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TDS on Professional Taxes – Sec 194J


TDS Section 194J of the Income Tax Act 1961 includes provisions regarding the TDS deduction of fees for technical as are included well as professional services.

What is Included in 194J

The Following is Included in the 194J
Professional fees that are paid to Lawyer, Doctor, Engineer, Architect, Chartered accountant, Interior decorators, Advertisers, etc…Technical services like managerial, technical, consultancy services. The payments to residents are covered under section 194J.

Amendments of Section 194J under TDS:

• Technical services, which don’t fall under professional Services, TDS will be deducted under Section 194J at a rate of 2% and rate can reach up to 10% of depending on the cases.
• If there is a turnover of more than 1Crore in total sales, gross receipts for an Individual or HUF from the business or Rs 50 lacs in case of the profession during the Financial year, Immediately in which such interest is credited or paid, shall be liable to deduct TDS.
• Monetary limits are substituted under Section 44AB wherever required.

Deduct TDS Under Section 194J?

Everyone except an individual/HUF who is liable to make the following payments has to deduct TDS under Section 194J:
• Fees to be paid for professional services, technical services
• Any remuneration/ fees/ commission paid to director of a company except the payment on which tax is deductible under section 192 or Royalty
• Non-compete fees Under 28(VA)

TDS Rates under 194J

TDS rate under section 194J Constitutes to 2%-10%. If Payee is engaged in the business operation of the call center then he/she comes under the 2% tax slab. In the case where the payee is not involved In any of the business operations under 194J, then he/she is subjected to 10%. However, the PAN is to be furnished in both cases.In case of the absence of PAN, TDS deducted will constitute 20%. TDS (Tax Deducted at Source) will be not deducted where the prescribed payment or credit does not exceed the threshold limit. Of 30,000

Time for TDS Deduction

• The credit of the amount to the payee’s account
• Payment of amount to the payee either in the mode of cash/ cheque/ draft or any other medium, whichever is to be credited earlier.

Exemption under TDS 194J

Individual/HUF is not liable to pay TDS under section 194J if the payment is made or credited exclusively for personal purposes.