Any person (other than individual or huf who is not liable to audit u/s 44AB) who is responsible for paying to a resident
- Fees for professional services
- Fees for technical services
- 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
- 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
- If payment is made by an Individual or Huf exclusively for personal purposes, then tax is not required to be deducted.
- Assessee can apply to assessing officer for no TDS or TDS at lower rate under Section 197.
- 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.
TDS on certain payment to director covered under section 194J
The payment of remuneration to whole time director or managing director will be considered as salary under section 192 and thus liable for TDS under this section.
While payment of sitting fees, fees for attending meetings etc paid to any director (whether whole time director/managing director or any other director) is considered as payment of professional fees under section 194J. TDS is required to be deducted at the rate of 10% and no threshold limit of rs. 30,000 applies to this. Therefore even if the payment is less then Rs. 30,000 TDS is required to be deducted.
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