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What is Section 194J of Income Tax Act: TDS on Fees for Professional or Technical Services

Who Is Responsible for Deducting TDS as Per Section 194J?

What Are the Payment Types Covered Under Section 194J?

What Does Professional & Technical Services Mean in Section 194J?

What Is the Threshold Limit to Deduct TDS Under Section 194J?

The threshold limit should be above ₹ 30,000 in a financial year for TDS to be deducted. Note that this payment limit for deducting TDS is computed individually under the heads: ‘technical’, ‘professional’, ‘non-competence’ and ‘royalty’ fees. For example-

Mr. Alok receives payment of ₹ 20,000 and ₹ 25,000 for providing professional and technical services, respectively, then the aggregate payment is as follows:

Particulars

Amount

Payment received for providing professional services

₹ 20,000

Payment received for providing technical services

₹ 25,000

Aggregate payment made to Mr Alok

₹ 45,000

In this case, the deductor will not deduct tax at source while making payments as each payment made for respective services does not exceed ₹ 30,000. 

Additionally, note that there is no threshold limit for payment made to directors for TDS to be deducted from such payments.

Also, while calculating the limit of ₹ 30,000, aggregate of such payments in a financial year under each heading must be seen. For example - 

Mr. A has provided ‘professional’ services to H Ltd. He raises two invoices of Rs 25,000 and Rs 7000. The aggregate amount is Rs 32,000 which exceeds the threshold limit. Hence, H Ltd has to deduct TDS on Rs 32,000. 

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What Is the TDS Rate as Per Section 194J?

Here is the rate at which a payer deducts TDS while making payments for technical and professional services under Section 194J:

Particulars

TDS Rates

Royalty in nature of distributions, sales, and exhibitions of cinematographic films and fees for professional services

10%

Fees paid for technical services and payee associated with the business of operating call centres

2%

A payee who does not provide PAN

20%

When Is TDS Deducted According to Section 194J?

When Is Section 194J of the Income Tax Act Not Applicable?

What Is the Time Limit to Deposit TDS as Per Section 194J?

Deductor must deposit TDS within the following deadlines mentioned below:

Non-Government Taxpayers

Particulars

Due Dates for TDS Payment

The amount is transferred or paid in March

On or before 30th April

The amount is credited or paid other than March

Within 7 days from the completion of the month in which the payer deducted TDS

Government Taxpayers

Particulars

Due Dates for TDS Payment

A deductor needs to deposit TDS without using challan

The same day on which TDS has been deducted

A payer needs to deposit TDS using challan

7th day of the subsequent month

In specific cases, a deductor can deduct TDS in a quarter of a financial year given the approval of an Assessing Officer.

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What Are the Due Dates to File Tax Return as Per Section 194J?

A deductor, after depositing TDS, needs to fill Form 26Q for filing quarterly return of TDS within the following due dates:

Particulars

Due Dates for TDS Return Filing

April to June

31st July

July to September

31st October

October to December

31st January

January to March

31st May

When Does a Deductor Issue TDS Statement Under Section 194J?

A deductor issues Form 16A to the payee or deductee within the following due dates:

Particulars

Dues Dates to Issue TDS Certificate

April -June

15th August

July to September

15th November

October to December

15th February

January to March

31st May

Consequences of Late or Non-Deduction of TDS Under Section 194J

Frequently Asked Questions

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