Reason (R) : If tax has not been deducted at source, the amount paid as interest will not be allowed as a deduction in computing business income.
Select the correct answer from the code given below :
TDS on Interest Payable Outside India: Assertion & Reason Analysis
This section examines the validity of the provided Assertion (A) and Reason (R) concerning Tax Deduction at Source (TDS) on interest payments made outside India.
Assertion (A) Validity: TDS Mandate
Assertion (A) posits that TDS is required when interest is payable outside India.
- According to Section 195 of the Income Tax Act, 1961, tax must be deducted at source on interest payments made to non-residents, provided such interest is chargeable to tax in India.
- Therefore, Assertion (A) is correct.
Reason (R) Validity: Disallowance Consequence
Reason (R) states that failure to deduct TDS results in the disallowance of the interest expense.
- Section 40(a)(i) of the Income Tax Act, 1961, explicitly states that interest payable to a non-resident is not deductible if tax has not been deducted at source under Chapter XVII-B or if deducted tax has not been paid to the Central Government.
- Hence, Reason (R) is correct.
Explanation Assessment: Linking Assertion and Reason
Reason (R) directly addresses the consequence of not adhering to the rule stated in Assertion (A). The disallowance of the interest expense (R) serves as a critical reason why TDS must be applied (A) to interest payable outside India.
Thus, the non-deduction consequence (R) correctly explains the necessity of TDS (A).
Final Determination
Based on the analysis, both statements are correct, and Reason (R) accurately explains Assertion (A).
Important Questions from Deduction and Collection of tax at source
Income received and accrued or arisen outside India from a business controlled in or a profession set up in India, is taxed in the hands of which of the following?
a. Every citizen of India
b. Domicile of India
c. Ordinary Resident
d. Non-Ordinarily Resident
e. Non-Resident
Choose the correct answer from the options given below:
Match List I with List II:
List I List II (A) Section 80 EE (I) Deduction in respect of rent paid (B) Section 80 GG (II) Deduction in respect of certain donations for scientific researches (C) Section 80 GGA (III) Deduction in respect of interest on loan taken for residential house (D) Section 80 E (IV) Deduction in respect of payment of Interest on loan taken for Higher Education. Choose the correct answer from the options given below:
Which of the followings is correct about deduction available in respect of contribution to various provident funds in case of salaried employees?
(A) Employer's contribution to recognised provident fund is exempted upto 12% of salary.
(B) Employer's contribution to unrecognised provident fund is exempted from tax.
(C) Employer does not contribute to Public Provident Fund.
(D) Deduction under Section 80 C is available for employer's contribution in unrecognized provident fund.
Choose the correct answer from the options given below:
Match List I with List II
List I
List II
A.
80 GG
I.
Deduction in respect of contribution
given by companies to political parties.B.
80 GGA
II.
Deduction in respect of contribution given
by any person to political parties.C.
80 GGB
III.
Deduction in respect of scientific research.
D.
80 GGC
IV.
Deduction in respect of rent paid.
Choose the correct answer from the options given below:
Mr. X is entitled to transport allowance of Rs. 1,800 p.m. for commuting from his residence to office and back and he spends Rs. 1,400 p.m. The exemption shall be allowed of
