The present article features the TDS provisions contained under section 194J of the Income Tax Act, 1961 relating to the TDS deduction on fees for professional or technical services.
Page Contents
Coverage of Section 194J of the Income Tax Act
Categories of the person covered under section 194J
Every person, except an individual or a HUF, making payment to a resident for notified services is covered under section 194J of the Income Tax Act.
However, it should be noted that, if the gross receipts or sales or turnover of the Individual or a HUF exceeds the monetary limit specified under section 44AB (a) or section 44AB (b), then, they would get covered under section 194J. In short, in case of an individual or a HUF, if they are liable to get their accounts audited, they are required to deduct TDS as per provisions of section 194J.
List of notified services
Every person making payment of the following notified services is required to deduct TDS under section 194J of the Income Tax Act, 1961 –
- Fees for professional services;
- Fees for technical services;
- Royalty;
- Remuneration / fees / commission paid to director of the company (excluding salary);
- Fees paid for not carrying out any activity in relation to any business or profession;
- Fees paid for not sharing any technical know-how, copyright, trade mark, patent or any other business or commercial rights of the same nature.
Understanding the meaning of important terms –
1. Professional Services –
The term ‘Professional Services’ means services rendered by a person carrying on –
-
-
- Legal;
- Medical;
- Engineering or architectural profession or accountancy profession;
- Technical consultancy or interior decoration or advertising;
- or such other profession as notified by Board for the purpose of section 44AA.
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2. Fees for technical services –
The meaning of the term ‘Fees for technical services’ is the same as that provided in Explanation 2 to section 9 (1) (vii).
‘Fees for technical services’ means any consideration for the rendering of any managerial, consultancy, or technical services. It includes the provision of services of technical or other personnel. The term ‘Fees for technical services’ doesn’t include consideration for any construction, mining, assembly or like project undertaken by the recipient or consideration chargeable under the head ‘salary’.
3. Royalty –
The meaning of the term ‘Fees for technical services’ is the same as that provided in Explanation 2 to section 9 (1) (vi).
Time of TDS deduction –
The person who is required to deduct TDS under section 194J shall deduct TDS either at the time of credit of sum to the account of the payee or at the time of payment in cash / cheque / draft or any other mode, whichever is earlier.
Rate of TDS deduction –
The Deductor is required to deduct TDS at the following prescribed rates under section 194J of the Income Tax Act, 1961 –
| Particulars | Rate of TDS |
| Cases, wherein, the payee is engaged in the business of the operation of Call Centre only (effective from 1st June 2017) | 2% |
| In case of fees for technical services (not being a professional royalty where such royalty is in the nature of consideration for sale, distribution or exhibition of cinematographic film) (effective from 1st April 2020) | 2% |
| Professional royalty where such royalty is in the nature of consideration for sale, distribution or exhibition of cinematographic film | 10% |
| In case of fees for any other professional services | 10% |
| In case the payee fails to furnish PAN | 20% |
Threshold Exemption Limit –
TDS is not deductible in case the payment doesn’t exceed the prescribed threshold exemption limit. No TDS is to be deducted if the aggregate amount credited / paid during the financial year doesn’t exceed –
1. INR 30,000 in case of fees for professional services.
2. INR 30,000 in case of fees for technical services.
3. INR 30,000 in case of royalty.
4. INR 30,000 in case of fees paid for not carrying out any activity in relation to any business or profession.
5. INR 30,000 in case of fees paid for not sharing any technical know-how, copyright, trade mark, patent or any other business or commercial rights of alike nature
It should be noted that the threshold exemption limit is not available only in the case of remuneration / fees / commission paid to director of the company (excluding salary).
Frequently Asked Questions (FAQ) on Section 194J
Q.1 What is section 194J?
Ans: As per provisions of section 194J of the Income Tax Act, 1961 requires every person to deduct TDS @ 10% or 2% depending on case to case basis on the following payment made to a resident person –
-
- Fees for professional services;
- Fees for technical services;
- Royalty;
- Remuneration / fees / commission paid to director of the company (excluding salary);
- Fees paid for not carrying out any activity in relation to any business or profession;
- Fees paid for not sharing any technical know-how, copyright, trade mark, patent or any other business or commercial rights of alike nature.
Q.2 How can I claim TDS under section 194J?
Ans: If the TDS is deducted under section 194J and total net income of the year is below the taxable income, then the payee can claim for refund of TDS so deducted under section 194J by the filing of an income tax return.
Q.3 Is TDS applicable on legal charges?
Ans: Yes, TDS is applicable on legal charges if the aggregate amount exceeds INR 30,000 during the financial year.
Q.4 What is the TDS rates for consultancy?
Ans: TDS rates of 10% for consultancy are prescribed under section 194J of the Income Tax Act, 1961.
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Republished with Amendments
Author Bio
I am into business of software sales. I purchase some products from vendor and sale it to clients. It attracts 2% TDS. We have deducted the same and filed the return.
Now we fount the descripancy when we use this service for personal use we have to deduct 2% and if we resale it to client then we have to deduct 10%.
Please suggest what action to be taken.
Sir,what is the tds rate to priests who perform poojas on special occations once or twice in a year of our company’s colony Temple/s..
can u plz tel how many % for tds on consultancy service render ? is it 10% or 7.5% ?
sir i want to know in case breakage and leakage expiry material receive from our party more than 6 year for issuing credit note to party is gst applicable or not.
Pl advise how much income tax is to be deducuted on concurrent audit fees.
10%
is consultancy & marketing fees attract 2% TDS under 194J or 10%
Kindly Advice
Is installation of computer projector covered under section 194JB (Technical services@2%)?
please give me sajetion for TDS on Audit fees & professional fees
which rate and how will be it calculate
We have purchased Computer VMware Software Subscription. How much TDS will be applicable and under which section?
Payment made by Studio owner to photographers would be attract TDS u/s. 194 C or 194 J ? If its 194 J then it would be 2% as per new provision as technical services or 10% as professional services ?
Sir,
What is definition of Technical Services as Section 44AA Profession Fess Definition say still Like Engineers /Architects/Technical consultants /Interior decorators, are profession so we should deduct TDS on Profession (10%) or Technical (2%)
as on 1st April 2020
Will TDS be applicable on college Fees U/S 194J
Dear Sir,
please advise @ what % of TDS applicable for publishing books. Thanks, Saraswathi
SIR I WANT TO KNOW THAT WHETHER GUEST FACULTY LECTURER, ,GUEST FACULTY RETD PROFESSOR,VISITING FACULTY LECTURER ARE UNDER U/S 194J CATEGORY
Is the hospitals are required to deduct TDS while releasing the salary payment to a doctor. His monthly salary is only 22000/-. What is the impact flood cess in this case ?
I certainly feel that time has arrived for the Finance Bill to introduce a new 194ZZZZZZZZZZZ to say any payment to anyone on any purpose will be liable for TDS at the rates to prescribed by CBDT from time to time and on such amounts as may be decided from time to time
charges paid to an accountant ( Non-CA) for rendering accounting services Rs. 100000/-. whether ths will be covered u/s 194J or 194C.
2. Profession includes vocation as per definition in Sec. 2. Please crearify.
Pls file a E-TDS Correction Return
PLEASE CLARIFY LISTING FEES PAID BY COMPANIES TO STOCK EXCHANGE ARE LIABLE TO TAX DEDUCTION AT SOURCE U/S 194J OF I.T. ACT, 1961 OR ANY OTHER SECTION
please suggest if tds deducted under section 194 J wrongly by deductor but assessee is appointed as a employee & assessee want to file his ITR salary head .
Sir,
please clarify whether event management services are liable to tax deduction under section 194 c or 194 j of IT Act, 1961.