What is TDS?

The person who is responsible for making payment of certain incomes or disbursing certain amounts
has to deduct income tax at the prescribed rates before such payment or disbursal and is known as
Tax Deducted at Source (TDS). Such amount should be deposited by the deductor in the Government
Treasury within the prescribed limit.

TDS Certificate
The person who deducts TDS is supposed to issue a certificate specifying the income of amount in
amount and TDS made and deposited with Government Treasury to the receiver of income or
amount and is known as TDS certificate. This is the proof of tax already remitted on behalf of the
receiver of income.

Problems and solutions on Advance Tax

PROBLEM NO. 1
Shri Basu has estimated the following income for the financial year 2017-18
a. Income from House property (Taxable) – Rs. 75,000
b. Income from profession (Taxable) – Rs. 7,07,500
c. Dividend from X Ltd – Rs. 10,000
Determine the instalments of Advance Tax payable during financial year 2017-18

SOLUTION:
Computation of Taxable income for the financial year 2017-18
Income from HP (Taxable) 75,000
Income from profession (Taxable) 7,07,500
Income from other sources
Dividend from Indian company Exempted
GTI 7,82,500
Less: Deduction u/s 80 NIL
NTI 7,82,500
Tax on 7,82,500
Upto Rs. 2,50,000 – NIL
Next Rs. 2,50,000 – 12,500
Balance Rs. 2,82,500 – 56,500 69,000
Add: 3% cess 2,070
71,070

Upto 15-06-2017 = 15% x 71,070 = 10661

Upto 15-09-2017 = 30% x 71070 = 21,321 (To make 45%)
Upto 15-12-2017 = 30% x 71,070 = 21,321 (To make 75%)
Upto 15-03-2018 = 25% x 71070 = 17,767 (To make 100%)
Total = 71070

PROBLEM NO. 2
Mr. Ajay has the following estimated incomes for FY 2017-18.
Business Income (Taxable) = 4,90,000
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Income from HP (Taxable) = 1,20,000
Income from other sources - Interest on securities (Taxable) = 30,000
Calculate advance tax instalments.

SOLUTION:
Computation of taxable income for the FY 2017-18
Income from Business 4,90,000
Income from HP 1,20,000
Income from other sources 30,000
Interest on securities
Tax payable 6,40,000
Tax payable: 40,500
First 2,50,000 – NIL
Next 2,50,000 – 12,500
Balance 1,40,000 – 28,000
Add: Surcharge Nil
Add: 3% Cess 1,215
41,715
Upto 15-06-2017 = 15% x 41,715 = 6,257
Upto 15-09-2017 = 30% x 41,715 = 12,515
Upto 15-12-2017 = 30% x 41,715 = 12,515
Upto 15-03-2018 = 25% x 41,715 = 10,428
41,715

PROBLEM NO. 3
The following are the incomes of Mr. Saket for the financial year 2017-18
Taxable Income from Business = 6,00,000
Taxable Income from HP = 2,00,000
Taxable Income from other sources = 50,000
Calculate Advance tax instalments

SOLUTION:
Computation of total taxable income for the financial year 2017-18
Taxable income from Business 6,00,000
Taxable income from HP 2,00,000
Taxable income from other sources 50,000
8,50,000
Tax payable
Upto 2,50,000 = NIL
Next 2,50,000 = 12,500
Balance 3,50,000 = 70,000 82,500
Add: Surcharge NIL
82,500
Add: 3% Cess 2,475
84,975

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Upto 15-06-2017 = 15% x 84,975 = 12,746
Upto 15-09-2017 = 30% x 84,975 = 25,493
Upto 15-12-2017 = 30% x 84,975 = 25,493
Upto 15-03-2018 = 25% x 84,975 = 21,243
84,975

PROBLEM NO. 4
Mr. Sudhi has a taxable total income estimated to be 5,50,000. Calculate the advance tax
instalments if the estimated TDS is 5,000.

SOLUTION:
Taxable income = 5,50,000
Tax payable:
Upto 2,50,000 = NIL
Next 2,50,000 = 12,500
Balance 50,000 = 10,000
Total = 22,500
Add: Surcharge = NIL
= 22,500
Add: 3%Cess = 675
= 23,175
Less: TDS = 5,000
Advance Tax = 18,175

Upto 15-06-2017 = 15% x 18,175 = 2,726

Upto 15-09-2017 = 30% x 18,175 = 5,453
Upto 15-12-2017 = 30% x 18,175 = 5,453
Upto 15-03-2018 = 25% x 18,175 = 4,543
18,175

PROBLEM NO. 5
The estimated taxable business income of P ltd for the financial year 2017-18 is Rs. 6,00,000
and taxable LTCG on 03-06-2017 is Rs. 3,00,000. Calculate the advance tax instalment
assuming estimated TDS to be 15,000.

SOLUTION:
Computation of Taxable total income for the financial year 2017-18
Business income 6,00,000
Taxable LTCG 3,00,000
GTI/NTI 9,00,000
Tax payable
LTCG @ 20% x 3,00,000 60,000
Balance 6,00,000 x 30% 1,80,000
2,40,000
Add: Surcharge NIL
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 2,40,000
Add: 3% cess 7,200
2,47,200
Less: TDS 15,000
2,32,200
Upto 15-06-2017 = 15% x 2,32,200 = 34,830
Upto 15-09-2017 = 30% x 2,32,200 = 69,660
Upto 15-12-2017 = 30% x 2,32,200 = 69,660
Upto 15-03-2018 = 25% x 2,32,300 = 58,050
2,32,200

PROBLEM NO. 6
XY & Co., a firm, has an estimated taxable business income of rs. 4,80,000 and taxable STCG
of Rs. 1,20,000 on 03-06-2017. Calculate advance tax in statements if the TDS is estimated
to be Rs. 11,000 for the financial year 2017-18.

SOLUTION:
Computation of Taxable income for the financial year 2017-18
Business income taxable 4,80,000
STCG taxable 1,20,000
GTI/NTI 6,00,000
Tax on STCG 1,20,000 x 15% 18,000
Balance 4,80,000 x 30% 1,44,000
1,62,000
Add: Surcharge NIL
1,62,000
Add: 3% cess 4,860
1,16,860
Less: TDS 11,000
Advance tax payable 1,05,860

Upto 15-06-2017 = 1,05,860 x 15% = 15,879

Upto 15-09-2017 = 1,05,860 x 30% = 31,758
Upto 15-12-2017 = 1,05,860 x 30% = 31,758
Upto 15-03-2018 = 1,05,860 x 25% = 26,465
1,05,860

Problems and Solutions on TDS

PROBLEM NO. 1
Calculate the TDS to be made in respect of the following transactions for FY 2017-18 (AY
2018-19)
a. Salary estimated for the year Rs. 4,20,000 and income from other sources Rs.
1,20,000 (both taxable)

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 b. Gross winnings from lottery Rs. 45,000
c. Gross amount from Horse race Rs. 4,000
d. Insurance commission Rs. 25,000
e. Commission on sale of lottery tickets Rs. 7,000
f. Interest on securities Rs. 12,000

Solution:
a.
Taxable salary estimated – Rs. 4,20,000
Taxable income from other sources – Rs. 1,20,000
GTI/NTI – Rs. 5,40,000

Income Tax :
Upto 2,50,000 – NIL
Next 2,50,000 @ 10% – 12,500
Balance 40,000 @ 20%– 8,000
20,500
Add: Surcharge NIL
20,500
Add: 3% cess 615
21,150
Per month TDS = 21,150/12 = Rs. 1,760

b. Gross winnings from lottery = 45,000

TDS @ 30% x 45000 = 13,500
c. Gross winnings from Horse Race Rs. 4,000
No TDS as its below Rs. 10,000
d. Insurance commission Rs. 25,000
TDS 25,000 x 5% = Rs. 1,250
e. Commission on sale of lottery = Rs. 7,000
No TDS as its below Rs. 15,000
f. Interest on securities Rs. 12,000
TDS = 12,000 x 10% = Rs. 1,200

PROBLEM NO. 2
Calculate TDS in Each case:
a. Taxable salary income Rs. 3,50,000
Taxable House Property Income 80,000 (estimated)
b. Payment to Electrical contractor Rs. 40,000, Mr. X who is an individual (Gross)
c. Payment to L&T ltd, a civil contracting company Rs. 4,00,000 by cheque (Gross)
d. Premature withdrawal from RPF Rs. 40,000
e. Interest on bank deposits (Gross) Rs. 28,000
f. Commission from Real estate agency Rs. 40,000
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Solution:
a. Taxable Salary 3,50,000
Taxable HP income 80,000
GTI/NTI 4,30,000

Tax thereon
Upto 2,50,000 NIL
Balance 1,80,000 x 5% 9,000
9,000
Add: Surcharge NIL
9,000
Add: Cess @ 3% 270
9,270

Monthly TDS = 9,270/12 = 772.5 per month

b. Payment to electrical contractor = 40,000

TDS 1 % of 40,000 is 400

c. Payment corporate contractor = Rs. 4,00,000

TDS 2% of 4,00,000 is 8,000

d. Premature withdrawal from RPF 40,000

No TDS as it is below 50,000

e. Interest on Bank deposits (Gross) 28,000

TDS 10% Rs.2,800

f. Commission on Real Estate Agency Rs.40,000

TDS 5% of 40,000 is Rs.2,000

PROBLEM NO. 3
Calculate TDS in the following cases:
a. Amount received from LIC Policy 1,20,000
b. Amount from sale of building, the total amount of sale consideration = 52,00,000
c. NSS deposit amount received Rs. 4,000
d. Professional fees paid to Mr. Kanaka pillai, an auditor for Income tax work Rs. 40,000
e. House rent paid to owner at Rs. 38,000 per month rent
f. Compensation for the acquisition of a part of the immovable property for expanding
the road Rs. 2,20,000

Solution:
a. Amount from LIC – 1,20,000
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 TDS = 1% x 1,20,000 = 1,200
b. Amount from sale of building = 52,00,000
TDS = 52,00,000 x 1% = 52,000
c. NSS Deposit amount received Rs. 4,000
TDS = 4,000 x 10% = Rs. 400
d. Professional fees = 40,000
TDS = 40,000 x 10% = 4,000
e. House rent = Rs. 38,000
No TDS upto Rs. 50,000 per month
f. Compensation for the acquisition of land Rs. 2,20,000
No TDS upto Rs. 2,50,000

PROBLEM NO. 4
Calculate TDS in the following cases:
a. Compensation for the acquisition of land Rs. 5,00,000
b. Rent received Rs. 60,000 per month on building
c. Amount from RPF on premature settlement Rs. 70,000
d. Interest on deposits with a firm Rs. 28,000
e. Amount paid to civil contractor Rs. 20,000 but the aggregate amount during the year
exceeds one lakh rupees and contractor is X ltd
f. Commission on sale of house Rs. 80,000
g. Interest on securities Gross Rs. 22,000

Solution:
a. Compensation for land acquisition Rs. 5,00,000
TDS = 5,00,000 x 10% = 50,000
b. Rent received Rs. 60,000 per month
TDS = 60,000 x 5% = 3,000 per month
c. RPF amount on premature settlement Rs. 70,000
TDS = 70,000 x 10% = 7,000
d. Interest on deposit with firm Rs. 28,000
TDS = 28,000 x 10% = 2,800
e. Payment to X ltd, contractor exceeding rs. 1,00,000 per annum Rs. 20,000
TDS 20,000 x 2% = 400
f. Commission on sale of house = Rs. 80,000
TDS 80,000 x 5% = 4,000
g. Interest on securities = 22,000
TDS = 22,000 x 10% = 2,200

PROBLEM NO. 5
Calculate TDS in the following cases:
a. Amount of gross income from house race Rs. 1,50,000
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 b. Interest on securities Rs. 28,000
c. Amount from premature withdrawal of provident fund Rs. 85,000
d. Insurance commission Rs. 24,000
e. Paid to sanitary contractor Mr. Sanjeev Reddy, Gross Rs. 39,000
f. Amount from sale of immovable property Rs. 30,00,000
g. Amount from life insurance policy Rs. 90,000
h. Amount paid to lawyer 80,000

Solution:
a. Race amount Rs. 1,50,000
TDS 1,50,000 x 30% = 45,000
b. Interest on securities 28,000
TDS 28,000 x 10% = 2,800
c. Amount from premature withdrawal Rs. 85,000
TDS 85,000 x 10% = 8,500
d. Insurance commission 24,000
TDS = 24,000 x 5% = 1,200
e. Payment contractor Rs. 39,000
TDS = 29,000 x 1% = 390
f. Amount from sale of immovable property Rs. 30,00,000
No TDS as its below 50,00,000
g. Amount from LIC policy Rs. 70,000
NO TDS as its below Rs. 1,00,000
h. Amount paid Rs. 80,000 to lawyer
TDS = 80,000 x 10% = 8,000