PQR Ltd. has paid - 2,70,000 to Mr. A for Professional Services rendered by Mr. A. The agreement between PQR Ltd. and Mr. A stipulates the tax…

Since as per the agreement between PQR Ltd. and Mr. A, tax on income from professional services should be borne by PQR Ltd. then such income is increased to such an amount as would after deduction of tax thereon, be equal to the net amount payable under the agreement. Accordingly, PQR Ltd. is required to deduct tax at source @10% on 3,00,000 (₹ 2,70,000 x 100/90) and furnish a certificate to Mr. A in the prescribed form within the prescribed time. Mr. A can claim the credit of tax deducted at source by PQR Ltd., since any sum deducted is deemed to be income received while computing the income of the payee, on the production of a certificate furnished by the payer.