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

Trustees of the Employees' Provident Funds Scheme, 1952 are paying the accumulated balance to Mr. Ramesh, an employee in a recognised provident fund. The balance is includible in his total income because rule 8 of Part A of the Fourth Schedule does not apply. Which payment is subject to deduction of tax under section 192A at 10%?

A payment of Rs 50,000 attracts 10% deduction under section 192A, because the proviso exempts only payments, or aggregate payments to the payee, that are less than Rs 50,000. The amounts of Rs 48,000, Rs 49,999 and an aggregate of Rs 45,000 fall below the limit.

  1. ARs 48,000 paid in a single payment
  2. BRs 50,000 paid in a single paymentCorrect
  3. CRs 30,000 paid, with a further Rs 15,000 paid to him at a later date
  4. DRs 49,999 paid in a single payment

Explanation

Section 192A applies where the payment, or the aggregate of payments to the payee, is not less than Rs 50,000; no deduction is made only when it is less than Rs 50,000. Rs 50,000 is not less than Rs 50,000, so tax of Rs 5,000 is deducted. The Rs 48,000 and Rs 49,999 payments are below the threshold. The Rs 30,000 plus Rs 15,000 payments aggregate to Rs 45,000, which is also below it.

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