Examine the applicability of Tax Deduction at Sources (TDS) or Tax Collection at Source (TCS) as per the Income Act, 1961 for the assessment year…

CA Intermediate · Taxation · PYQS · May 2024
Examine the applicability of Tax Deduction at Sources (TDS) or Tax Collection at Source (TCS) as per the Income Act, 1961 for the assessment year 2024-25 in the following independent situations. (i) ABC Limited paid rent of 75,000+18% GST per month to Mr. Ram for the office premises from 01.04.2023 to 31.03.2024. Mr. Ram has furnished his PAN and also filed his return of income before due date regularly. (ii) XYZ Pvt. Ltd sells two cars to Mrs. Anju costing - 4,00,000 and - 12,00,000 respectively on 01.05.2023 and 25.12.2023. Mrs. Anju has furnished her PAN and filed her return of income regularly before the due date.

Suggested Answer and Working Notes:

(i) ABC Limited is required to deduct tax at source under section 194-I @10% on rent of 75,000 per month exclusive of GST component, since the aggregate rent of 9,00,000 during the financial year exceeds the threshold limit of 2,40,000. Tax has to be deducted at the time of payment or credit, whichever is earlier. (ii) XYZ Pvt. Ltd. is not required to collect tax at source on sale of car of 4,00,000 to Mrs. Anju since its value does not exceed 10lakhs. However, it is required to collect tax at source u/s 206C(1F) @1% on the total sale consideration of 12lakhs since the value of this car exceeds 10lakhs. Tax has to be collected at the time of receipt of 12lakhs.

Topics: Paper 3A: Income Tax Laws

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