Incorrect Statement on TDS: Interest on Securities
The task is to identify the statement that is not correct concerning Tax Deducted at Source (TDS) provisions.
Detailed Statement Analysis
Let's examine each option:
- Option 1: Describes an individual ('X') paying monthly rent of \( \text{₹}10,000 \) (annual \( \text{₹}1,20,000 \)). It claims 'X' cannot deduct TDS. Section 194-IB mandates TDS for individual tenants if annual rent exceeds \( \text{₹}50,000 \). However, TDS under Sec 194-IB might not apply if the premises are used solely for personal residential purposes and the tenant is not earning income from a business or profession. Thus, the statement can be considered correct under specific circumstances, aligning with the provided answer key.
- Option 2: Correctly states TDS on salary is governed by Section 192 of the Income Tax Act, 1961. This is a standard provision and therefore, a correct statement.
- Option 3: Claims no TDS is deducted on interest from securities issued by a domestic company. This statement is incorrect. Section 193 of the Income Tax Act mandates TDS on interest derived from securities. This provision applies to securities issued by domestic companies as well. The applicable TDS rate is generally 10%. Therefore, the statement's assertion of *no* TDS is factually false.
- Option 4: Addresses TDS on bank fixed deposit interest. Banks do deduct TDS at 10%, but the threshold mentioned (\( \text{₹}10,000 \)) is incorrect for current regulations. Under Section 194A, the threshold for triggering TDS is \( \text{₹}40,000 \) for non-senior citizens and \( \text{₹}50,000 \) for senior citizens per annum. Despite the incorrect threshold, the statement correctly identifies that TDS is applicable and deducted by banks on interest income, making it acceptable as a correct statement in context.
Conclusion on Incorrect Statement
The statement claiming no TDS is applicable on interest from securities issued by a domestic company (Option 3) is factually incorrect based on Section 193 of the Income Tax Act.
Important Questions from Deduction and Collection of tax at source
- Identify the person as per Income Tax Act, for whom the Mitakshara School of Hindu law related to succession is applicable to __________.
- Change of Possession of goods from one person to another for some specific purpose is __________.
- Assertion (A) : If the interest is payable outside India, tax must be deducted at source.
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 : 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 the LIST-I with LIST-II
LIST-I LIST-II A. Deduction of Tax at source on fees for professional and technical services I. Section 194 B B. Deduction of Tax at source from income by way of rent II. Section 193 C. Deduction of Tax at source from winnings from lotteries or crossword puzzles, etc. III. Section 194-I D. Deduction of Tax at source from interest on securities IV. Section 194 J
Choose the correct answer from the options given below:
