Section 194J of the Income-tax Act mandates tax deduction at source on payments made for professional or technical services, royalty, or sums under section 28 to residents, with specific exemptions based on the amount paid. Currently, the threshold for tax deduction is set at Rs. 30,000 for these payments. The Finance Bill, 2025 proposes an increase in the threshold amount for tax deduction from Rs. 30,000 to Rs. 50,000 for fees related to professional services, technical services, royalty, and certain sums. This change means that tax will not be deducted if the amount paid in these categories does not exceed Rs. 50,000 in a financial year. This amendment will come into effect on April 1, 2025, and will apply to payments made from that date onward.
Budget 2025: Section 194J – Fees for professional or technical services.
Section 194J of the Act requires for deduction of tax at source on payment by any person, not being an individual or a Hindu undivided family, who pays to a resident any sum of the nature of fees for professional or technical services, any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 192, to a director of a company, or royalty, or any sum referred to in clause (va) of section 28 of the Act, at the rates specified therein.
2. Clause (B) of proviso to sub-section (1) of section 194J provides the threshold amount of sum paid during the financial year for tax to be deducted under this section. It is proposed to increase the thresholds specified in Clause (B) of proviso to sub-section (1) of section 194J of the Act as below –
| S. No |
Nature of sum | Current threshold to deduct TDS | Proposed threshold |
| 1. | Fees for professional services | Rs. 30,000/- | Rs. 50,000/- |
| 2. | Fees for technical services | Rs. 30,000/- | Rs. 50,000/- |
| 3. | Royalty | Rs. 30,000/- | Rs. 50,000/- |
| 4. | Any sum referred to in clause (va) of section 28 | Rs. 30,000/- | Rs. 50,000/- |
3. This amendment will take effect from the 1st day of April 2025.
[Clause 60]
Extract of Relevant Clauses of Finance Bill, 2025
Clause 60 of the Bill seeks to amend section 194J of the Income-tax Act relating to fees for professional or technical services.
Sub-section (1) of the said section, inter alia, provides that the deduction of tax at source in respect of any sum by way of fees for professional services and technical services, etc.
Clause (B) of the first proviso to sub-section (1) of the said section provides that tax is not required to be deducted under said sub-section if the amount of such sum or, as the case may be, the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year does not exceed thirty thousand rupees in case of fees for professional services, fees for technical services, royalty, or any sum referred to in clause (va) of section 28.
It is proposed to amend the said clause (B) of the first proviso so as to provide that no deduction of tax at source shall be made under this section where the amount of such income as specified therein or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during a month, does not exceed fifty thousand rupees.
This amendment will take effect from 1st April, 2025.
Extract of Relevant Amendment Proposed by Finance Bill, 2025
60. Amendment of section 194J.
In section 194J of the Income-tax Act, in sub-section (1), in the first proviso, in clause (B), for the words “thirty thousand rupees” wherever they occur, the words “fifty thousand rupees” shall be substituted.
