Section 194J: TDS on Professional or Technical Fee

author portrait

Hiral Vakil

TDS
TDS Sections
Last updated on February 3rd, 2023

Professional/Technical fee is one of the most important types of payment that the business entity makes. If the entities are making any payment in respect of such fee and if it exceeds the threshold limit of INR 30,000 then the TDS will be deducted u/s 194J.

What is Section 194J?

TDS u/s 194J needs to be deducted by a deductor other than an individual or a HUF (not liable to tax audit) @ 10% on any amount paid or payable to any person which is in excess of Rs. 30,000 as:

  1. Fees for professional services
  2. Fees for technical services
  3. Any remuneration or fees or commission by whatever name called paid to a director ( other than salary)
  4. Royalty
  5. Any sum referred to in clause (VA) of section 28.

What is the meaning of Professional fees?

Professional fees are paid in lieu of services provided by a person in course of carrying on legal, medical, engineering, or architectural profession or the profession of accountancy or interior decoration or technical consultancy or advertising, or such profession as is notified by the Board for the purpose of section 44AA.

Fees for Technical Services mean fees paid for rendering any managerial, technical, or consultancy services.

When to deduct TDS under section 194J?

TDS shall be deducted at the time of:

It shall be noted that if the payee credits such amount to the “suspense account” or any other account by whatever name called, it shall be considered as deemed payment, and also TDS is required to be deducted on such credit.

Rate of TDS u/s 194J

TDS was applicable at 10% on all the services. However, from FY 2020-21 onwards, the following changes have been made:

chart of rates u/s 194J
TDS Calculator
TDS (Tax Deducted at Source) is a part of Income Tax. TDS should be dedcuted by a person for specific payments made.
Explore
TDS Calculator
TDS (Tax Deducted at Source) is a part of Income Tax. TDS should be dedcuted by a person for specific payments made.
Explore

TDS shall be deducted at the rate of 20% in the case where the payee does not provide the PAN.

Who is exempt from deduction of TDS u/s 194J?

Section 194J shall not apply in the following cases :

EXAMPLE 1: Firm ABC paid INR 20,000 as fees for professional fees and INR 20,000 as fees for technical services to Mr. Akash. Here firm ABC is not liable to deduct the TDS of Mr. Akash as an individual payment of each item that doesn’t exceed INR 30,000.

EXAMPLE 2: Mr. Jay paid INR 50,000 to Mr. Ram as a professional fee. As the aggregate limit of INR 30,000 has been exceeded, Mr. Jay is liable to deduct TDS @10% on the total amount of INR 50,000.

TDS Return

The payer/deductor is liable to deduct tax u/s 194J of the Income Tax Act and file a TDS Return in Form 26Q on a quarterly basis.

Find the best plan
Find the best plan
GET EXPERT HELP
Find the best plan
Find the best plan

TDS Certificate

Deductor/Payer shall issue a quarterly TDS Certificate to the payee/deductee in Form 16A. The deductor can download Form 16A from the TRACES.

FAQs

What are specific cases where Section 194J is applicable?

TDS deduction u/s 194J is also applicable to the payments made to hospitals, HR consultancy, Recruitment agencies, and advertising agencies.

When TDS is deducted at a lower rate under section 194J?

As per section 197, the payee can apply in form no. 13 to his Assessing Officer (AO) for a lower deduction of TDS ( lower than the rate specified under section 194J).
If the AO is satisfied with the justification provided by the payee, he will issue a certificate for a lower deduction of income tax. Such a certificate has to be produced to the deductor for a lower rate of deduction. The payee can take the benefit of a lower rate for the period stated in the certificate.

What is the limit of section 194J?

Rs. 30,000 is the limit of section 194J. The limit is calculated on an aggregated basis against the professional/technical services provided.

Got Questions? Ask Away!

  1. Hey @Dia_malhotra

    As per section 194A, TDS on interest other than interest on securities is required to be deducted by any person other than Individual or HUF at the rate of 10%, when paid to a resident. No surcharge, education cess or SHEC shall be added to the above rate.

    Hope this helps!

  2. Hey @HarishMehta

    TDS u/s 194J needs to be deducted by deductor other than an individual or a HUF, @ 10% on any amount paid or payable to any which is in excess of INR 30,000 as:

    1. Fees for professional services
    2. Fees for technical services
    3. Any remuneration or fees or commission by whatever name called paid to a director ( other than salary)
    4. Royalty
    5. Any sum referred to in clause (VA) of section 28.

    Hope this helps!

  3. Hello @the_AK,

    Against gross income, you can claim business expenses that you have incurred for earning that income. So you can claim this service fee as a business expense from the gross income received by you.

    Hope this helps!

  4. Hello @Anuj_Agarwal,

    TDS will be deducted by the company when the interest is actually paid on the securities, so at that time whoever is the owner of such security shall receive the interest and can claim credit of interest.

    Hope this helps!

  5. I have respectable salary income and 1000 insurance commission…ie old commission…not claiming any expenses…can i show it as other income in itr1 or have to file itr 3

  6. Hi @Shivam_B

    If you have income from salary and income from insurance commission (business income), then you will be required to file ITR 3.

  7. Itr 3 is so big…have to pay heavy charges…for filing…will it be defective if i do so ie reporting 1000 as other income in itr1 along with salary income…have closed down the insirance work since yesrs…i even contacted commssiom giving broker and closed my commission account…still they are showing in 26as wheress i am not receiving in real

  8. Hi @Shivam_B

    As per the recent utilities, ITD gives you the option to select only the schedules applicable to you while filing ITR.
    Thus, you are not required to go through the entire ITR 3 form. You can also prepare and file ITR on Quicko, where you can upload form 16 and add commission income under the head “Business & Profession” and file ITR 3, without any charges as Quicko is a DIY platform helping individuals to file taxes.

Continue the conversation on TaxQ&A

17 more replies

Participants

Avatar for Shrutika_Shah Avatar for Bharti_Vasvani Avatar for Surbhi_Pal Avatar for Sundaraiah_Kollipara Avatar for Sreetama_Chakraborty Avatar for Yesha Avatar for Shivam_B Avatar for Dia_malhotra Avatar for the_AK Avatar for Honest_Indian Avatar for Sudais Avatar for Anuj_Agarwal Avatar for HarishMehta