TDS, TCS, ADVANCE TAX, ROI TEST PAPER

MARKS - 30 TIME – 1 HR 15 MIN

1. Mr. Puneet submits his ROI on 12.09.2023 for A.Y.2023-24 consisting of Income under head
Salary, HP and Bank Interest. On 21.10.2023 he realized that he had not claimed deduction u/s
80TTA in respect of his interest income on savings bank a/c. He wants to revise the return of his
income. Can he do so? Discuss. Would your answer be different if he discovered this omission on
21.01.2023? 4 MKS

Solution:
Since, Mr. Puneet, has income only under the head Income from Salaries, Income from House
Property & Income from Other Sources, he does not fall under the category of a person whose
accounts are required to be audited under the Income Tax Act, 1961 or any other law for the
time being in force.
Therefore, the due date of filing of return of Income for A.Y. 2023-24 u/s 139(1), in this case, is
31st July 2023.
Since, Mr. Puneet had submitted the return on 12.09.2023, the said return is a belated return
u/s 139(4).

As per sec 139(5), a return furnished u/s 139(1) or a belated return furnished u/s 139(4) can be
revised. Thus, a belated return furnished by Mr. Puneet can also revised.

Therefore Mr. Puneet can revise a return of income filed by him u/s 139(4) in October 2023, to
claim deduction u/s 80TTA, since the time limit to file a revised return for A.Y. 2023-24 is 3
months prior to the end of the R.A.Y., which is 31.12.2023.

However, he cannot revise the return if he discovered this omission on 21.01.2024, since it is
beyond 31.12.2023, being due date to file revised return for the A.Y. 2023-24.

2. X having only income from HP Rs.9,50,000/- filed his ROI for A.Y.2023-24 by 30.11.2023. He
claims that he shall not be liable to pay any fees u/s 234F. Is he legally correct? What will be
your answer if he earns Rs.4,50,000/- instead of Rs.9,50,000/-? 2 MKS

Solution:
Since X has only source of income being House Property fetching income of Rs.950000, its due
date of filing Return of Income shall be 31st July 2023.
X however filed its return after 31st July. Therefore, it shall be liable to pay a fee of Rs.5000/-
u/s 243F for such delayed filing of Return of Income.
However, if X earns Rs.450000 (being less than Rs.500000) instead Rs.950000 then the reduced
fees of Rs.1000 u/s 234F shall apply.

3. R & Co. a partnership firm is having car dealership showroom. They have purchased cars for
Rs.2 crores from XYZ Ltd., a car manufacturer, the cost of each car being more than Rs. 12
lakhs. They sell these cars to individual buyers at price yielding 10% margin on cost. State
whether there will be any obligation to collect tax at source in above situations. 4 MKS

Solution:
Purchase of cars by R & Co. a partnership firm having a car dealership showroom for Rs.2 crores
from XYZ Ltd., a car manufacturer, the cost of each car being more than Rs.12 lakhs shall not be
subject to Tax collection at source u/s 206C(1F) since such provisions do not apply to sale of car
by manufacturers to dealers/distributors.
However, further sale of these cars by R & Co. to individual buyers at price yielding 10% margin
on cost being a value exceeding Rs.10 Lakhs (since actual cost of each car exceeds Rs.12 Lakhs)
shall be subject to TCS u/s 206C(1F) at 1% on sale consideration as applicable for each car.

4. Compute installments of advance tax if any payable by Mr. Y from data below: 6 MKS
a. Income from HP (computed) Rs.480000
b. Interest from Savings Bank deposit Rs.7000
c. Interest on FD with PNB (Net) Rs.90000
d. Interest on Government securities Rs.24000
e. Winnings from Card Games (net) Rs.210000
f. Business Income Rs.200000
g. Agricultural Income Rs.500000
h. Investment in PPF Rs.100000
i. Mediclaim paid for self Rs.15000

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 TDS, TCS, ADVANCE TAX, ROI TEST PAPER
MARKS - 30 TIME – 1 HR 15 MIN
Solution:
Computation of Installments of advance tax payable

Income from HP (computed) Rs.480000

Business Income Rs.200000
Interest from Savings Bank deposit Rs.7000
Interest on FD with PNB (Gross)(90000x100/90) Rs.100000
Interest on Government securities Rs.24000
Winnings from Card Games (Gross)(210000x100/70) Rs.300000

Gross Total Income Rs.1111000

Less: Deductions u/s 80C to 80U
u/s 80C: PPF (Rs.100000)
u/s 80D: Mediclaim (Rs.15000)
u/s 80TTA: Interest from Savings Bank (Rs.7000)
Net Income Rs.989000
Agricultural Income Rs.500000

Tax Liability
Tax on winnings Rs. 300000 @ 30% Rs.90000
Tax on remaining Rs.1189000 (Rs.689000+500000 = 1189000) Rs.169200
Less: Tax on Rs.750000 (Rs.250000+500000 = 750000) (Rs.62500)
Balance Payable Rs.196700
Add: Health & Education Cess @ 4% Rs. 7868
Total Tax Payable Rs.204568
Less: TDS (10000+90000) (Rs.100000)
Advance Tax Payable Rs.104568
i.e. Rs. u/s 288B Rs.104570

Installment (% of total payable) Due date Amount

1. 15% on / before 15th June Rs.15685
2. 30% on / before 15th September Rs.31371
3. 30% on / before 15th December Rs.31371
4. 25% on / before 15th March Rs.26143

Note: Above advance tax installments are calculated ignoring the provisions of sec 115BAC

5. State applicability of TDS & amount of tax, if any, to be deducted in below cases. 10 MKS

a. Mr. K received Rs.2,50,000/- as rent from Trip Ltd. for hire of machinery
Solution:
Rent received by Mr. K Rs.2,50,000/- from Trip Ltd. for hire of machinery would be liable for
TDS u/s 194I @ 2% amounting to Rs.5000 since the rent exceeds Rs.240000.

b. Payment of Rs.59,000/- made by Indian newspaper agency on 21.09.2022 to Chris Gayle, a

West Indies cricket player, NR for contribution of articles in relation to sport of cricket.
Solution:
Payment of Rs.59,000/- made by Indian newspaper agency on 21.09.2022 to Chris Gayle a
West Indies cricket player, NR in India for contribution of articles in relation to sport of
cricket shall be liable for TDS u/s 194E @ 20.8% amounting to Rs.12272/-

c. Rent paid by X Rs.60,000/- p.m. for flat in which he resides w.e.f. 01.10.2022 to Mr. Y. (X is
engaged in business having turnover never exceeding Rs.20 lakhs since its inception)
Solution:
Rent paid by X Rs.60,000/- p.m. for flat in which he resides w.e.f. 01.10.2022 to Mr. Y. (X is
engaged in business having turnover never exceeding Rs.20 lakhs since its inception). Since
X is not liable for tax audit in the preceding P.Y. and the rent per month exceeds Rs.50000/-
it shall be liable for TDS u/s 194-IB. In such a case tax shall be deducted in the month of
March being last month of the financial year @5% amounting to Rs.18000 (Rs.60000 x 6
months x 5%)

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 TDS, TCS, ADVANCE TAX, ROI TEST PAPER
MARKS - 30 TIME – 1 HR 15 MIN
d. X Ltd. paid technical fees Rs.50000/- to Y Ltd. who is engaged in the business of operating a
call centre on 01.01.2023.
Solution:
X Ltd. paid technical fees Rs.50000/- to Y Ltd. who is engaged in the business of operating a
call centre on 01.01.2022. Such fees shall be liable for TDS u/s 194J @2% amounting to
Rs.1000/- since the amount of fees exceeds Rs.30000/-.

e. X, a retailer in electronic goods received a cash gift of Rs.1,00,000/- for achieving winter
sales target given by his regional distributor ABC Ltd.as a condition of franchise contract.
Solution:
Cash gift of Rs.1,00,000 received by X , a retailer in electronic goods from his regional
distributor as a condition of franchise contract for achieving winter sales target shall be liable
for TDS u/s 194R @10% since the value of benefit in the course of business exceeds
Rs.20000.

6. Mr. Bharat, a cloth manufacturer, runs his proprietary business in the name of "M/s Bharat
Traders". He also exports clothes outside India to his associate enterprises as well as unrelated
parties. The turnover of P.Y. 2021-22 was Rs 400 lakhs from such business.

Mr. Bharat had taken a loan of Rs. 35 lakhs @9% from SBI on 01.11.2022 for a term of 10 years
for the education of his brother Mr. Ram. Mr. Ram is studying in a university in London. He
remitted the loan amount to Mr. Ram. For the previous year ended on 31.03.2023, he repaid
principal of Rs.7,50,000 and paid interest of Rs.1,31,250 towards the said loan. The entire
foreign remittances are settled through SBI, which is an authorized dealer.

Other information:

1) In April, 2022, he went on a tour to London for the purpose of learning new technology to
leverage his business. The Foreign Tour Package was arranged by Franklin Tours and Travelers,
New Delhi. The details of expenditure on this tour are as follows:
Particulars Rs.
Ticket Fare Rs.450000
Hotel Accommodation Rs.160000
Sight Seeing charges including entry tickets, cab fare etc. Rs.80000

2) On 15.4.2022, he sold scrap to Gentle Suiting’s lnc, a foreign buyer, who remitted payment of
Rs.80,000 for the same during the year through ABC Forex Bank, an authorized dealer.

3) On 17.8.2022, he received Rs.55,00,000 from M/s Shakti Traders, a LLP, for supplying clothes
as per its specifications. The raw material for the same was also supplied by the LLP. The invoice
for such supplies is raised in the following manner:
Value of Material – Rs.37,80,000
Stitching charges – Rs.17,20,000

From information given above, choose most appropriate answer to following questions – 4 MKS

6.1. Would Mr. Bharat be eligible for deduction u/s 80E in respect of payment of interest &
repayment of loan taken for higher education of Mr. Ram? Also, does any liability for TDS or TCS
arise on remittances to Mr. Ram under the provisions of the Income-tax Act, 1961?

(a) Yes, deduction u/s 80E is allowable in respect of interest payment of Rs.1,31,250. No
deduction is, however, allowable for principal repayment of loan. Mr. Bharat is required to deduct
tax at source u/s 195 on the amount remitted to Mr. Ram.

(b) No, Mr. Bharat is not eligible for any deduction u/s 80E. Further, no tax deduction at source
or tax collection at source liability arises on the amount remitted to Mr. Ram

(c) Yes, Mr. Bharat is eligible for deduction u/s 80E in respect of interest payment of Rs.
1,31,250. No deduction is, however, allowable for principal repayment of loan. Moreover, SBI is
required to collect tax at source on the amount remitted to Mr. Ram@5% (plus cess) on Rs.28
lakh, being the amount in excess of Rs.7 lakh

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 TDS, TCS, ADVANCE TAX, ROI TEST PAPER
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(d) No, Mr. Bharat is not eligible for any deduction u/s 80E. Moreover, SBI is required
to collect tax at source on the amount remitted to Mr. Ram @0.5% (plus cess) on
Rs.28 lakh, being the amount in excess of Rs.7 lakh.

6.2 Is tax is required to be collected at source on payment made by Mr. Bharat towards expense
on foreign tour package? If yes, at what rate & amount on which tax is to be collected at source?

(a) No tax to be collected at source, since the amount of expense does not exceed Rs. 7,00,000
(b) Yes, tax to be collected at source @5% only on travel expenditure of Rs.4,50,000
(c) Yes, tax to be collected at source @5% only on travel expenditure of Rs.4,50,000 plus hotel
accommodation charges of Rs.1,60,000
(d) Yes, tax to be collected at source @5% on Rs.6,90,000, being the total amount of
expenditure on overseas tour program package

6.3 What is amount of TCS on sale of scrap to Gentle Suiting’s lnc?

(a) Rs. 600 (b) Rs. 624
(c) Rs. 800 (d) Rs. 832

6.4 What is rate to deduct tax u/s 194C by M/s Shakti Traders LLP & on what amount?
(a) @ 1% on Rs. 55,00,000 (b) @ 1% on Rs.17,20,000
(c) @ 2% on Rs.55,00,000 (d) @2% on Rs.17,20,000

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