Section 194J TDS on Fees for professional or technical services

This article briefly covers about Important provisions of Section 194J of Income tax act 1961 - Tax deducted at source (TDS) on Fees for professional or technical services.

Section: 194J.

Payer: 

Any person,(not being an individual or a Hindu undivided family not liable to tax audit u/s 44AB of income tax act in last PY)

Payee: 

Any Resident person

Nature of Payment: 

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,

TDS Rate: 

• 2% in case of fees for technical services (not being a professional services) (or) royalty where such royalty is in the nature of consideration for sale, distribution or exhibition of cinematographic films and
• 2% in the case of a payee, engaged only in the business of operation of call centre.
• 10% in other cases

Note:

1. No TDS if :

 (i) Fees for professional services is upto Rs 30,000 p.a.

(ii) Fees for technical services is upto Rs 30,000 p.a.

(iii) Royalty is upto Rs 30,000 p.a.

(iv) Non compete fee is upto Rs 30,000 p.a.

2. No TDS if the payment for professional services is made or credited for their personal purposes of individual or a Hindu undivided family.

3. No TDS u/s 194J by an Individual or HUF even if covered by sec 44AB in the last PY , if the payment is being made for :

Royalty or

Non compete fee or

Payment to a director of company 

Timing of deduction: 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.

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;

(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.

Source "income tax india"

Share this post