Skip to content

CS Executive · Tax Laws and Practice · Income under the Head Salary

The trustees of the Employees' Provident Funds Scheme, 1952 pay an accumulated balance of Rs. 80,000 to an employee in a recognised provident fund. The balance is includible in his total income because the exemption in paragraph 8 of Part A of Schedule XI does not apply. What tax must they deduct under section 392(7) of the Income-tax Act, 2025?

The trustees must deduct Rs. 8,000. Section 392(7) requires tax at 10% when the aggregate accumulated balance paid is Rs. 50,000 or more and is includible in total income, and 10% of Rs. 80,000 equals Rs. 8,000.

  1. ARs. 4,000, at 5%
  2. BRs. 8,000, at 10%Correct
  3. CRs. 16,000, at 20%
  4. DNil, since the payment is below Rs. 1,00,000

Explanation

Section 392(7) requires deduction at 10% where the aggregate payment is Rs. 50,000 or more and the balance is includible in income. Here 80,000 is above 50,000, so tax is 10% of 80,000 = Rs. 8,000. The Rs. 1,00,000 threshold in the last option is not in the section.

Did you get it right without looking?

One question tells you little. A timed set on Income under the Head Salary shows your real accuracy, how long you take and where you lose marks.

Practise Income under the Head SalaryFree diagnostic mock

More Income under the Head Salary questions