Which two of the following are correct in terms of rate of tax deduction at source (TDS)? (a) Income by…
The correct choice is: (a) and (b) (a) Winnings from horse races suffer TDS at 30% (Section 194BB of the Income-tax Act, 1961; now Section 393(3) of the Income-tax Act,…
Choose your answer
Which two of the following are correct in terms of rate of tax deduction at source (TDS)?
(a) Income by way of winnings from horse races: @ 30%
(b) Insurance commission paid to a domestic company: @ 10%
(c) Rent of plant & machinery: @ 5%
(d) Rent of furniture: @ 5%
Answer and explanation
Correct answer A
The correct choice is: (a) and (b)
(a) Winnings from horse races suffer TDS at 30% (Section 194BB of the Income-tax Act, 1961; now Section 393(3) of the Income-tax Act, 2025, in force from 1 April 2026). (b) TDS on insurance commission (Section 194D of the 1961 Act; now Section 393(1) of the 2025 Act) is at the rates in force: 10% where the payee is a domestic company, and a lower rate for payees other than companies (5% from 1 June 2016, reduced to 2% from 1 April 2025).
(c) and (d) are wrong. TDS on rent (Section 194-I of the 1961 Act; now Section 393(1) of the 2025 Act) is 2% for plant, machinery or equipment and 10% for land, building or furniture; neither is 5%. So the only correct pair is (a) and (b).
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UGC NET Commerce