194J – TDS on Professional or Technical Services A.Y.2023-24

Professional services mean services provided by professional persons like advocates, chartered accountants, engineers or architects. Technical services mean the services which are in nature of technical, managerial and consultancy. Here, we will discuss the exemption limit, time of deduction of TDS, the time limit to deposit TDS, TDS Returns, form 16a and more about TDS on professional service, technical services, royalty and non-compete fee payments.

Summary

194J Fee for Technical Services, Professional Fee, Royalty, Non-Compete Fee, Director’s Remuneration

Who will deduct TDS? 

  • Any person except individual/HUF

Rate of TDS? 

  • 2% if the payee is call centre
  • 2% if the payee is FTS/royalty for cinema films
  • 10% other

Not applicable?

  • Amount paid is up to Rs.30,000/- each in the case of fee for technical service, professional fee, royalty, non-compete fee
  • NO limit on the director’s remuneration

Persons Responsible to Deduct Tax/TDS

  • A payer (if a company)
  • Any individual or a HUF, whose turnover/gross sales/total receipts are more than Rs. 1 Crore in case of business or Rs. 50 lacs in the case of profession, in the preceding year, shall also be liable to deduct tax at source under section 194J on payment of fees for professional or technical services.

Exemption Limit

  • Rs.30,000
  • No exemption limit in case remuneration or fees or commission to a director.

TDS Rates on fees for Technical or Professional Services

  • The rate of TDS is at @10%.
  • W.e.f.1-4-2017, the tax on payments made to operators of call centres shall be deducted at a reduced rate of 2%.
  • Note: TDS will be deducted @20% if PAN is not provided by deductee to the deductor (Sec.206AA) w.e.f. 1-4-2012.
  • Surcharge and Health & Education cess on TDS rates is applicable only to Non-Residents and Foreign Companies. No surcharge and Health & education cess is applicable on the payment to Residents/HUFs/firms/Domestic companies.

When Liability to Deduct TDS arises

  • At the time of payment or credit whichever is earlier.
  • Total payment paid or credited during a financial year to the same person, by way of fees for professional services, or fees for technical services, or royalty or sum does not exceed Rs.30,000 in each case.

No deduction in the case of

  • An individual or HUF is not required to deduct TDS on payment of royalty or sums, irrespective of his turnover/gross sales/total receipts.
  • The payee does not need to deduct TDS if payment is exclusively for personal purposes.
  • No need to deduct TDS if payment is made to Central Government, RBI, or Any corporation by the central or state government and A mutual fund notified

Time Limit to Deposit TDS

Where tax is deducted by the office of the Government

  • on or before 7 days from the end of the month in which the deduction is made; and
  • on the same day where the tax is paid without production of an income-tax challan.

In any other case, 

  • on or before 7 days from the end of the month in which the deduction is made; and
  • on or before 30th April where the income or amount credited or paid in the month of March.

TDS Returns for Profession & Technical Services

Another duty of the deductor is to submit TDS return/TDS statement within the prescribed limit as given below.

  • 31st July
  • 31st October
  • 31st January
  • 31st May

Issue of TDS Certificate

The deductor will issue a TDS certificate within 15 days from the due date for furnishing the statement/TDS Return.

  • 15th August
  • 15th November
  • 15th February
  • 15th June

More Information

The other provisions like an online deposit of TDS, Issue of TDS certificate, Quarterly Returns of TDS and penalty on failure to deposit TDS or statements are common for TDS deduction on “fees for technical or professional services, royalty and certain other sums” like other nature of payments to deduct TDS.

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