Our firm needs to pay a professional fee of Rs 40,000 to an advocate. He claims that his annual income is less than Rs 8.50 lakh and no surcharge is leviable on the tax deducted at source from his fee. But he has not furnished any evidence. Should we recover surcharge at the rate of 10 per cent from him?
You are not supposed to act as an assessing officer in making tax deduction at source. If the advocate gives you a certificate that his income during 2003-04 will be less than Rs 8.50 lakh, till any form is prescribed for this by the income-tax department, you may adopt the rate of 5 per cent for surcharge in making tax deduction at source from the professional fee payable to the advocate.
Contractors are often required to furnish an income-tax clearance certificate in appendix A, while submitting tenders to the government and public sector undertakings and local bodies. Paragraph 151(h) of the Finance Minister Jaswant Singh