Taxation - DT Ch 10: Tds Tcs Advance Tax - Test 1: answer key

Question 1 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · hard

Scenario. Vikramaditya Tech Labs LLP, a Pune-based LLP, furnishes the following payments for FY 2026-27. It pays office rent of ₹22,000 per month to Smt. Anuradha Sen from April 2026 to March 2027; she has furnished PAN. It hires a server rack from Aryan Equipments LLP for ₹18,000 per month throughout the year; PAN is available. It engages Shri Mahesh Rane, an individual contractor, for interior work. Payments are ₹25,000 on 12 April 2026, ₹25,000 on 18 August 2026, ₹25,000 on 22 November 2026 and ₹30,000 on 20 March 2027. No single payment exceeds ₹30,000. It also pays Suresh Goods Carriage, an individual owning eight goods carriages, ₹1,20,000 on 5 January 2027 for plying goods; Suresh gives a declaration and PAN. The LLP pays commission of ₹14,500 to Nandini Real Estates Pvt Ltd on 28 February 2027 for arranging a client. All payees are residents. The LLP follows the mercantile system and credits rent on the last day of each month. It asks you to compute TDS under the Income-tax Act, 1961 for FY 2026-27; assume PAN is furnished unless stated otherwise and no lower-deduction certificate applies.

What is the TDS, if any, on office rent paid by Vikramaditya Tech Labs LLP to Smt. Anuradha Sen for FY 2026-27?

1. ₹22,000
2. ₹26,400 (correct answer)
3. ₹33,600
4. Nil

Answer: B — ₹26,400

Explanation. Annual rent is ₹22,000 × 12 = ₹2,64,000. It exceeds the ₹2,40,000 threshold for rent of land or building under section 194I. The rate for building rent is 10%. TDS = ₹2,64,000 × 10% = ₹26,400. The monthly amount is not the threshold; the annual rent governs.

Where it goes wrong. Applying a monthly threshold or ignoring the annual aggregation of rent.

Authority. Section 194I of the Income-tax Act, 1961

Question 2 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · medium

What is the TDS under section 194I on the server rack hire paid by Vikramaditya Tech Labs LLP to Aryan Equipments LLP?

1. ₹4,320
2. ₹2,160
3. Nil (correct answer)
4. ₹21,600

Answer: C — Nil

Explanation. Rent for plant, machinery or equipment is covered by section 194I at 2%, but only if the annual rent exceeds ₹2,40,000. Here, ₹18,000 × 12 = ₹2,16,000, which is below the threshold. Hence, no TDS is required on the equipment hire.

Where it goes wrong. Deducting 2% without checking the annual threshold for plant or machinery rent.

Authority. Section 194I of the Income-tax Act, 1961

Question 3 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · hard

What is the total TDS under section 194C on payments made by Vikramaditya Tech Labs LLP to Shri Mahesh Rane, an individual contractor?

1. Nil
2. ₹300
3. ₹750
4. ₹1,050 (correct answer)

Answer: D — ₹1,050

Explanation. No single payment exceeds ₹30,000. However, the aggregate is ₹25,000 + ₹25,000 + ₹25,000 + ₹30,000 = ₹1,05,000, which exceeds ₹1,00,000. For an individual contractor, the rate is 1%. TDS = ₹1,05,000 × 1% = ₹1,050.

Where it goes wrong. Testing each payment separately and ignoring the ₹1,00,000 aggregate threshold.

Authority. Section 194C of the Income-tax Act, 1961

Question 4 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · medium

What is the TDS on ₹1,20,000 paid by Vikramaditya Tech Labs LLP to Suresh Goods Carriage for plying goods?

1. Nil (correct answer)
2. ₹1,200
3. ₹2,400
4. ₹600

Answer: A — Nil

Explanation. A transport operator owning ten or fewer goods carriages is exempt from TDS under section 194C if he furnishes a declaration and PAN. Suresh owns eight goods carriages and has furnished the declaration and PAN. Therefore, no TDS is required on the ₹1,20,000 payment.

Where it goes wrong. Deducting 1% merely because the aggregate payment exceeds ₹1,00,000, while ignoring the transport-operator exemption.

Authority. Section 194C of the Income-tax Act, 1961

Question 5 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · hard

Scenario. Nandini Real Estates Pvt Ltd, a Mumbai company, reports the following payments for FY 2026-27. It pays commission to Shri Rohan Mehta for arranging property sales: ₹9,000 on 10 July 2026 and ₹9,500 on 15 December 2026. It pays interest of ₹45,000 to Smt. Meera Joshi on an unsecured loan taken for working capital on 31 March 2027. It hires equipment from Aryan Equipments LLP at ₹25,000 per month from April 2026 to March 2027; PAN is furnished. It pays salary of ₹2,90,000 to Shri Kabir, an office assistant, for the year; no other salary is paid to him and standard deduction under section 16(ia) is available. The company has not obtained any lower-deduction certificate. All payees are residents. The company credits rent and commission on the dates of payment. It seeks your assistance in determining the tax deduction at source implications under the Income-tax Act, 1961 for FY 2026-27. Assume PAN is furnished by all payees and the payments are not exclusively for personal purposes of any individual.

What is the TDS under section 194H on commission paid by Nandini Real Estates Pvt Ltd to Shri Rohan Mehta?

1. Nil
2. ₹180
3. ₹370 (correct answer)
4. ₹750

Answer: C — ₹370

Explanation. Commission payments are aggregated for the ₹15,000 threshold under section 194H. Aggregate = ₹9,000 + ₹9,500 = ₹18,500, which exceeds ₹15,000. The applicable rate is 2%. TDS = ₹18,500 × 2% = ₹370.

Where it goes wrong. Comparing each commission payment separately with ₹15,000, or using the earlier 5% rate.

Authority. Section 194H of the Income-tax Act, 1961

Question 6 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · medium

What is the TDS under section 194A on interest of ₹45,000 paid by Nandini Real Estates Pvt Ltd to Smt. Meera Joshi on an unsecured loan?

1. Nil
2. ₹450
3. ₹2,250
4. ₹4,500 (correct answer)

Answer: D — ₹4,500

Explanation. The payer is a company, not a bank, cooperative bank or post office. For interest other than securities paid to a resident other than a senior citizen, the threshold is ₹5,000. Interest of ₹45,000 exceeds it. TDS = ₹45,000 × 10% = ₹4,500.

Where it goes wrong. Using the ₹40,000 or ₹50,000 bank-interest threshold for a non-bank payer.

Authority. Section 194A of the Income-tax Act, 1961

Question 7 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · hard

What is the TDS under section 194I on equipment rent paid by Nandini Real Estates Pvt Ltd to Aryan Equipments LLP?

1. ₹3,000
2. ₹6,000 (correct answer)
3. ₹30,000
4. Nil

Answer: B — ₹6,000

Explanation. Annual equipment rent = ₹25,000 × 12 = ₹3,00,000. This exceeds ₹2,40,000. Rent for plant, machinery or equipment attracts TDS at 2% under section 194I. TDS = ₹3,00,000 × 2% = ₹6,000.

Where it goes wrong. Applying the 10% rate meant for land or building to equipment rent.

Authority. Section 194I of the Income-tax Act, 1961

Question 8 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · medium

What is the TDS under section 192 on salary of ₹2,90,000 paid by Nandini Real Estates Pvt Ltd to Shri Kabir?

1. Nil (correct answer)
2. ₹2,400
3. ₹4,000
4. ₹12,000

Answer: A — Nil

Explanation. Salary TDS depends on tax on estimated total income, not on a flat percentage. After standard deduction of ₹50,000, taxable salary is ₹2,40,000, which is below the basic exemption limit applicable under the default regime. Tax liability is nil, so no TDS under section 192.

Where it goes wrong. Applying a fixed percentage to salary without computing taxable income and tax.

Authority. Section 192 of the Income-tax Act, 1961

Question 9 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

A bank with core banking solutions pays interest of ₹30,000 to Smt. Sarla, a senior citizen, at one branch and ₹22,000 at another branch during FY 2026-27. PAN is furnished. What is the TDS under section 194A?

1. Nil
2. ₹2,200
3. ₹5,000
4. ₹5,200 (correct answer)

Answer: D — ₹5,200

Explanation. For a bank with core banking solutions, interest is aggregated across branches. Total interest = ₹30,000 + ₹22,000 = ₹52,000. For a senior citizen, the threshold is ₹50,000. TDS = ₹52,000 × 10% = ₹5,200.

Where it goes wrong. Applying the threshold branch-wise instead of aggregating interest across branches of the same bank.

Authority. Section 194A of the Income-tax Act, 1961

Question 10 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Alpha Trading Co. pays interest of ₹6,000 to Mr. Dev on an unsecured loan during FY 2026-27. PAN is furnished. What is the TDS under section 194A?

1. Nil
2. ₹600 (correct answer)
3. ₹1,200
4. ₹300

Answer: B — ₹600

Explanation. Alpha Trading Co. is not a bank, cooperative bank or post office. Interest of ₹6,000 exceeds the ₹5,000 threshold for other resident payees. TDS = ₹6,000 × 10% = ₹600.

Where it goes wrong. Using the bank-interest threshold of ₹40,000 for a non-bank payer.

Authority. Section 194A of the Income-tax Act, 1961

Question 11 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Sunrise Ltd pays ₹25,500 on four occasions during FY 2026-27 to Mr. Iqbal, an individual contractor. Aggregate payment is ₹1,02,000. What is the TDS under section 194C?

1. Nil
2. ₹510
3. ₹1,020 (correct answer)
4. ₹2,040

Answer: C — ₹1,020

Explanation. Each payment is below ₹30,000, but the aggregate of ₹1,02,000 exceeds ₹1,00,000. For an individual contractor, TDS is 1% of the aggregate. TDS = ₹1,02,000 × 1% = ₹1,020.

Where it goes wrong. Ignoring the aggregate threshold because no single payment crosses ₹30,000.

Authority. Section 194C of the Income-tax Act, 1961

Question 12 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

A transport operator owning 12 goods carriages receives ₹1,50,000 from a company for plying goods during FY 2026-27. PAN and a declaration are furnished. What is the TDS under section 194C?

1. Nil
2. ₹750
3. ₹3,000
4. ₹1,500 (correct answer)

Answer: D — ₹1,500

Explanation. The transport-operator exemption applies only if the operator owns ten or fewer goods carriages. This operator owns 12, so the exemption is not available. As an individual contractor, the rate is 1%. TDS = ₹1,50,000 × 1% = ₹1,500.

Where it goes wrong. Allowing the transport exemption despite ownership exceeding ten goods carriages.

Authority. Section 194C of the Income-tax Act, 1961

Question 13 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

PQR Ltd pays commission of ₹15,000 to a resident agent on 31 March 2027. PAN is furnished. What is the TDS under section 194H?

1. Nil (correct answer)
2. ₹300
3. ₹750
4. ₹1,500

Answer: A — Nil

Explanation. Section 194H applies when commission or brokerage exceeds ₹15,000. A payment of ₹15,000 is at the threshold and does not exceed it. Therefore, no TDS is required.

Where it goes wrong. Deducting TDS when the amount is equal to the threshold rather than exceeding it.

Authority. Section 194H of the Income-tax Act, 1961

Question 14 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Meera Enterprises pays office rent of ₹20,000 per month throughout FY 2026-27 to a resident landlord. Annual rent is ₹2,40,000. PAN is furnished. What is the TDS under section 194I?

1. ₹24,000
2. Nil (correct answer)
3. ₹4,800
4. ₹2,400

Answer: B — Nil

Explanation. The threshold for rent under section 194I is ₹2,40,000 per year. Annual rent is ₹20,000 × 12 = ₹2,40,000, which is equal to but does not exceed the threshold. Hence, no TDS is required.

Where it goes wrong. Deducting TDS when annual rent is at the threshold rather than above it.

Authority. Section 194I of the Income-tax Act, 1961

Question 15 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Zenith Ltd pays annual rent of ₹2,50,000 for machinery to a resident lessor during FY 2026-27. PAN is furnished. What is the TDS under section 194I?

1. ₹25,000
2. Nil
3. ₹5,000 (correct answer)
4. ₹2,500

Answer: C — ₹5,000

Explanation. Annual machinery rent of ₹2,50,000 exceeds the ₹2,40,000 threshold. For plant, machinery or equipment, section 194I applies at 2%. TDS = ₹2,50,000 × 2% = ₹5,000.

Where it goes wrong. Using the 10% rate for land or building instead of the 2% rate for machinery.

Authority. Section 194I of the Income-tax Act, 1961

Question 16 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Ms. Rhea, a resident employee, receives salary of ₹9,50,000 and an accommodation perquisite valued at ₹1,80,000. Tax on her salary computed under section 192 is ₹78,000. The employer does not opt to pay tax on the perquisite. What is the TDS under section 192?

1. ₹60,000
2. ₹96,000
3. Nil
4. ₹78,000 (correct answer)

Answer: D — ₹78,000

Explanation. Salary TDS is computed on total salary including the value of perquisites. The tax on estimated salary income is ₹78,000. Since the employer has not chosen to pay tax on the non-monetary perquisite, the employer must deduct ₹78,000 at source.

Where it goes wrong. Omitting the perquisite value, or assuming the employer must always pay perquisite tax.

Authority. Section 192 of the Income-tax Act, 1961

Question 17 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

A bank pays interest of ₹45,000 to Mr. Raman, a senior citizen, and ₹8,000 on another deposit in his name during FY 2026-27. PAN is furnished. What is the TDS under section 194A?

1. ₹5,300 (correct answer)
2. ₹4,500
3. Nil
4. ₹800

Answer: A — ₹5,300

Explanation. Interest paid by a bank to a senior citizen is aggregated for the ₹50,000 threshold. Total interest = ₹45,000 + ₹8,000 = ₹53,000. TDS = ₹53,000 × 10% = ₹5,300.

Where it goes wrong. Applying the threshold separately to each deposit or ignoring senior-citizen status.

Authority. Section 194A of the Income-tax Act, 1961

Question 18 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

ABC Ltd pays ₹1,20,000 during FY 2026-27 to Mr. Kamal, an individual contractor, for carrying out a work contract. PAN is furnished. What is the TDS under section 194C?

1. ₹2,400
2. ₹1,200 (correct answer)
3. Nil
4. ₹600

Answer: B — ₹1,200

Explanation. The aggregate payment of ₹1,20,000 exceeds ₹1,00,000. For a contractor who is an individual, the TDS rate is 1%. TDS = ₹1,20,000 × 1% = ₹1,200.

Where it goes wrong. Using the 2% rate applicable to non-individual contractors.

Authority. Section 194C of the Income-tax Act, 1961

Question 19 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Ravi Ltd pays office rent of ₹19,500 per month throughout FY 2026-27 to a resident landlord. Annual rent is ₹2,34,000. PAN is furnished. What is the TDS under section 194I?

1. ₹23,400
2. ₹3,900
3. Nil (correct answer)
4. ₹1,950

Answer: C — Nil

Explanation. Annual rent = ₹19,500 × 12 = ₹2,34,000. This is below the ₹2,40,000 threshold for rent under section 194I. Therefore, no TDS is required on the office rent.

Where it goes wrong. Deducting 10% by looking only at the monthly rent and not the annual threshold.

Authority. Section 194I of the Income-tax Act, 1961

Question 20 · 2 marks · Taxation - DT Ch 10: Tds Tcs Advance Tax · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Nandini Real Estates Pvt Ltd deducts TDS of ₹18,000 on 31 March 2027. By which date must the company deposit the tax with the Central Government?

1. 30 April 2027 (correct answer)
2. 7 April 2027
3. 31 March 2027
4. 15 May 2027

Answer: A — 30 April 2027

Explanation. For a non-government deductor, TDS deducted in March is deposited by 30 April of the following financial year. TDS deducted on 31 March 2027 is therefore deposited by 30 April 2027.

Where it goes wrong. Applying the general 7th-day rule to March deductions.

Authority. Section 200(1) of the Income-tax Act, 1961; Rule 30 of the Income-tax Rules, 1962