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

CA Intermediate · Taxation · MTP · May 2026
Examine the applicability of Tax Deduction at Sources (TDS) or Tax Collection at Source (TCS) as per the Income-tax Act, 1961 for the assessment year 2026-27 in the following independent situations. (i) XYZ Limited paid rent of 75,000+18% GST per month to Mr. Raja for the office premises from 01.04.2025 to 31.03.2026. Mr. Raja has furnished his PAN and also filed his return of income before due date regularly. (ii) ABC Pvt. Ltd sells two cars to Mrs. Shilpa costing - 4,00,000 and - 12,00,000 respectively on 01.05.2025 and 25.12.2025. Mrs. Shilpa has furnished her PAN and filed her return of income regularly before the due date.

Suggested Answer and Working Notes:

(i) XYZ 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 rent exceeds - 50,000 per month. Tax has to be deducted at the time of payment or credit, whichever is earlier. (ii) ABC Pvt. Ltd. is not required to collect tax at source on sale of car of 4,00,000 to Mrs. Shilpa since its value does not exceed 10lakhs. However, it is required to collect tax at source u/s 206C(1F) @1% on the 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, Paper 3B: Goods and Services Tax

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