Examine TDS implications in case of following transactions, briefly explaining provisions involved; state the rate and amount to be deducted,…

CA Intermediate · Taxation · MTP · January 2026
Examine TDS implications in case of following transactions, briefly explaining provisions involved; state the rate and amount to be deducted, assuming that the deductees are residents and having a PAN which they have duly furnished to the respective deductors. (i) Mira & Co., an LLP withdrew cash amounts of 40 lakhs on 1st May 2024,35 lakhs on 7th September 2024, and 55 lakhs on 28th February 2025 from its bank account. Mira & Co regularly files its return of income before the due date. (ii) Mr. Anil, aged 75 years, holds 8% Savings (Taxable) Bonds, 2003 with a face value of 2,50,000 and 7.75% Savings (Taxable) Bonds, 2018 amounting to 3,50,000. He received interest income on these bonds on 31st March 2025 for P.Y. 2024-25.

Suggested Answer and Working Notes:

(i) Mira & Co has withdrawn aggregate cash of 1.30 crores during the previous year 2024-25. Since aggregate amount of cash withdrawals exceed 1crore, bank is required deducted tax at source @2% on the amount exceeding 1crore i.e.,30 lakhs. TDS = 2% of 30lakhs = 60,000 (ii) Tax @10% under section 193 is to be deducted on interest on 8% Savings (Taxable) Bonds, 2003 and 7.75% Savings (Taxable) Bonds, 2018, since the interest payable on the bonds held by Mr. Anil exceeds - 10,000. Interest on 8% Savings (Taxable) Bonds, 2003 = 2,50,000 x 8% = 20,000 Interest on 7.75% Savings (Taxable) Bonds, 2018 = 3,50,000 x 7.75% = 27,125 Tax to be deducted at source = 47,125 x 10% = 4,713.

Topics: Paper 3A: Income Tax Laws, Paper 3B: Goods and Services Tax

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