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

Trustees of the Employees' Provident Funds Scheme, 1952 are about to pay the accumulated balance of Rs 4,80,000 to Mr. Venkat, an employee in a recognised provident fund. Because of rule 8 of Part A of the Fourth Schedule not being applicable, the balance is includible in his total income. Under section 192A of the Income-tax Act, 1961, what tax must be deducted at the time of payment?

Tax of Rs 48,000 must be deducted. Section 192A requires the trustees to deduct income-tax at ten per cent when the accumulated balance is includible in the employee's total income and the payment is not below Rs 50,000. Ten per cent of Rs 4,80,000 is Rs 48,000.

  1. ARs 48,000Correct
  2. BRs 24,000
  3. CRs 96,000
  4. DNil, because the payment is made by trustees

Explanation

Section 192A requires deduction at ten per cent where the accumulated balance is includible in total income and the payment is Rs 50,000 or more. 10% of Rs 4,80,000 is Rs 48,000. Rs 24,000 uses 5%, which the section does not prescribe, and the trustees are expressly covered by the section, so nil is wrong.

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