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CA Final · Direct Tax Laws & International Taxation · Miscellaneous Provisions

Mr. Iyer's accumulated balance in a recognised provident fund is includible in his total income because rule 8 of Part A of the Fourth Schedule does not apply. The trustees make two payments to him in the year: Rs 30,000 and Rs 35,000. What is the TDS position under section 192A?

Tax of Rs 6,500 must be deducted. The section 192A proviso looks at the aggregate of payments to the payee. Rs 65,000 is not below Rs 50,000, so 10% applies on the entire amount, not on the excess or on individual payments.

  1. ANo deduction on either payment, since each is below Rs 50,000
  2. BDeduction of 10% on Rs 35,000 only
  3. CDeduction of 10% on Rs 65,000, being Rs 6,500Correct
  4. DDeduction of 10% on Rs 15,000 being the excess over Rs 50,000

Explanation

The proviso to section 192A exempts a payment from deduction only if the payment, or the aggregate of payments to the payee, is below Rs 50,000. Here the aggregate is Rs 65,000, which is not below Rs 50,000, so tax at 10% applies on the whole amount, giving Rs 6,500. Treating each payment separately is the key mistake.

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