Simplification of the provisions of tax deduction at source in case Fees for professional or technical services under section 194J

The existing provisions of sub-section (1) of Section 194J of the Act, inter-alia provides that a specified person is required to deduct an amount equal to ten per cent. of any sum payable or paid ( whichever is earlier) to a resident by way of fees for professional services or fees for technical services provided such sum paid/payable or aggregate of sum paid/payable exceeds thirty thousand rupees to a person in a financial year.

In order to promote ease of doing business, it is proposed to amend section 194J to reduce the rate of Deduction of tax at source to two per cent. from ten per cent. in case of payments received or credited to a payee, being a person engaged only in the business of operation of call center.

This amendment will take effect from the 1st day of June, 2017.

[Clause 65]

Extract of relevant clause from Finance Bill, 2017

Amendment of section 194J.

65. In section 194J of the Income-tax Act, after the third proviso and before the Explanation, the following proviso shall be inserted with effect from the 1st day of June, 2017, namely:—

“Provided also that the provisions of this section shall have effect, as if for the words “ten per cent.”, the words “two per cent.” had been substituted in the case of a payee, engaged only in the business of operation of call centre.”.

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  1. Sanjay Jeena says:

    Hi can anyone explain the definition on call centre which type of service are covered under the same, anyone have any idea where we can find the exact definition of Call centre..

  2. Dhruv Gupta says:

    Is this 2% in place of 10% only applicable for call centre people? What about consultants?? What would be the TDS deducted for them?

  3. Basuki Nath Jha(Hon's) says:

    As per above details the amended rate of TDS section 194j changed only for who engaged in call center business . The rate of 194J is same from other than call center business according to the service receiver point of view.

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June 2021