Home > Income Tax > TDS/TCS > Section 194J – Fees for Professional or Technical Services

Section 194J – Fees for Professional or Technical Services

U.C Date : 11 Jan 2016

Any person (other than individual or huf who is not liable to audit u/s 44AB) who is responsible for paying to a resident

  1. Fees for professional services
  2. Fees for technical services
  3. Royalty
  4. Any remuneration or fees or commission by whatever name called, other than those on which tax is deductible u/s 192 to a director of a company
  5. Any sum referred u/s 28(va)

Rate of TDS – 10%. If the recipient of income doesn’t furnish his PAN to deductor then TDS is to be deducted @ 20%. No surcharge, education cess or SHEC shall be added to the mentioned rates.

Tax is to be deducted at the time of credit of such income to the account of the payee or at the time of payment whichever is earlier.

TDS not required to be deducted in following cases

  1. If payment is made by an Individual or Huf exclusively for personal purposes, then tax is not required to be deducted.
  2. Assessee can apply to assessing officer for no TDS or TDS at lower rate under Section 197.
  3. No tax is required to be deducted where the amount of such sum or the aggregate of the amounts of such sums credited or paid or likely to be paid or credited during the financial year does not exceed
  • 30,000 in case of fees for professional services or
  • 30,000 in case of fees for technical services or
  • 30,000 in case of royalty or
  • 30,000 in case of sum referred u/s 28(va)

The amounts are calculated for each of the above categories separately.

Professional Services covered under section 194J

Professional services means services which are notified by the board under section 44AA and sports person, coaches and trainers, event manager, anchors, film artists.

Technical Services covered under section 194J

Technical services mean any consideration for rendering services of  managerial, technical ,consultancy nature But does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head salaries.

Other Points

No limit is defined for payment to director, it means any payment to director is liable to TDS.

Actual expenses which are reimbursed cannot be deducted out of bill amount for the purpose of calculation of TDS. If the amount reimbursed is claimed separately then no TDS provisons applicable on such amount.

TDS on service tax component  – If the service tax amount is indicated separately in the invoice or agreement/contract then the tax shall be deducted on the amount paid/payable without including such service tax component. Circular no. 01/2014

Also Read:

Bare Act for Sec 194J

Bare Act for Sec 194J

(1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of—

(a)  fees for professional services, or

(b)  fees for technical services, [or] [(ba)  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] [(c)  royalty, or

(d)  any sum referred to in clause (va) of section 28,]

shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to  [ten] per cent of such sum as income-tax on income comprised therein :

Provided that no deduction shall be made under this section—

(A)  from any sums as aforesaid credited or paid before the 1st day of July, 1995; or

(B)  where 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 by the aforesaid person to the account of, or to, the payee, does not exceed—

(i)   [thirty thousand rupees], in the case of fees for professional services referred to in clause (a), or

(ii)   [thirty thousand rupees], in the case of fees for technical services referred to in  [clause (b), or] [(iii)   [thirty thousand rupees], in the case of royalty referred to in clause (c), or

(iv)   [thirty thousand rupees], in the case of sum referred to in clause (d) :] [Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such sum by way of fees for professional services or technical services is credited or paid, shall be liable to deduct income-tax under this section :] [Provided also that no individual or a Hindu undivided family referred to in the second proviso shall be liable to deduct income-tax on the sum by way of fees for professional services in case such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family.]

Explanation.—For the purposes of this section,—

(a)  “professional services” means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AA or of this section;

(b)  “fees for technical services” shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9;

1[(ba)  “royalty” shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;]

(c)  where any sum referred to in sub-section (1) is credited to any account, whether called “suspense account” or by any other name, in the books of account of the person liable to pay such sum, such crediting shall be deemed to be credit of such sum to the account of the payee and the provisions of this section shall apply accordingly.

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