TDS on fees for professional or technical services
As per section 194J of income tax act, 10% TDS is to be deducted on fee for professional or technical service, if the payment exceeds Rs.30,000.
Points covered:
- What is section 194J of income tax act
- Which types of payments are cover under section 194J of income tax act?
- What is the meaning of Professional and technical services?
- Who is require deduct TDS u/s 194J?
- What is the rate of TDS u/s 194J of income tax act
- Time of deduction at source u/s 194J
- What is threshold limit for deducting tax at source u/s 194J?
- What is the due date of payment of TDS u/s 194J?
- What is the due date of filing return of TDS on professional and technical fees u/s194J?
- What if TDS is not deducted ?
- When and by whom is the TDS certificate issued ?
- FAQ
What is section 194J of income tax act?
TDS means tax deducted at source. If entities are making payment in respect fees for professional or technical service and it exceeds Rs. 30,000 than TDS needs needs to be deducted.
Further, TDS on such fees is to be deducted @10% on amount of payment. And TDS is to be deducted by deductor other than Individual and HUF.
In brief, section 194J of income tax act defines the provisions related to TDS on on fee for professional or technical service . And applies to those who pay fee for professional or technical services. For instance professional fees are fees paid to doctor,lawyer,chartered accountant,engineer or architect etc. Further, technical service includes providing managerial,technical or consultancy service.
At the time of filing return the deductee can claim credit for tax deducted at source.
Which types of payments are cover under section 194J of income tax act?
Section 194J covered following types of payments are as follows:
- Professional fees
- Fees for technical services
- royalty
- Next, Payment made to director except salary (for instance sitting fees or any other service provided)
- And, non-compete fees under section 28(VA) of income tax act.
What is the meaning of Professional and technical services?
Professional service under section 194J of income tax act
Further, Professional service means service provided by professional in carrying on legal ,medical, architectural or engineering service. And, includes accountancy, interior decoration, advertising or technical consultancy service or any other profession specified by CBDT under section 44AA.
Further, CBDT has notified following services as professional service under section 194J:
- Company Secretary
- Film Artist
- Sportsperson
- And, Commentators
- Event manager
- Anchor
- Umpire and referee
- Coaches and trainer
- Team physician
- Lastly, Sports columnist etc.
Technical service under section 194J of income tax act
Technical service means managerial, technical or consultancy service but it does not include payments made as salary.
- Managerial service include conducting ,handling ,supervising or managing of business of client.
- Further, technical service means providing service which includes technical expertise.
- Lastly, consultancy service means providing necessary advice or consultation for business.
Note: Technical service include service provide provided by human and not by machine or robot.
Who is require to deduct TDS u/s 194J?
However, according to section 194J, any person who pays fees to resident for technical or professional service shall deduct tax at source if payment in a year exceeds Rs.30,000.
Person includes fillowing
- Company
- Firm
- Corporative Society
- And, Trust
- Central or State Govt.
- Local Authority
- Registered Society
- Lastly, Individual or HUF whose books of accounts are subject to audit u/s 44AB(a) or (b)
What is the rate of TDS u/s 194J of income tax act?
Rate of tax at source is depends on the type of service provided by the professional.
Lets learn rate in tabular form:
| Payment | Rate |
| Fees for technical services or royalty in nature of sale, distribution or exhibition of cinematographic film | 2% |
| Any payment made to operator of call centres | 2% |
| Any other payments like professional services | 10% |
| If payee does not furnish PAN | 20% |
Time of tax deduction under section 194J
tax at source u/s 194J is to be deducted at earlier of following:
- date of invoice or
- at the time of actual payment (cash or cheque)
What is threshold limit for deducting tax at source u/s 194J?
Although TDS on payment of fees for professional or technical services u/s 194j is to be deducted if such payment is exceeds Rs.30,000 in a year.
Further, Rs.30,000 is applicable for each item or each payment individually.
For instance payment made towards technical services for F.Y. 2-23-24 is Rs.15,000 and for professional service is Rs. 22,000. than
TDS is not required to deducted because payments made is below the threshold limit prescribed u/s 194j of income tax act.
In brief both services are to be considered individually.
What is the due date of payment of TDS u/s 194J?
TDS on fees for professional or technical services u/s 194j shall be paid on or before due date as may be specified.
TDS has to be deducted at the time of issue of invoice or actual payment of fees whichever is earlier . Payment to the government needs to be made within 7 days from the end of the month in which the deduction is made. In case the amount has been paid/ credited in March, the deadline is 30th of April.
For instance, TDS deducted in the month of april 2023 is to be paid on or before 7th may 2023.
What is the due date of filing TDS return on professional and technical fees u/s194J?
Subsequent, to the payment of TDS to Government ,the quarterly return in form 26Q is to be filed.
| Particulars | Due date |
| April – June | 3oth july 2022 |
| July – Sept | 31st Oct 2022 |
| Oct – Dec | 31st Jan 2023 |
| Jan – Mar | 31st May 2023 |
What if TDS is not deducted u/s 194J ?
If TDS is deducted but fails to pay to govt then he/she liable to pay interest at 1.5% per month.
And if TDS is not deducted than he/she shall be liable to pay interest at 1% per month. And 30% of the expenditure shall be disallow in the year in which expenses claimed. But expenses is re-allow in year in which TDS payment is made.
In addition to interest, deductor is also liable for late filing fees mentioned u/s 234F i.e. 200 per day or amount of TDS whichever is lower.
When and by whom is the TDS certificate issued ?
Further, every person who deduct TDS is duty bound as per section 203 of the income tax act to furnish a certificate to the payee that acknowledges tax deduction. And, this certificate is known as TDS certificate. Further, TDS on fees for professional or technical services u/s 194j form 16A is issue after every quarter.
Due date for issue of TDS certificate u/s 194J
| Period | Date of issue of certificate |
| 1st Quarter – Apr to Jun | 1st Quarter – Apr to Jun |
| 2nd Quarter- Jul to Sep | 15th Nov 2022 |
| 3rd Quarter- Oct to Dec | 15th Feb 2023 |
| 4th Quarter- Jan to Mar | 15th Jun 2023 |
