Section 194J: TDS on Professional or Technical Fees

Updates and details for Section 194J: TDS on Professional or Technical Fees:

In this article, I have given the brief description of Section 194J. There are also some interesting topics like Key Points in Section 194J on TDS, Exceptions to TDS Deduction under Section 194J, Time Limit to Deposit TDS under Section 194J and also Professional or Technical Service for the purpose of Section 194J. Just scroll down and read the full article for more details and keep browsing our site.

Section 194J:

As per Section 194J of Income Tax Act of 1961, an individual should deduct TDS at the rate of 10% when the following payments are made to a resident, in a fiscal year (higher than Rs.30,000):

• Amount charged as professional services fee or
• Amount charged as technical service fee or
• Non-compete fee according to the Income Tax Act of Section 28(VA) or
• Royalty.

section 194J of the Income-tax Act provides for deduction of tax at source on fees for professional or technical services.

The existing provisions of sub-section (1) of section 194J of the Act, inter-alia provides that a a person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of fees for professional or technical services or other services mentioned therein  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.

Key Points in Section 194J on TDS:

• Under Section 194J, Rs.30,000 is the maximum limit which is applicable to each item or payment independently.
• TDS under this section is also applicable on commission or remuneration or fees are given to a company’s director, even though the amount is not a part of the main salary. In these cases, the Rs.30,000 limit is not applicable.

Exceptions to TDS Deduction under Section 194J:

• No TDS should be deducted under section 194J if the amount paid or likely to be paid during the financial year does not exceed Rs..30,000.
• TDS is liable to be deducted by all class of persons except Individuals and HUF. Though if such Individual or HUF is liable to get his tax audit conducted under Section 44AB for the previous financial year, this exception won’t be applicable and they would also be required to deduct TDS under section 194J.

Time Limit to Deposit TDS under Section 194J:

The following guidelines on time limit for depositing TDS under the section must be followed:

• If the TDS deduction under Section 194J is made by the government or on behalf of the government, the deposit has to be made on the same day.
• In other cases, TDS can be deposited within a week from the month end in which the tax deduction has been made.
• If the payment is made on the last day of the fiscal year, the TDS deposit must happen within two months from that financial year’s end in which it was credited.
• Some special cases may be allowed to deduct TDS on the quarterly basis, provided the assessing officer has approved.

Professional or Technical Service for the purpose of Section 194J:

Professional service 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 purpose of Section 44AA.

Other professions notified by the board for the purposes of Section 44AA are:

1. Profession of Authorized Representative
2. Profession of Film Artist
3. Profession of Company Secretary

Technical Service Fees means fees for any rendering of any managerial, technical or consultancy services including provision of services of technical or other personnel.

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