CA SHIRISH VYAS / C.A.

FINAL / IMP DT QUESTIONS

TDS AND TCS

In respect of the following independent case scenarios you are
required to discuss the provisions related to TDS/TCS and amount
of tax deductible/collectible for the year ended 31st March 2024:
Question 1:
High and Tall Ltd., a real estate development company, entered
into a Joint Development Agreement with Mr. John, a resident
individual, whereby Mr. John would transfer a plot of land
measuring 10 acres for a part consideration of ₹6 crores to be paid
on the date of agreement, i.e., 1.6.2023. High and Tall Ltd. has
planned to develop a high-rise apartment complex on such land
by 31.3.2026. Upon completion of the project, High and Tall Ltd.
would transfer 6 flats in the apartment to Mr. John as final
settlement. FMV of the flats is estimated to be ₹1.20 cr. each as on
31.3.26.
Answer 1:
Mr. John, a resident, is entering into an agreement with High and
Tall Ltd., a real estate developer, to develop a high-rise apartment
complex on his land in consideration of ₹6 crore and 6 flats in the
apartment. This is a specified agreement under section 45(5A).
As per section 194-IC, High and Tall Ltd. is required to deduct tax
at source @ 10% on monetary consideration of ₹6 crores given
to Mr. John.
Tax is to be deducted at the time of credit of such sum or payment,
whichever is earlier.
Amount of TDS u/s 194-IC = ₹6 crore x 10% = ₹ 60 lakhs
Question 2:
State Government of Telangana grants a lease of coal mine to M/s
XYZ Co. Ltd. on 1.09.2023 and charged ₹10 crores for the lease.
M/s XYZ Co. Ltd. sold coal for ₹1 crore to M/s AB (P) Ltd. during the
previous year 2023-24. The turnover of M/s XYZ Co. and M/s AB
(P) Ltd. for the financial year 2022-23 amounted to ₹5 crores and
₹6 crores, respectively.

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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
Answer 2:
State Government is required to collect tax at source @2% u/s
206C(1C) on ₹10 crores, being charges for lease of coal mine.
TCS = 2% x ₹10 crores = ₹20,00,000
M/s XYZ Co. Ltd. is required to collect tax at source @1% u/s
206C(1) on sale of coal to M/s AB (P) Ltd.
TCS = 1% of ₹1 crore = ₹1,00,000.
Question 3:
M/s Aryan Ltd., a domestic company having a total turnover of ₹12
crores for the financial year 2022-23, purchased goods worth ₹85
lakhs (excluding purchase return) from M/s Varun & Co. during the
previous year 2023-24. M/s Varun & Co., a resident firm, has
furnished its PAN to Aryan Ltd. Details of payments for purchases
from M/s Varun (P) Ltd, are given below:
On 25.05.2023 - ₹30 lakhs;
On 28.06.2023 - ₹25 lakhs,
On 10.12.2023 - ₹20 lakhs (out of these purchases, goods worth
₹5 lakhs were returned on 20.12.2023 due to quality issue for
which money was refunded by M/s Varun & Co.); On 20.02.2024
₹10 lakhs.
Assume that the turnover of M/s Varun & Co. during the Financial
year 2022-23 was ₹ 8 crores and the above amounts were credited
to M/s Varun & Co.'s account in the books of M/s Aryan Ltd. on the
same date.
Answer 3:
M/s Varun & Co. (Seller) is not required to collect tax at source on
the sale of goods to M/s Aryan Ltd. since his turnover for the P.Y.
2022-23 does not exceed ₹10 crores.
Since turnover of M/s Aryan Ltd. (Buyer) for the P.Y. 2022-23
exceeds ₹10 cr. and the aggregate value of purchases from M/s
Varun & Co, exceeds ₹50 lakhs, M/s Aryan Ltd. is required to
deduct tax at source u/s 194Q @0.1% on sum exceeding ₹50 L.
In case of purchase return, if the money is refunded by the seller,
then, this tax deducted on purchase return would be adjusted
against the next purchase from the same seller.

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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
Applicability of TDS on purchases from M/s Varun & Co.
25.05.23 30 lakhs No TDS (< ₹50 Lakhs)
28.06.23 25 lakhs TDS = ₹500 (5 lakhs x 0.1%)
10.12.23 20 lakhs TDS = ₹2,000 (20 lakhs x 0.1%)
20.02.24 10 lakhs TDS = ₹500 {(10L–5L Returns) x 0.1%}
Question 4:
XYZ Ltd. was incorporated on 1.4.2023 for trading goods. Its
turnover for the P.Y. 2023-24 is ₹12 crores. During the P.Y.2023-24,
it purchased goods from M/s. White Ride, the details of which are
as follows:
On 1.8.2023 for ₹25,00,000;
On 15.9.2023 for ₹30,00,000 and
On 15.12.2023 for ₹15,00,000.
The above dates represent the date of credit to the account of M/s.
White Ride. Payment is made after one month (i.e., on the same
date in the immediately following month). M/s White Ride's
turnover for the FY. 2022-23 and F.Y. 2023-24 was ₹11 crores and
₹9.7 crores, respectively.
Answer 4:
Sec. 194Q is attracted if buyer’s turnover in the preceding year
should be > ₹10 crore. Since this condition would not be satisfied
in the year of incorporation, the provisions of sec. 194Q shall not
apply in the year of incorporation. Since XYZ Ltd. is incorporated in
the P.Y.23-24, sec. 194Q shall not apply in P.Y. 23-24.
However, since White Ride's turnover for the F.Y. 2022-23 exceeds
₹ 10 crores and its receipts from XYZ Ltd. exceed ₹50 lakhs, TCS
provisions under section 206C(1H) would be attracted in its hands.
TCS would be attracted at the time of receipt of consideration
(i.e., in respect of receipts in excess of ₹50 lakhs).
No tax is to be collected u/s 206C(1H) on 1.9.2023, since the
aggregate receipts till that date i.e., ₹25 lakhs, has not exceeded
the threshold of ₹50 lakhs.
Tax of ₹500 (i.e., 0.1% of ₹5 lakhs) has to be collected u/s 206C(1H)
by M/s White Ride on 15.10.2023.
Tax of ₹1,500 (i.e., 0.1% of ₹15 lakhs) has to be collected u/s
206C(1H) by M/s. White Ride on 15.1.2024.
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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
Question 5:
Mr. Rajat aged 79 years, a retired resident individual, maintains a
savings bank account and a fixed deposit account with ABC Bank,
Delhi. He provides following details to ABC Bank in respect of
financial year 2023-24:
Interest on Savings A/c ₹75,100
Pension (received in savings a/c) ₹55,000 p.m.
Interest from Fixed deposit A/c ₹1,20,000
He does not have any other income during the year 23-24. Assume
that Mr. Rajat has shifted out of default tax regime.
Answer 5:
Mr. Rajat is a specified person as per section 194P as he is of age of
79 years, having pension income and only interest income with
ABC Bank [where he receives his pension].
As per section 194P, ABC Bank is required to deduct tax at source
at rates in force on total income computed after deduction under
Chapter VI-A and rebate u/s 87A
Particulars ₹ ₹
Pension (₹55,000 x 12) 6,60,000
Less: Standard deduction 50,000 6,10,000
Interest on Bank FD 1,20,000
Interest on Bank Savings account 75,100 1,95,100
Gross Total Income 8,05,100
Less: Deduction under VIA:
 Sec. 80TTB:
Interest on Bank FD & Savings a/c, - 50,000
(Max. ₹50,000)
Net Taxable Income 7,55,100
Tax on above 61,020
Upto 3 L 0% Nil
3 L to 5 L 5% 10,000
5 L to 7,55,100 20% 51,020
Add: HEC @4% + 2,441
Tax to be deducted by ABC Bank 63,460

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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
Question 6:
Raghav Motors Ltd., Ludhiana, is a dealer in cars of Ford and Maruti
Cars and also runs a service station. The sale of cars of Raghav
Motors Ltd. for F.Y.2022-23 is 9.80 crores. The sale of spare parts
and service station is 60 lakhs for F.Y.2022-23.
M/s. Om Ltd., dealing in textile manufacturing, bought following cars
from Raghav Motors Ltd. during F.Y. 2023-24 for business purposes:
Model of Car Date of Invoice Value of Car (₹)
Maruti 14.7.2023 37 lakhs
Maruti 12.8.2023 19 lakhs
Ford 18.10.2023 8 lakhs
Maruti 5.11.2023 12 lakhs
The payment against each invoice was made on the date of
invoice itself.
Answer 6:
As per section 206C(1F), Raghav Motors Ltd., a seller is required to
collect tax at source @1% of the sale consideration received from
M/s. Om Ltd., a buyer, on sale of motor vehicle of the value
exceeding ₹10 lakhs.
Accordingly, Raghav Motors Ltd. is required to collect tax at source
u/s 206C(1F) on the following dates
₹37,000 [1% on ₹37,00,000] on 14.7.2023
₹19,000 [1% on ₹19,00,000] on 12.8.2023
₹12,000 [1% on ₹12,00,000] on 5.11.2023
Total amount of TCS is ₹68,000.
In all three cases mentioned above, the payment was received on
the date of sale of Maruti cars, hence, the tax has to be collected
on the respective dates of sale mentioned above.
In respect of Ford car, the value of which is ₹8,00,000, tax is not
required to be collected under section 206C(1F), since its value
does not exceed ₹10,00,000.
Note: Sale consideration of ₹8 lakh in respect of Ford car on
18.10.2023 is the only receipt from Om Ltd. which is excluded from
the purview of TCS u/s 206C(1F), and this receipt does not exceed
the annual threshold of ₹50 lakhs. Hence, no tax is required to be
collected at source u/s 206C(1H).

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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
Question 7:
Mr. Z, a resident individual, starts a new business on 01-11-2023
for sale of unique T-shirts. He obtained a valid PAN in his name and
registers himself on ABC.com (a Singapore based website), an e-
commerce operator, for sale of his products in India.
Mr. Z sold goods worth ₹60 lakhs through ABC.com upto 31-03-
2024. E-commerce operator credited the following payments from
time to time payable to Mr. Z in its books of accounts.
31-12-2023 ₹20 lakhs
28-02-2024 ₹15 lakhs
Full & final payments have been released by ABC.com to Mr. Z on 31-
03-24 after deducting a commission of 10% on gross sale proceeds.
Mr. Z received ₹10,00,000 directly in his bank out of above ₹60
lakhs through PayTM Wallet directly connected by ABC.com to the
account of Mr. Z.
Answer 7:
As per section 194-O, ABC.com, an e-commerce operator is
required to deduct tax @1% on the gross amount of sale of goods
(T-shirts, in the present case] of Mr. Z, a resident individual, an e-
commerce participant, since such sale of goods is facilitated by
ABC.com through its digital or electronic facility or platform.
ABC.com is required to deduct tax at the time of credit of such sum
or payment, whichever is earlier. Any payment received directly by
Mr. Z for the sale of goods, facilitated by ABC.com, would be
deemed to be amount credited or paid by ABC.com to Mr. Z.
Accordingly,
ABC.com is required to deduct tax of:
- ₹20,000 (1% x ₹20,00,000) on 31.12.2023 and
- ₹15,000 (1% x ₹15,00,000) on 28.02.2024
being the dates on which such amounts were credited in books of
account of ABC.com.
ABC.com is also required to deduct ₹10,000 (1% of ₹10,00,000
being the amount directly received by Mr. Z).
On 31.3.2024, ABC.com is also required to deduct tax of ₹15,000
(1% of ₹15,00,000), being the amount of full and final payment
made on 31.3.2024.
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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
Question 8:
Deer Co Ltd engaged in the business of manufacture of furniture
items on contract basis. It sub- contracted the production of
cushion for the chairs to M/s Lion & Co, a sole proprietary concern.
The sub-contractor M/s. Lion & Co procured the raw materials for
production of cushions, performed further labour works and
supplied the same to Deer Co Ltd. It raised its bill on Deer Co Ltd,
showing the cost of raw materials ₹4,00,000 and labour charges
₹1,50,000, separately.

Answer 8:
TDS under section 194C is attracted on any sum payable to a
resident contractor/sub- contractor for carrying out any work
which includes job work. However, "Job work" means
manufacturing as per the requirement or specification of a
customer by using material purchased from such customer or
associate of such customer.
In this case, M/s Lion & Co. has to supply cushion for the chairs to
Deer Co Ltd., according to the specifications of the customer (Deer
Co Ltd.) by using materials purchased from a person other than
the customer, Deer Co Ltd. Thus, the sub-contract for production
of cushions is not a 'works contract’. Consequently, there is no
liability to deduct tax at source under section 194C in this case.

Question 9:
Maha Bank Ltd accepted fixed deposits of ₹20 crores in the name
of Registrar General of the High Court and issued a fixed deposit
receipt in compliance with a direction passed by court in relation
to certain proceedings.

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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
Answer 9:
The issue under consideration is whether the bank is required to
deduct tax at source on the amount of interest paid or payable on
fixed deposits in the name of Registrar General of High Court.
Under section 194A, the bank is obliged to deduct tax at source
in respect of any credit or payment of interest (exceeding ₹40,000)
on deposits made by the payee. The expression "payee” under
section 194A would mean the recipient of income. However, in
this case, the actual payee is not ascertainable because the interest
is credited in the name of the Registrar General of HC who is not
the recipient of the income. In the absence of a payee, the
machinery provisions for deduction of tax from interest credited
become ineffective. Hence, the bank is not required to deduct
tax at source.
Question 10:
M/s Mexil Ltd. is engaged in the business of manufacturing certain
article or thing for which the raw material is imported from Russia.
For the purpose of making payment to the supplier, the assessee
entered into a bank guarantee with BDFH Bank, an Indian Bank
against the payment of ₹1,10,000 as bank guarantee commission
for the Financial Year 2023-24.
Answer 10:
No tax is deductible at source on the payment of inter alia bank
guarantee commission made by a person to a bank.
As per section 197A(1F), no deduction of tax shall be made from
specified payments to notified bodies. Accordingly, the Central
Government has notified that no deduction of tax shall be made
from the specified payments to scheduled banks which include
depository charges underwriting service charges credit card or
debit card commission , bank guarantee commission etc.
Thus, M/s Mexil Ltd. is not required to deduct tax at source on bank
guarantee commission of ₹1,10,000 paid to BDFH Bank, an Indian
bank, in the F.Y.2023-24.

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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
Question 11:
StudyKart, an online education provider and a trust registered
under section 12AB of the Income-tax Act, pays ₹98,000 during
the Financial Year 2023-24, to Mr. Monty, a non-resident for
providing web based lectures.
Answer 11:
Any person responsible for paying any sum chargeable to tax to a
non - resident is liable to deduct tax at source at the rates in force.
Since Mr. Monty, a non-resident has provided web based lectures
from outside India, income arising therefrom is not chargeable to
tax in India as no income is deemed to accrue or arise in India.
Thus, no tax is deductible at source on such payment to him.
Alternatively, it may be possible to take a view that income arising
from web lectures may fall within the meaning of "Fees for
technical services". If this view is taken, such income would be
deemed to accrue or arise in India, since the services are utilised in
India, even though they are rendered from outside India.
Therefore, such income would be chargeable to tax in India in the
hands of Mr. Monty, a non-resident. Thus, StudyKart, a trust
registered u/s 12AB, is required to deduct tax at source under
section 195.
Question 12:
On 31st December, 2023, Mr. Nitin, a resident individual whose
gross turnover was ₹97 lakhs during the preceding previous year,
paid ₹65 lakhs to Mr. Basant, a resident individual, as contract
payment for repairing his office building.
Answer 12:
Since Mr. Nitin’s turnover does not exceed ₹1 crore in the
P.Y.2022-23, TDS provisions u/s 194C are not attracted in respect
of payment made in the P.Y, 2023-24 to Mr. Basant, a resident
individual, for repairing his office building. However, tax is required
to be deducted at source @5% u/s 194M, on the payment of
₹65,00,000, since such amount exceeds ₹50 lakhs. Therefore, tax
deducted at source would be ₹3,25,000, being 5% of ₹ 5,00,000.

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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
Question 13:
Fly Fly Ltd., an airlines company, paid ₹10 lakhs to Airports
Authority of India as landing and parking charges of its aircrafts.
Answer 13:
The landing and parking charges which are fixed by the Airports
Authority of India are not merely for the "use of the land". These
charges are also for services and facilities offered in connection
with the aircraft operation at the airport which include providing
of air traffic services, ground safety services, aeronautical
communication facilities, installation and maintenance of
navigational aids and meteorological services at the
airport. Airports are constructed as per the requirement and
specification of Airlines Company.
Therefore, tax of ₹20,000 (2% of ₹10 lakh) is deductible at source
under section 194C by the airline company, Fly Fly Ltd., on payment
of ₹10,00,000 made towards landing and parking charges to the
Airports Authority of India for the previous year 2023-24.
Question 14:
Mr. Soham purchased licensed copy of computer software from
the software vendor (resident of India) along with all right to use
it for ₹50,000 to be used for business purposes.
Answer 14:
As per Explanation 4 to section 9(1)(vi), consideration for transfer
of all or any right to use of computer software (including granting
of a licence) would fall within the meaning of "royalty".
Tax deduction at source @10% under section 194J would be
attracted where the amount of royalty exceeds ₹30,000.
However, an individual/HUF [whose turnover in preceding year
does not exceed ₹1 crore, in case of a business or ₹50 L, in case of a
profession] is not required to deduct tax at source under section
194J on the sum paid by way of royalty, even if it exceeds
₹30,000. Therefore, Mr. Soham, being an individual, is not required
to deduct tax at source on the amount of ₹50,000 paid towards
purchase of licensed copy of computer software from the software
vendor.
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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
Question 15:
X is a bookmaker and Mr. B is a punter.
On 22-09-2023, B has won ₹5,000 in a Horse Race 1.
On 12-01-2024, B has won ₹8,000 in a Horse Race 2 and suffered
a loss of ₹2,000 in Horse Race 3.
Answer 15:
As per sec. 194BB, any person who is responsible for paying any
income by way of winnings from horse race is liable to deduct tax
@30% at the time of such payment if the aggregate amount of
winnings paid during the financial year exceeds ₹10,000.
Tax would be deducted on winnings before set-off of losses.
Thereafter, the net amount, i.e., winnings after deduction of tax
and losses, would be paid to the individual.
Thus, in the present case, Mr. X is liable to deduct tax at the time
of payment of winnings in Horse Race – 2 when the aggregate
amount exceeds ₹10,000.
Amt. of TDS on 12/01/2024 = 30% of ₹13,000 = ₹3,900.
Question 16:
Rent of ₹60,000 per month deposited by Mr. Shrikanth, software
employee on 1st of every month in advance, in the account of Mr.
Ashok, who does not provide his PAN. The house was taken on
rent with effect from 01.07.2023 and he vacated the house on
29.02.2024.
Answer 16:
Since Mr. Shrikanth pays rent exceeding ₹50,000 p.m. in the F.Y.
2023-24, he is liable to deduct tax at source @5% u/s 194-IB.
However, since Mr. Ashok does not provide his PAN to Mr.
Shrikanth, tax would be deductible @20%, instead of 5%.
Tax has to be deducted from rent payable for the last month of the
P.Y.2023-24. However, since he vacated the premises in
February, 2024, tax has to be deducted from rent paid on
1.2.2024 for the month of February, 2024.
Tax of 96,000 [₹ 60,000 x 20% x 8] has to be deducted but the
same has to be restricted to ₹ 60,000, being rent for Feb., 2024.

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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
Question 17:
AKL Ltd., a third-party administrator on behalf of an Insurance
Company has settled medical bills of ₹5,00,000 on 31.10.2023
submitted by Kay Hospitals Ltd. from a patient under a cashless
scheme.
Answer 17:
As per section 194J, every person, who is responsible for paying
to resident any sum by way of fees for professional services
exceeding ₹30,000 shall deduct tax at source at the rate of 10%
at the time of credit to the account of payee or at the time of
payment, whichever is earlier.
"Professional services" include services rendered by a person in the
course of carrying on medical profession.
The CBDT has, vide Circular No.8/2009 dated 24.11.2009,
clarified that since the services rendered by hospitals to various
patients are primarily medical services, TPAs (Third Party
Administrator's), who are making payment on behalf of insurance
companies to hospitals for settlement of medical/insurance claims
etc. under various schemes including cashless schemes are liable
to deduct tax at source on all such payments to hospitals etc.
Thus, AKL Ltd., a TPA is liable to deduct tax of ₹50,000, being
10% of ₹5,00,000 from the payment made to Kay Hospitals Ltd.
Question 18:
₹19,50,000 credited to the account of Digitech Studios (a P. Firm)
on 31.03.2024 by Star-TV, Television channel, towards part
consideration for shooting of Tele Episode for 10 weeks as per the
storyline, contents and specifications of Star TV channel.
Answer 18:
Shooting of Tele Episode for Star-TV as per the storyline, contents
and specifications of Star-TV falls within the scope of "work"
under section 194C. Since the amount credited exceeds the
specified limit of 30,000, TDS@2% under section 194C is attracted
on amount credited to the account of Digitech Studios, a
partnership firm. Amt of TDS = ₹39,000 [2% of ₹19,50,000].

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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
Question 19:
X Ltd. is a producer of natural gas. During the year, it sold natural
gas worth ₹20,50,000 to M/s Hawa Co., a partnership firm. It also
incurred ₹2,00,000 as freight for transportation of gas. It raised the
invoice and clearly bifurcated the value of gas as well as the
transportation charges.
Answer 19:
TDS u/s 194C is attracted on “works contract”. Sale of natural
gas by X Ltd. [including transportation] to the purchaser, M/s.
Hawa Co. is a 'contract for sale of goods' [not a works contract].
The manner of raising the sale bill (whether the transportation
charges are included in the cost of gas or shown separately) does
not alter the basic nature of such contract.
Therefore, in such circumstances, TDS provisions under section
194C are not applicable.
Question 20:
M/s. Sunivesh Investors is engaged in the business of stock
broking, depositories, mobilisation of deposits and marketing of
public issues. It is a registered member of Bombay Stock Exchange.
Every year it makes payment amounting to ₹10 lakhs, to the Stock
Exchange by way of transaction charges in respect of fully
automated online trading facility. This service is available to all
members of the stock exchange in respect of every transaction that
is entered into.
Answer 20:
Under section 194J, TDS is attracted in respect of fees for
technical services. Technical services are specialised services
made available as per the requirement and specification of
customer to cater the special needs of the customer.
However, the service provided by the BSE does not satisfy the test
of specialized service because the fully automated online trading
facility is a common facility available to all members of the stock
exchange. Therefore, the transaction charges paid to BSE by its
members are not for technical services. Such payments would not
attract TDS u/s 194J.

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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
Question 21:
An Indian company pays gross salary including allowances and
monetary perquisites amounting to ₹7,30,000 to its General
Manager. Besides, the company provides non-monetary
perquisites to him whose value is estimated at ₹1,20,000. General
Manager is opting out of the provisions of Section 115BAC.
Answer 21:
₹
Gross salary [incl allowances & monetary perquisites] 7,30,000
Non – Monetary perquisites 1,20,000
8,50,000
Less: Standard deduction - 50,000
Taxable Salary 8,00,000
Tax liability 75,400
The company is liable to deduct ₹75,400 at source from the salary
of the General Manager. If the company bears the tax on non-
monetary perquisites i.e. *9.425% of ₹1,20,000 i.e. ₹11,310 then
the amount of TDS would be ₹ 64,090 [75,400 – 11,310]
* Average rate of tax (₹75,400/ ₹8,00,000 x 100) = 9.425%
Question 22:
A notified infrastructure debt fund eligible for exemption under
section 10(47) of the Income- tax Act, 1961 pays interest of ₹5
lakhs to a company incorporated in USA. The US Company
incurred expenditure of ₹12,000 for earning such interest.
The fund also pays interest of ₹ 3 lakhs to Mr. X, who is a resident
of a notified jurisdictional area.
Answer 22:
As per section 194LB, interest paid by infrastructure debt fund,
to a foreign company/NR is subject to TDS @5% [plus applicable
SC and HEC].
In the first case, since the payment is to a foreign company, TDS
@5.20% of ₹ 5 lakhs would be deductible u/s 194LB.

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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
However, in case the notified infrastructure debt fund pays interest
to a person who is a resident of a notified jurisdictional area,
section 94A will apply. Accordingly, tax would be deductible
@30% [plus applicable SC and HEC].
Therefore, the tax deductible in respect of payment of ₹3 lakh to
Mr. X, who is a resident of a notified jurisdictional area, would be
₹93,600, being 31.2% of ₹3,00,000.
Question 23:
ABC Ltd. took on sub-lease a building from Jeet, an individual, with
effect from 1.9.2023 on a rent of ₹25,000 per month. It also took
on hire machinery from Jeet with effect from 1.10.2023 on hire
charges of 15,000 per month. ABC Ltd. entered into two separate
agreements with Jeet for sub-lease of building and hiring of
machinery.
Answer 23:
As per section 194-I, the rate of TDS is 2% for rent of plant,
machinery and equipment and 10% for land, building and
furniture. TDS under this section is applicable if rent exceeds
₹2,40,000 p.a.
The limit of ₹2,40,000 for tax deduction at source will apply to the
aggregate rent of all the assets. Even if two separate agreements
are entered into, one for sub-lease of building and another for
hiring of machinery, rent and hire charges under the two
agreements have to be aggregated for the purpose of application
of the threshold limit of ₹2,40,000. In this case, since the payment
for rent and hire charges aggregates to ₹2,65,000 (₹ 1,75,000 +
₹90,000), tax is deductible at source under section 194-I, tax is
deductible @10% on ₹1,75,000 (rent of building) and @2% on ₹
₹90,000 (hire charges of machinery).
Question 24:
Mr. X, a resident, is due to receive ₹4.50 lakhs on 31.3.2024,
towards maturity proceeds of LIC policy taken on 1.4.2021, for
which the sum assured is ₹4 lakhs and the annual premium is
₹1,25,000.

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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
Answer 24:
Since the annual premium exceeds 10% of sum assured in
respect of a policy taken after 31.3.2012, the maturity proceeds of
₹4.50 lakhs due on 31.3.2024 are not exempt under section
10(10D) in the hands of Mr. X. Therefore, tax is required to be
deducted @5% under section 194DA on the amount of income
comprised therein i.e., on ₹ 75,000 (₹4,50,000 – ₹3,75,000, being
the entire amount of insurance premium paid).
Question 25:
Miss Tara, resident individual aged 32 years, is a social media
influencer. She makes videos reviewing various electronic items
and posts those videos on social media. On 1st December 2023,
XYZ Ltd., an Indian company manufacturer of electric cars gave her
a brand new car having fair market value of ` 6 lakhs to promote
on her social media page. She used that car for 7 months for her
personal purposes, recorded a video reviewing the car and then
returned the car to the company.
Answer 25:
Under section 194R, the person who is responsible for providing
to a resident, any benefit or perquisite whether convertible into
money or not, arising from business or the exercise of a profession
by such resident, has to first ensure deduction of tax@10% of the
value of such benefit or perquisite, if the same exceeds ₹ 20,000.
However, in case of benefit or perquisite being a product like car,
mobile etc. if the product is returned to the manufacturing
company after using for the purpose of rendering service, then it
will not be treated as a benefit/perquisite for the purposes of
section 194R.
Accordingly, in the present case, since Miss Tara has returned the
car to XYZ Ltd., TDS provisions under section 194R would not
apply.

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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
Question 26:
The following details pertain to Mr. Sahil and his best friend
Mr. Akhil:
 Mr. Sahil:
₹
Amount remitted to his elder son Aarav, who is
pursuing two-year MBA Program from Columbia
University, USA
- Out of own savings through HDFC Bank, an
authorized dealer under LRS of the RBI 3,50,000
• towards tuition fees on 5.7.2023
• to meet day to day exps. for study purposes
- 10.5.2023 1,20,000
- 29.9.2023 90,000
- 01.1.2024 1,35,000
- Out of loan through Axis Bank, an authorized
dealer under LRS towards tuition fees on
- 11.10.2023 3,50,000
- 10.01.2024 3,50,000
- Own savings (to meet day to day exps.) on
- 1.7.2023 1,50,000
To complete the formalities of admission, Mr. Sahil 5,20,000
visited the USA from 10.4.2023 to 13.4.2023 for
which he purchased a tour package from M/s Gate 2
Travel, a foreign tour operator and remits money
under LRS on 5.4.2023. International travel tickets
and hotel accommodation are included in the said
package.
Mr. Sahil has furnished undertakings containing the details of
earlier remittances to HDFC bank and Axis bank. He has also
furnished his PAN to the authorized dealers and to the seller of
overseas tour program package.

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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
 Mr. Akhil:
Mr. Akhil, an Indian citizen got a job offer from M/s Wellbeing Inc.,
a Dubai based company of AED 10,500 per month. He left for
Dubai on 29.3.2023 and joined M/s Wellbeing Inc. on 1st April
2023. He returned to India on 15.12.2023 on leaves for 15 days.
On 23.12.2023, he went on 7 days tour to Bali with his wife and
son. Thereafter, he directly went to Dubai with his wife and son.
On 16.12.2023, he purchased a tour package for Bali from Make
Your Trip, an Indian tour operator for which he paid ₹ 7,50,000
towards flight tickets and hotel accommodation. During F.Y. 2023-
24, he has business income of ₹ 4,20,000 from a retail shop in India
and interest on fixed deposit and savings account with Canara
Bank of ₹ 1,20,000 and ₹ 8,000, respectively. He is not liable to pay
any tax in Dubai. Assume 1 AED = ₹ 23.
From the information given above, choose the most appropriate
answer to Q. 1 to Q. 6:
1) Is HDFC Bank required to collect tax at source on the
amount remitted by Mr. Sahil? If so, what is the amount of
tax to be collected?
(a) Yes; TCS of ₹ 2,000 on 29.9.2023 and TCS of ₹ 27,000
on 1.1.2024
(b) Yes; TCS of ₹ 500 on 29.9.2023 and TCS of ₹ 27,000
on 1.1.2024
(c) Yes; TCS of ₹ 500 on 29.9.2023 and TCS of ₹ 6,750 on
1.1.2024
(d) No tax is required to be collected at source since
receipts do not exceed ₹ 7 lakh
2) Is Axis Bank required to collect tax at source on the amount
remitted by Mr. Sahil? If so, what is the amount of tax to be
collected?
(a) Yes; TCS of ₹ 7,500 on 1.7.2023; TCS of ₹ 1,750 on
11.10.2023 and TCS of ₹ 1,750 on 10.1.2024
(b) Yes; TCS of ₹ 17,500 on 11.10.2023 and TCS of ₹
17,500 on 10.1.2024
(c) Yes; TCS of ₹ 1,750 on 11.10.2023 and TCS of ₹ 1,750
on 10.1.2024
(d) No tax is required to be collected at source, on the
remittances for education and for other purposes
since each receipt does not exceed ₹ 7 lakh
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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
3) Is tax required to be collected at source on the amount
remitted for tour package to USA by Mr. Sahil? If so, what is
the amount of tax to be collected?
(a) Yes; TCS of ₹ 26,000
(b) Yes; TCS of ₹ 1,04,000
(c) No tax is required to be collected at source, since tour
package is purchased from a foreign tour operator
(d) No tax is required to be collected at source, since
receipt does not exceed ₹ 7 lakh
4) Does Make Your Trip require to collect tax at source on the
amount received for tour package to Bali from Mr. Akhil? If
so, what is the amount of tax to be collected?
(a) Yes; ₹ 2,500 is required to be collected at source
(b) Yes; ₹ 37,500 is required to be collected at source
(c) Yes; ₹ 45,000 is required to be collected at source
(d) No tax is required to be collected at source
5) What is the total income of Mr. Akhil for the A.Y. 24-25?
Assume he has shifted out of the default tax regime u/s
115BAC.
(a) ₹ 33,88,000
(b) ₹ 5,48,000
(c) ₹ 33,96,000
(d) ₹ 5,40,000
6) What would be the amount of the tax liability (computed in
the most beneficial manner) of Mr. Akhil for the A.Y.24-25?
(a) ₹ 7,47,550
(b) ₹ 12,900
(c) Nil
(d) ₹ 12,480

Answer 26:
1 – (c) 2 – (c) 3 – (a)
4 – (d) 5 – (d) 6 – (b)

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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
Note for MCQ – 1 and 2:
 Date wise remittance
Date Amount Dealer Amt of TCS
10/5/23 1,20,000 HDFC Nil
1/7/23 1,50,000 Axis Nil
5/7/23 3,50,000 HDFC Nil
29/9/23 90,000 HDFC 500 (7,10,000 – 7,00,000) x 5%
11/10/23 3,50,000 Axis 1,750 (3,50,000 x 0.5%)
1/1/24 1,35,000 HDFC 6750 (1,35,000 x 5%)
10/1/24 3,50,000 Axis 1,750 (3,50,000 x 0.5%)
Note for MCQ – 3:
Since the overseas tour package is purchased before 1/10/2023,
TCS is collected @5% [whether the tour operator is of India or
Foreign – is not relevant].
Note for MCQ – 4:
Section 206C(1G) of the Act is not applicable to a buyer who is a
non-resident and who does not have a permanent establishment
in India.
Note for MCQ – 5 and 6:
COMPUTATION OF TAX
Old Regime 115BAC
Income from salaries Nil Nil
Income from business 4,20,000 4,20,000
IFOS:
FD Interest 1,20,000 1,20,000
Savings Interest 8,000 8,000
Gross Total Income 5,48,000 5,48,000
Less: Dedn 8,000 Nil
Net Taxable Income 5,40,000 5,48,000
Tax on above 20,500 12,400
Less: Rebate Nil Nil
Add: SC Nil Nil
Add: HEC 820 496
Tax Payable 21,320 12,896
Rounded off 21,320 12,900
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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
Question 27:
ABC bank provides the following information relating to cash
withdrawals by its two customers during the P.Y.2023-24:
Date of cash Mr. Arjun XYZ Co-operative Society
withdrawal (Savings Account) (`) (Current Account) (`)
12.04.2023 20,00,000 -
9.05.2023 - 68,00,000
15.06.2023 25,00,000 -
19.07.2023 - 85,00,000
18.10.2023 35,00,000 -
5.11.2023 - 88,00,000
22.12.2023 25,00,000 -
03.01.2024 - 57,00,000
Co-op. society regularly files its return of income.
However, Mr. Arjun has not filed his return for the last 3 years.
Would cash withdrawals by Mr. Arjun and XYZ Co-operative
society during the P.Y. 2023-24 attract deduction of tax at source?
If yes, how much tax would be deductible by ABC bank?
(a) Yes; ` 1,85,000 and ` 3,96,000, respectively
(b) Yes; ` 1,85,000 and ` 5,56,000, respectively
(c) Yes; ` 10,000 and `3,96,000, respectively
(d) ` 1,85,000 in respect of cash withdrawals by Mr. Arjun and
no tax is required to be deducted from cash withdrawals by
the co-operative society.
Answer 27:
In case of Arjun (non-filer), TDS u/s 194N is calculated as follows:
Cash Withdrawal TDS % TDS (₹)
Upto 20 L 20 L 0% Nil
Above 20 L up to 1 Cr. 80 L 2% 1,60,000
Above 1 Cr. 5L 5% 25,000
105 L 1,85,000
In case of XYZ Co-op Sty, TDS u/s 194N = 2% of cash withdrawal in
excess of 3 crores i.e. NIL (total withdrawal is 2.98 cr.).

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 CA SHIRISH VYAS / C.A. FINAL / IMP DT QUESTIONS
Question 28:
Mr. Sunil took an education loan of ` 8 lakhs on 1.7.2023 from State
Bank of India, Mumbai, for his son’s MBA from University of Oxford,
UK and remitted the said amount through the same bank, which
is an authorised dealer, under the Liberalised Remittance Scheme of
RBI (LRS).
He, further, remitted ` 2 lakhs on 15.10.2023 to his son for his
personal expenditure, out of his personal savings, through Bank of
India, Mumbai which is also an authorised dealer, under LRS.
Mr. Sunil also remitted ` 6 lakhs on 28.3.2024, out of his personal
savings, under LRS through Union Bank of India, Mumbai, for his
sister’s medical treatment in London.
Mr. Sunil has furnished undertaking containing the details of
earlier remittance to Bank of India and Union Bank of India.
What is the amount of TCS from Mr. Sunil ?
(a) TCS @0.5% of ` 1 lakh in respect of remittance for son’s
education; @5% of ` 2 lakhs in respect of remittance for son’s
personal expenditure and 5% of ` 6 lakhs in respect of
remittance for sister’s medical treatment.
(b) TCS @0.5% of ` 1 lakh in respect of remittance for son’s
education; @20% of ` 2 lakhs in respect of remittance for
son’s personal expenditure and 5% of ` 6 lakhs in respect of
remittance for sister’s medical treatment.
(c) TCS @0.5% of ` 1 lakh in respect of remittance for son’s
education; no TCS in respect of remittance for son’s personal
expenditure and sister’s medical treatment since each
transaction is of less than ` 7 lakhs.
(d) TCS @0.5% of ` 1 lakh in respect of remittance for son’s
education; @5% of ` 1 lakh in respect of remittance for sister’s
medical treatment.
Answer 28:
 Date wise remittance
Date Amount Dealer Amt of TCS
1/7/23 8,00,000 SBI 500 = (8 L – 7 L) x 0.5%
15/10/23 2,00,000 BOI 40,000 (2,00,000 x 20%)
23/3/24 6,00,000 UBI 30,000 (6,00,000 x 5%)
~~~~~~~~~~~~~

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