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

Under section 192A, the trustees of the Employees' Provident Funds Scheme, 1952 pay accumulated balances to employees of Narmada Textiles Ltd. Rule 8 of Part A of the Fourth Schedule is not applicable to any of them, so all balances are includible in income. Which payee would NOT suffer deduction of tax under section 192A?

Mr. Khan, with Rs 49,000. The proviso to section 192A exempts deduction only when the payment or aggregate payment to the payee is less than Rs 50,000. A payment of exactly Rs 50,000 or more attracts 10% deduction.

  1. AMs. Iyer, receiving Rs 50,000 in a single payment
  2. BMr. Khan, receiving Rs 49,000 in a single paymentCorrect
  3. CMr. Das, receiving Rs 75,000 in a single payment
  4. DMs. Bose, receiving Rs 1,20,000 in a single payment

Explanation

The proviso bars deduction where the payment, or the aggregate payment to the payee, is less than Rs 50,000. Rs 49,000 is less than Rs 50,000, so no deduction. Rs 50,000 is not less than Rs 50,000, so Ms. Iyer's payment is subject to 10% TDS, which makes that option wrong.

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