Skip to content

CA Intermediate · Taxation · Tax Deduction or Collection at Source and Advance Tax

Arvind, a salaried individual who is not subject to tax audit, pays monthly rent of Rs 60,000 to a resident landlord for a flat taken from 1 April 2026. He vacates the flat on 30 November 2026 and pays rent for all 8 months. Tax is deductible at 2% on rent paid by such an individual when the monthly rent exceeds Rs 50,000, and it is deducted once, in the last month of tenancy. Assuming the landlord's PAN is furnished, how much tax must Arvind deduct?

Arvind must deduct Rs 9,600. The rent paid for the 8 months of tenancy is Rs 4,80,000, and tax at 2% applies to it, deducted once in the last month of tenancy. A full-year calculation or a higher rate would be incorrect.

  1. ARs 14,400
  2. BRs 9,600Correct
  3. CRs 24,000
  4. DRs 48,000

Explanation

Rent for the period of tenancy is 8 x Rs 60,000 = Rs 4,80,000. Tax at 2% is Rs 9,600, deducted in the last month of tenancy, i.e. November 2026. Rs 14,400 assumes a full year of 12 months, Rs 24,000 uses an old 5% rate, and Rs 48,000 uses 10%.

Did you get it right without looking?

One question tells you little. A timed set on Tax Deduction or Collection at Source and Advance Tax shows your real accuracy, how long you take and where you lose marks.

Practise Tax Deduction or Collection at Source and Advance TaxFree diagnostic mock

More Tax Deduction or Collection at Source and Advance Tax questions