th January 2023.
(e) Payment of ₹ 1,90,000 made to Mr. Lalu for compulsory acquisition of his house as per law of the State
Government on 19th October 2022.
(f) The company held a lucky draw. A car worth ₹ 2,80,000 was given to the prize winner on 22nd July 2022.
(g) The company is engaged in the business of insurance. It paid ₹ 60,000 as insurance commission to its agent on 27th
December 2022.
CA SHREY RATHI TDS & TCS 13.3

Sol 4: Computation of tax to be deducted by XY Ltd. in the following payments:

S. No. Particulars (₹)
(a) Payment of ₹ 1,00,000 to Mr. Rajbeer, a transporter who furnishes his PAN: No TDS is required to ---
be deducted u/s 194C on payment to Mr. Rajbeer since he does not own 10 or less goods
carriages at any time during the previous year (assumed) & has furnished his PAN.

(b) Payment of fee for professional services of ₹ 54,000 to Mr. Gagan who is having PAN on 13th May 5,400
2022: As per section 194J, liability to deduct TDS @ 10% gets attracted where the payment made
as fees for professional services and royalty, individually, exceeds ₹ 30,000 during the financial
year. Therefore, TDS shall be deducted on ₹ 54,000.

(c) Payment of ₹ 22,000 to MN Ltd. for repair of building: Provisions u/s 194C are not attracted, since ---
the payment for repair of building is less than the threshold limit of ₹ 30,000.

(d) Payment of ₹ 3,50,000 to Mr. Ajay for purchase of chemicals for business: No TDS provisions are ---
applicable on purchase of goods for the purpose of business.

(e) Payment of ₹ 1,90,000 made to Mr. Lalu for compulsory acquisition of his house as per law of the ---
State Government: As per section 194LA, any person responsible for payment to a resident any
compensation on compulsory acquisition shall deduct tax @ 10% where such compensation
exceeds ₹ 2,50,000. In the given case, no TDS as the payment made does not exceed ₹ 2,50,000.

(f) The company held a lucky draw. A car worth ₹ 2,80,000 was given to the prize winner: As per 84,000
section 194B, TDS shall be deducted @ 30% on lottery prize where it exceeds ₹ 10,000. Where the
lottery is in kind, the organiser shall ensure deduction of tax before releasing the winnings. It has
been assumed that the organiser has taken reasonable steps for deduction of tax.

(g) Company paid ₹ 60,000 as insurance commission to its agent: As per section 194D, TDS is 2,250
deductible @ 5% if the commission or brokerage exceeds ₹ 15,000. Therefore, TDS shall be
deductible in this case.
Total TDS deductible by XY Ltd. 91,650

Q 5: An amount of ₹ 40,000 was paid to Mr. X on 01.07.2022 towards fees for professional services without deduction of
tax at source. Subsequently another payment of ₹ 50,000 was due to Mr. X on 27.02.2023, from which tax @ 10%
(amounting to ₹ 9,000) on the entire amount of ₹ 90,000 was deducted. However, this tax of ₹ 9,000 was deposited only
on 23.06.2023. Compute the interest chargeable u/s 201. [ICAI Study Module]

Sol 5: Computation of interest u/s 201 for Mr. X:

Where a person liable to deduct tax fails to do so, he shall be charged @ 1% p.m. or part of the month from the date on
which tax was deductible to the date tax is actually deducted. But where a person deducts tax and fails to pay such tax, he
shall be liable to interest @ 1.5% p.m. or part of the month from the date on which tax was deducted to the date it is
actually paid. Interest shall be calculated on the amount of TDS.

Interest from 01.07.2022 – 27.02.2023: ₹ 4,000 x 1% x 8 = ₹ 320

Interest from 27.02.2022 – 23.06.2023: ₹ 9,000 x 1.5% x 4 = ₹ 540
₹ 860

Q 6: Discuss whether the person making payment is liable to deduct tax at source in the following circumstances. Also
compute the amount of tax to be deducted.
(i) Interest of ₹ 2,900 paid by ZYX Ltd. to Luv and ₹ 5,500 to his HUF on 27.04.2022, by way of account payee cheque
on account of debenture of the company held by them separately. Debentures are listed in Bombay Stock
Exchange.
(ii) Sitting fees of ₹ 29,900 paid to director of the company on 12.10.2022.
CA SHREY RATHI TDS & TCS 13.4

(iii) Sports World Magazine paid ₹ 3,80,000 to Brian Lara, a non-resident cricketer, for writing an article for the August
issue. The payment for the same was made on 25.08.2022.
(iv) Interest of ₹ 43,300 on recurring deposit credited to Ms. Zubia on 31st March 2023.
(v) Punjab National Bank pays ₹ 90,000 p.m. as rent on the last day of each month to the State Government for a
building.
(vi) An engineer was reimbursed ₹ 40,000 on 15th April 2022 towards expenses incurred by him for a company. Such
amount is separate from his contract amount.
(vii) By virtue of an agreement with Nationalised Bank, a Catering organisation (Pvt. Co.) receives ₹ 50,000 p.m. towards
supply of food, water, snacks etc. during office hours to the employees of the bank. The contract came into force
from 1st July 2022.
(viii) Fees paid to Dr. Lahoti by Sunder (HUF) ₹ 42,000 for surgery performed on a member of his family.
[ICAI Study Module (modified)]

Sol 6: Determining the applicability of TDS provisions:

(i) Section 193 provides deduction of tax at source @ 10% on interest where such interest exceeds ₹ 5,000. In this
case, interest to Luv i.e. ₹ 2,900 shall not be subject to TDS provisions whereas interest to Kush i.e. ₹ 5,500 shall be
subject to TDS @ 10% as interest exceeds ₹ 5,000. TDS = ₹ 550.
(ii) Section 194J provides for deduction of tax at source @ 10% from any sum paid by way of remuneration or fees or
commission to a resident director, which is not in the nature of salary. The threshold limit of ₹ 30,000 is not
applicable in respect of any sum paid to the assessee. Therefore, tax @ 10% has to be deducted at source u/s 194J
on ₹ 29,900. TDS = ₹ 2,990.
(iii) Section 194E provides that the person responsible for payment of any amount to a non-resident sportsman for
contribution towards any game or sports in India has to deduct tax at source @ 20% + Health & Education Cess @
4%. Therefore, payment of ₹ 3,80,000 made by Sports World Magazine to Brian Lara for writing an article shall be
subject to TDS provisions. TDS = ₹ 79,040.
(iv) Section 194A shall be levied @ 10% where interest other than interest on securities exceeds ₹ 5,000 (₹ 40,000 in
case of banking company or co-operative societies or a post office). Therefore, interest of ₹ 43,300 on recurring
deposit shall be liable to TDS @ 10%. TDS = ₹ 4,330.
(v) Section 194I provides for deduction of tax at source @ 10% where rent paid exceeds ₹ 2,40,000. However, where
the payee is Central Government or State Government, no TDS is deductible. Therefore, payment by Punjab
National Bank to State Government shall not be liable to TDS.
(vi) Reimbursement of expenses is not an income in the hands of the payee. Therefore, reimbursement of ₹ 40,000 by
the company to the engineer shall not fall under the ambit of TDS provisions.
(vii) Section 194C provides for deduction of tax at source where the amount paid to a contractor exceeds ₹ 30,000 in a
single payment or ₹ 1,00,000 in aggregate during the financial year. TDS @ 1% is applicable in case of
individual/HUF contractors & 2% in case of other contractors. In this case, as the contractor is a private company,
TDS shall be deductible @ 2% of ₹ 4,50,000 (₹ 50,000 x 9). TDS = ₹ 9,000.
(viii) As per the provisions of section 194J, a Hindu Undivided Family is required to deduct tax at source on fees paid for
professional services only if it is subject to tax audit in the preceding financial year.
However, if such payment made for professional services is exclusively for personal purpose of any member of HUF,
then the liability to deduct tax is not attracted. Therefore, in the given case, even if Sunder (HUF) is liable to tax
audit in the immediately preceding financial year, TDS shall not be deducted.

MULTIPLE CHOICE QUESTIONS

1. The deduction of tax at source from the salary shall be made at the time of:
(a) accrual of salary (c) credit or payment of the salary, whichever is earlier
(b) payment of salary (d) Any of the above at the choice of employer
CA SHREY RATHI TDS & TCS 13.5

2. The liability to deduct tax at source in case of income from interest on securities arises at the time of:
(a) payment of interest
(b) accrual of interest
(c) Credit of interest to the account of the payee or payment thereof, whichever is earlier
(d) any of the above at the choice of the payer of the interest

3. No deduction of tax at source on interest on listed debentures is to be done by the widely held company:
(a) if the interest is paid by account payee cheque
(b) the amount of interest paid or payable during the financial year does not exceed ₹ 5,000
(c) interest is paid or payable to an individual who is resident in India.
(d) All of the above

4. Mr. K an individual has borrowed a sum of ₹ 10,00,000 on 1/4/2022 @ 18% p.a. from SBI. Mr. K in this case should
deduct tax on such interest paid amounting to:
(a) ₹ 1,80,000 (c) ₹ 18,000
(b) ₹ 1,87,200 (d) Nil

5. Mr. A, a salaried individual, pays rent of ₹ 51,000 per month to Mr. B from June, 2022. Which of the statement is
true?
(a) No tax is deductible at source since Mr. A is a salaried individual.
(b) Tax is deductible at source every month @ 5% on rent paid to Mr. B.
(c) Tax is deductible at source every month @ 10% on rent paid to Mr. B.
(d) Tax is deductible at source @ 5% on annual rent from the rent paid for March 2023.

6. Mr. X, a resident Indian, wins ₹ 1,80,000 in a Game Show. Which of the statement is true?
(a) Tax is deductible u/s 194B @ 30%
(b) Tax is deductible u/s 194B @ 31.2%
(c) Tax is deductible u/s 194B @ to be decided by the winner
(d) Tax is deductible u/s 194B @ to be decided by the organizer of the game show

7. Mr. J has deposited a sum of ₹ 2,00,000 on 1/4/2022 with a scheduled bank for one year at the interest rate of 10%
pa. The bank should deduct tax at source amounting to:
(a) ₹ 2,080 (c) ₹ 4,000
(b) Nil (d) ₹ 2,000

8. Mr. X paid fees for professional services of ₹ 40,000 on 10th May 2022 to Mr. A. Mr. A is engaged only in the business
of operation of call centre. Tax is to be deducted by Mr. X at the rate of (ICAI MCQ Booklet)
(a) 1% (c) 10%
(b) 2% (d) 5%

9. Mr. Janardan an individual, whose turnover of the business for the preceding year exceeded ₹ 100 lakhs, has
engaged a contractor Mr. Akash for building his residential premises. On 30/11/2022, he has made a payment of ₹
60,00,000 to an individual contractor. Mr. Janardan should deduct the tax at source amounting to:
(a) ₹ 60,000 (c) ₹ 2,25,000
(b) ₹ 1,20,000 (d) ₹ 3,00,000

10. No tax is to be deducted at source if the amount credited / paid to the contractor during the relevant previous year
does not exceed:
(a) ₹ 30,000
(b) ₹ 1,00,000
(c) ₹ 30,000 at one time or ₹ 1,00,000 in aggregate in the financial year
(d) ₹ 1,30,000
CA SHREY RATHI TDS & TCS 13.6

11. A company has taken a house on rent @ ₹ 20,000 pm. The company should deduct tax on account of such rent
paid/credited on monthly basis amounting to:
(a) Nil (c) ₹ 2,000
(b) ₹ 120 (d) ₹ 24,960

12. Who shall not be liable to deduct TDS under section 194C?
(a) Any Individual
(b) Any HUF
(c) Any Individual and Any HUF whose accounts were not liable to audit in preceding financial year
(d) Any Individual and Any HUF whose accounts were liable to audit in preceding financial year

13. What shall be the rate at which TDS on insurance commission shall be deducted under section 194D when the payee
is a domestic company?
(a) 20% (c) 5%
(b) 10% (d) 15%

14. What is maximum amount upto which TDS on commission on sale of lottery tickets shall not be deducted?
(a) ₹ 5,000 (c) ₹ 1,000
(b) ₹ 20,000 (d) ₹ 15,000

15. What shall be the rate of TDS under section 194I on payment of rent of plant and machinery where rent is paid to
any person other than individual or HUF?
(a) 1% (c) 10%
(b) 2% (d) 20%

16. A person makes payment of ₹ 35,000 to a contractor who is a transport operator is not subject to TDS if
(a) The recipient owns 10 or less than 10 goods carriages at any time during the previous year.
(b) The recipient is engaged in the business of plying, hiring or leasing of goods carriage
(c) the recipient has furnished declaration to this effect along with his PAN to the payer.
(d) All of the above

17. Submission of PAN is mandatory for

(a) Payer to Payee (c) Company only
(b) Payee to Payer (d) Individual only

18. If PAN is not submitted by assessee than TDS will deducted at

(a) the higher of rate specified in Act or 20% (c) 30%
(b) 20% (d) Maximum Marginal Rate of Tax

19. TDS shall not be deducted if payment is made to:

(a) Government (c) A mutual fund specified under section 10(23C)
(b) Reserve bank of India (d) All the above

20. Certificate for the deduction of TDS as lower rate is issued by ....... after receiving an application from …...
(a) Assessing Officer, Assessee (c) CIT, Assessing Officer
(b) Assessee, Assessing Officer (d) Assessing Officer, CIT

21. After deduction of TDS, deductor must deposit such TDS to ..................... within specified time
(a) Central Government (c) Both (a) and (b)
(b) State-Government (d) None of the above

22. When the payer is other than Government, TDS of March month shall be deposit upto:
(a) 30th April (c) Same day
(b) 7th April (d) None of the above
CA SHREY RATHI TDS & TCS 13.7

23. Which of the following are correct due dates for deductor other than government for filling TDS returns:
(a) 31st July, 31st October, 31st January, 31st May
(b) 15th July, 15th October, 15th January, 15th May
(c) 15th July, 31st October, 31st January, 15th May
(d) None of the above

24. Due date of furnishing of TDS certificate in case of salary:

(a) 31st May of the following relevant financial year
(b) 15th May of the following relevant financial year
(c) 15th June of the following relevant financial year
(d) 30th June of the following relevant financial year

25. Assessee shall be deemed to assessee in default in which of following cases:

(a) If deductor has not deduct the whole or any part of the tax
(b) If after deduction, the deductor fails to pay whole or any part of tax
(c) If after deduction, the deductor makes late payment
(d) In all of the cases mentioned above

26. When prize is given partly in cash & party in kind, Income tax is to be deducted only from cash?
(a) True (c) Partly true
(b) False (d) None of the above

27. Mr. P, a resident of age of 70 years, is due to receive ₹ 2.20 lakhs on 31/3/2023 on LIC policy taken on 1/4/2010, for
which the sum assured is ₹ 2 lakhs and the annual premium is ₹ 45,000. What will be the applicability of provisions
for tax deduction at source u/s 194DA?
(a) Tax is deductible on ₹ 2,20,000 since annual premium exceeds 10% of sum assured
(b) Tax is deductible on ₹ 2,20,000 since annual premium exceed 20% of sum assured
(c) Tax is deductible on ₹ 2,20,000 since annual premium exceeds 15% of sum assured
(d) None of the above

28. Prakash is employed with XYZ Ltd. from 05-11-2018. He resigned on 31-03-2023 and wants to withdraw the
accumulated balance of employer’s contribution in his EPF Account i.e., ₹ 55,000. The tax deducted on such
withdrawal would be: (ICAI MCQ Booklet)
(a) ₹ 500 u/s 192 (c) ₹ 500 u/s 192A
(b) ₹ 5,500 u/s 192 (d) ₹ 5,500 u/s 192A

29. Any person responsible for paying to a resident any sum exceeding ₹ 2.5 lakh towards compensation for compulsory
acquisition of his urban industrial land under any law has to deduct income-tax at the rate of
(a) 10% (c) 20%
(b) 15% (d) 2%

30. TDS from Interest on securities have been discussed under

(a) Section 192 (c) Section 192A
(b) Section 193 (d) Section 194A

31. TDS u/s 194M shall be deductible @ ………

(a) 1% (c) 5%
(b) 2% (d) 10%

32. Mr. Chaudhary has a car showroom. He purchased 10 cars worth ₹ 18,00,000 each from the manufacturer on 5th April
2022. The manufacturer in this case shall collect TCS amounting to:
(a) Nil (c) ₹ 18,000
(b) ₹ 1,80,000 (d) ₹ 13,500
CA SHREY RATHI TDS & TCS 13.8

33. Rate of TCS on timber obtained under a forest lease shall be ………
(c) 1% (c) 5%
(d) 2% (d) 2.5%

34. What is the exemption limit for TDS withdrawl u/s 194N wherein the assessee has filed return in the previous 3 years?
(a) ₹ 20,00,000 (c) ₹ 1,00,00,000
(b) ₹ 50,00,000 (d) ₹ 2,00,00,000

35. Mr. Gaurav, a businessman having turnover of 182 lakhs opted for presumptive income basis took a residential
property on rent for ₹ 60,000 p.m. from Mr. Sultan on 1st February 2023. The amount of TDS to be deductible under
the provisions of Income Tax Act shall be:
(a) Nil (c) ₹ 12,000
(b) ₹ 6,000 (d) ₹ 9,000

36. Mr. Pankaj won a lottery prize of ₹ 35,000. The winnings shall be distributed in 3 instalments of ₹ 5,000, ₹ 10,000 & ₹
20,000. The TDS to be deducted by the lottery organiser is such case shall be:
(a) ₹ 9,000 (c) ₹ 6,000
(b) ₹ 10,500 (d) ₹ 4,500

37. SS Ltd. company withdrew ₹ 1.35 crores from bank on 22nd July 2022 & ₹ 70 lakhs on 28th March 2023 in cash. SS Ltd.
has filed return of income for the preceding 3 years. TDS to be deducted by the bank u/s 194N shall be:
(a) ₹ 2,10,000 (c) ₹ 1,40,000
(b) ₹ 4,10,000 (d) ₹ 3,70,000

38. Interest on FD when granted to resident senior citizen is liable to tax @ 10% if the interest amount exceeds:
(a) ₹ 5,000 (c) ₹ 40,000
(b) ₹ 10,000 (d) ₹ 50,000

39. Mr. Farhan filed his TDS return for the 2nd quarter on 19th November 2022. TDS deposited by him during this quarter
was ₹ 4,650. Penalty for late filing of return shall be:
(a) ₹ 3,800 (c) ₹ 10,000
(b) ₹ 4,650 (d) ₹ 1,900

40. TDS certificate is issued in Form ………….. where TDS is deducted u/s 194M.
(a) 16 (c) 16B
(b) 16A (d) 16C

41. Mr. X, a resident, is due to received ₹ 4.50 lakhs on 31-03-2023, towards maturity proceeds of LIC policy taken on 1-4-
2020, for which the sum assured is ₹ 4 lakhs and the annual premium is ₹ 1,25,000. Mr. Z, a resident, is due to receive
₹ 95,000 on 1-10-2022 towards maturity proceeds of LIC policy taken on 1-10-2014 for which the sum assured is ₹
90,000 and the annual premium is ₹ 10,000. (ICAI MCQ Booklet)
(a) Tax is required to be deducted on income comprised in maturity proceeds payable to Mr. X and Mr. Z
(b) Tax is required to be deducted on income comprised in maturity proceeds payable to Mr. X
(c) Tax is required to be deducted on income comprised in maturity proceeds payable to Mr. Z
(d) No tax is required to be deducted on income comprised in maturity proceeds payable to either Mr. X or Mr. Z

42. Mr. Ramesh, Mr. Mahesh and Mr. Suresh, jointly owned a flat in Mathura, which was let out to Dr. Rajesh from 01-04-
2022. The annual rent paid by Dr. Rajesh for the flat was ₹ 5,40,000, credited equally to each of their account. Mr.
Rajesh approached his tax consultant to seek clarity in relation to deduction of tax on payment of the rent. He
informed his consultant that he occupied such flat for his personal accommodation and his receipts from his
profession during the previous year 2021-22 was ₹ 58 lakhs. As tax consultant, choose the correct answer – (ICAI MCQ
Booklet)
(a) No tax at source is required to be deducted since the rental payments are towards flat occupied for personal
purpose
(b) Tax is required to be deducted at source since the rent payment exceeds ₹ 2,40,000 and Dr. Rajesh is an individual
having gross receipts from profession exceeding ₹ 50 lakh in the preceding financial year.
CA SHREY RATHI TDS & TCS 13.9

(c) No tax is required to be deducted at source since the rent credited to each co-owner is less than ₹ 2,40,000
(d) No tax is required to be deducted at source since Dr. Rajesh’s gross receipts during the preceding financial year
were less than ₹ 1 crore

43. Mr. Nihar maintains a Savings A/c and a Current A/c in Mera Bank Ltd. The details of withdrawals on various dates
during the previous year 2022-23 are as follows:
Date of Cash withdrawal Saving Accounts Current Accounts
05-04-2022 15,00,000 -
10-05-2022 - 22,00,000
25-06-2022 20,00,000 -
17-07-2022 - 5,00,000
28-10-2022 35,00,000 -
10-11-2022 - 38,00,000
12-12-2022 25,00,000 -
Mr. Nihar regularly files his return of income. Is Mera Bank Limited required to deduct tax at source on the
withdrawals made by Mr. Nihar during the previous year 2022-23? If yes, what would the amount of tax deducted at
source? (ICAI MCQ Booklet)
(a) TDS of ₹ 4,60,000 is required to be deducted
(b) No, TDS is not required to be deducted as the cash withdrawal does not exceed ₹ 1 crore neither in saving
account nor in current account
(c) TDS of ₹ 3,00,000 is required to be deducted.
(d) TDS of ₹ 1,20,000 is required to be deducted.

44. Mr. P is a professional who is responsible for paying a sum of ₹ 2,00,000 as rent for use of building to Mr. Harshit, a
resident, for the month of February, 2022. The gross receipts of Mr. P are as under:
From 01-04-2021 to 31-03-2022: ₹ 55,00,000
From 01-04-2022 to 28-02-2023: ₹ 45,00,000
Whether Mr. P is responsible for deducting any tax at source from the rent of ₹ 2,00,000 payable to Mr. Harshit? (ICAI
MCQ Booklet)
(a) Tax at source is required to be deducted u/s 194-I at the rate of 10%
(b) Tax at source is required to be deducted u/s 194-IB at the rate of 5%
(c) Tax at source is required to be deducted u/s 194-IB at the rate of 10%
(d) No tax is required to be deducted at source.

45. Mr. A has two bank accounts maintained with ICICI Bank and HDFC Bank. From 01-04-2022 till 31-03-2023, Mr. A
withdrew the following amounts as cash from both the said accounts;
HDFC Bank - ₹ 50 Lakh
ICICI Bank - ₹ 120 Lakh
What shall be the amount of tax to be deducted at source u/s 194N by HDFC Bank and ICICI Bank, respectively, while
making payment in cash to Mr. A assuming Mr. A has filed his return of income for P.Y. 2019-20, P.Y. 2020-21 and P.Y.
2021-22 respectively? (ICAI MCQ Booklet)
(a) ₹ 1,00,000 and ₹ 2,40,000 (c) ₹ 60,000 and ₹ 1,00,000
(b) Nil and ₹ 40,000 (d) ₹ 50,000 and ₹ 1,20,000

46. Mr. Ram acquired a house property at Chennai from Mr. Satyam, a resident, for a consideration of ₹ 85 lakhs, on 23-
08-2022. On the same day, Mr. Ram made two separate transactions, thereby acquiring an urban plot in Gwalior from
Mr. Vipun, a resident, for a sum of ₹ 50 lakhs and rural agricultural land from Mr. Danish, a resident, for a
consideration of ₹ 75 lakhs. Which of the following statements are correct assuming that in the consideration
amounts as aforementioned all the charges incidental to transfer of the immovable property are included? (ICAI MCQ
Booklet)
(a) No tax deduction at source is required in respect of any of the three payments.
(b) TDS @ 1% is attracted on all the three payments.
(c) TDS @ 1% on ₹ 85 lakhs and ₹ 50 lakhs are attracted. No TDS on payment of ₹ 75 lakhs for acquisition of rural
agricultural land
(d) TDS @ 1% on ₹ 85 lakhs is attracted. No TDS on payments of ₹ 50 lakhs and ₹ 75 lakhs.
CA SHREY RATHI TDS & TCS 13.10

47. Mr. X, a resident Indian, wins ₹ 10,000 in a lottery. Which of the statement is true? (ICAI MCQ Booklet)
(a) Tax is deductible u/s 194B @ 30% (c) No tax is deductible at source
(b) Tax is deductible u/s 194B @ 30.9% (d) None of the above

48. Which of the following details/evidences are required to be furnished by an employee to his/her employer in respect
of deduction of interest under the head “Income from house property”, when the employer is estimating the total
income of the employee for the purpose of tax deduction at source u/s 192?
(i) Amount of Interest payable or paid
(ii) Rate of interest payable or paid
(iii) Name of the lender
(iv) Address of the lender
(v) PAN or Aadhar number as the case may be, of the lender
(vi) TAN of the lender
Choose the correct answer (ICAI MCQ Booklet)
(a) (i), (iii), (v) (c) (ii), (iv), (v) (vi)
(b) (i), (iii), (iv), (v) (d) (i), (ii)

49. A firm pays salary and interest on capital to its resident partners. The salary and interest paid fall within the limits
specified in section 40(b). Which of the following statements is true? (ICAI MCQ Booklet)
(a) tax has to be deducted u/s 192 on salary and u/s 194A on interest
(b) tax has to be deducted u/s 192 on salary but no tax needs to be deducted on interest
(c) no tax has to be deducted on salary but tax has to be deducted u/s 194A on interest
(d) no tax has to be deducted at source on either salary or interest

50. Dr. Sargun maintained two bank A/cs, one current A/c with Canara Bank for her profession and a saving bank A/c with
State Bank of India. The following are the details of her withdrawals from these A/cs during the previous year 2022-
23:
Date of withdrawals Canara Bank State Bank of India
25-04-2022 25,00,000
27-04-2022 15,50,000
31-08-2022 29,00,000
01-09-2022 14,20,000
05-09-2022 14,00,000
07-10-2022 18,21,000
11-12-2022 26,23,000
12-02-2023 7,56,000
25-03-2023 16,13,000
She furnished her return of income for the A.Y. 2022-23 and A.Y. 2021-22 on or before the limit prescribed u/s 139(1).
However, for the A.Y. 2020-21 and A.Y. 2019-20, she has furnished her return of income belatedly.
Is any tax deductible at source u/s 194N on the withdrawals made by Dr. Sargun from Canara Bank and SBI Bank? If
yes, at what rate and what amount? (ICAI MCQ Booklet)
(a) TDS is deductible at source on ₹ 1,00,20,000 @ 5% by Canara Bank and tax is deductible at source @ 2% on ₹
25,63,000 by SBI.
(b) TDS is deductible at source on ₹ 20,20,000 @ 5% by Canara Bank and no tax is deductible by SBI.
(c) TDS is deductible at source on ₹ 20,20,000 @ 2% by Canara Bank and no tax is deductible by SBI.
(d) TDS is deductible at source on ₹ 1,00,20,000 @ 5% by Canara Bank and tax is deductible at source @ 5% on ₹
25,63,000 by SBI.

51. Mr. T an Indian Citizen and resident of India, earned dividend income of ₹ 4,500 from an Indian company, which was
declared on 1-10-2022 and paid in cash to Mr. T. what are the tax implications with respect to the dividend in the
hands of Mr. T and Indian Company? (ICAI MCQ Booklet)
(a) Such dividend is taxable in the hands of Mr. T and Indian company is required to deduct tax at source @ 5%.
(b) Such dividend is taxable in the hands of Mr. T and Indian company is required to deduct tax at source @ 10%.
(c) Such dividend is taxable in the hands of Mr. T. However, Indian company is not required to deduct tax at source
since it does not exceed ₹ 5,000.
(d) Such dividend is exempt in the hands of Mr. T. Hence, Indian company is not required to deduct tax at source.
CA SHREY RATHI TDS & TCS 13.11

52. TPR & Co., a partnership firm selling its product X through the digital facility provided by MKY Limited (an E-commerce
operator). MKY Limited has credited in its books of account, the account of TPR & Co. on 31st January, 2022 by sum of
₹ 4,80,000 for the sale of product X made during the month of January 2022. Out of ₹ 4,80,000, it made payment for ₹
4,00,300 on 3rd February, 2022. Further, Mr. Pawan, who purchased the product X through the facility provided by
MKY Limited, has made the payment of sum of ₹ 40,000 directly to TPR & Co. on 15th January, 2022. Which statement
is correct regarding requirement of deduction of tax at source by MKY Limited? (ICAI MCQ Booklet)
(a) No tax is required to be deducted at source.
(b) MKY Limited is required to deduct tax at source ₹ 4,800 under section 194C.
(c) MKY Limited is required to deduct tax at source ₹ 3,900 under section 194O.
(d) MKY Limited is required to deduct tax at source ₹ 5,200 under section 194O.

53. Mr. Vyas, aged 80, is a retired government employee. On 1st April 2022, he received the maturity amount of his LIC
policy amounting to Rs. 3,50,000. This policy was taken by Mr. Vyas on 1st April 2014 on which the sum assured was ₹
3,00,000 and the annual premium was ₹ 40,000. His other income comprised of pension amounting to ₹ 85,000. Mr.
Vyas Furnishes a declaration in Form 15H for non-deduction of tax at source to the insurance company stating that his
net tax liability for the year is NIL. Choose the correct statement from below: (ICAI MCQ Booklet)
(a) The declaration made by Mr. Vyas is wrong and the insurance company has to deduct tax of ₹ 3,500 under
section 194DA.
(b) The claim by Mr. Vyas is right and insurance company is not required to deduct tax at source.
(c) The insurance company has to deduct tax under section 194DA since declaration in Form 15H cannot be made
for tax deduction under section 194DA.
(d) The declaration made by Mr. Vyas is wrong and the insurance company has to deduct tax of ₹ 1,000 under
section 194DA.

MCQ’s Answers
1. (b) 2. (c) 3. (d) 4. (d) 5. (d) 6. (a) 7. (b) 8. (b) 9. (d) 10. (c)
11. (a) 12. (c) 13. (c) 14. (d) 15. (b) 16. (d) 17. (b) 18. (a) 19. (d) 20. (a)
21. (a) 22. (a) 23. (a) 24. (c) 25. (d) 26. (b) 27. (b) 28. (d) 29. (a) 30. (b)
31. (c) 32. (a) 33. (d) 34. (c) 35. (c) 36. (b) 37. (a) 38. (d) 39. (a) 40. (b)
41. (b) 42. (c) 43. (d) 44. (b) 45. (b) 46. (d) 47. (c) 48. (b) 49. (d) 50. (c)
51. (b) 52. (d) 53. (b)