Explain the applicability of TDS/ TCS provisions in the following independent cases and also compute the amount of TDS/TCS, if any. (i) M/s MCD…
CA Final · Direct Tax Laws and International Taxation · RTP · November 2026
Explain the applicability of TDS/ TCS provisions in the following independent cases and also compute the amount of TDS/TCS, if any. (i) M/s MCD Co-operative Society maintains a current account with the State Bank of India. It made following transactions of cash withdrawals during the previous year 2025-26: On 27-06-2025 : ₹ 2,50,00,000 On 18-09-2025 : ₹ 1,30,00,000 M/s MCD Co-operative Society did not furnish its income tax returns for A.Y. 2022-23, Α.Υ. 2023-24, 2024-25 and 2025-26. (ii) Mr. Singh, a resident individual, made the following payments to various persons for the purpose of remitting funds outside India for various specified purposes: (a) On 10-09-2025, ₹ 17 lakhs to Mr. Gagan, an Indian resident and a travel agent for purchase of an overseas tour programme package to visit Paris for 20 days. It includes all arrangements of travelling, hotel stay, lodging, boarding etc. (b) On 12-01-2026, 12 lakhs to M/s AM & Associates, an authorized dealer under Liberalized Remittance Scheme (LRS) of RBI for his wife medical treatment in Germany. (c) On 26-02-2026, 8 lakhs to M/s AM & Associates, an authorized dealer under Liberalized Remittance Scheme (LRS) of RBI for purposes other than education and medical treatment. Mr. Singh has furnished his PAN to both M/s AM & Associates and Mr. Gagan.
Suggested Answer and Working Notes:
16. Tax deducted at source under section 194N: Since, M/s MCD Co-operative society did not furnish income tax returns, the bank needs to deduct tax at source under section 194N as follows: Date Amount withdrawn Accumulated amount of withdrawn Rate of TDS Amount of TDS (₹) 27.06.2025 2,50,00,000 2,50,00,000 2% 4,60,000 (2,30,00,000*2%) 18.09.2025 1,30,00,000 3,80,00,000 2% & 5% 5,00,000 (50 lakhs *2%) (80 lakhs * 5%) TCS under section 206C(1G): When an authorized dealer, who receives an amount for remittance from a buyer, being a person remitting such amount under the Liberalized Remittance Scheme of the Reserve Bank of India, shall collect tax at source on the amount in excess of ₹ 10 lakhs in a financial year @ 5% if such remittance is for education or medical treatment or @20% if remittance for purposes other than education and medical treatment. Accordingly, the following is the amount of tax collection at source: Date Amount of remittance Amount of TCS (₹) Tax collected at source by 10.09.2025 17,00,000 1,90,000 = (@ 5% on ₹ 10 lakhs)+(@20% on ₹ 7 lakhs) Mr. Gagan 12.01.2026 12,00,000 10,000 = (5% of ₹ 2 lakhs) M/s AM & Associates 26.02.2026 8,00,000 1,60,000 = (20% of ₹ 8 lakhs) M/s AM & Associates
Topics: Deduction, Collection and Recovery of Tax
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