194J TDS AY 2023-24 & AY 2024-25: A complete explanation of section 194J TDS will be presented in this article, including TDS rates, TDS limits, procedures, threshold limits, returns, and more. In accordance with Section 194J of the Income Tax Act of India, TDS is calculated on payments made toward professional and technical fees. 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 services, technical services, royalty, and non-compete fee payments.
Latest Updates: Check Latest Amendments about TDS and TCS in Budget 2023
194J TDS Summary
194J Fee for Technical Services, Professional Fee, Royalty, Non-Compete Fee, Director’s Remuneration – Here is the important summary about section 194J TDS.
|Who will deduct TDS?||Every person, other than an individual or HUF, shall be required to deduct tax under this provision.
An individual or HUF shall be liable to deduct tax under this provision if his turnover or gross receipts, during the financial year immediately preceding the financial year in which sum is paid or credited, exceeds Rs. 1 crore in case of business and Rs. 50 lakhs in case of a profession.
|Rate of TDS||2% (fees for technical service, payment to call centres, payment of royalty for sale, distribution or exhibition of cinematographic films)
10% (All other payments covered under this section like professional services)
20% payee does not furnish his/her PAN
|Threshold Limit||Amount paid is up to Rs.30,000/– each in the case of fee for technical service, professional fee, royalty, non-compete fee|
Persons Responsible to Deduct Tax/TDS
In accordance with section 194J of the Income Tax Act, the following persons are responsible for the deduction of TDS. They must deduct the applicable TDS at the time of payment or credit and remit the same to the government. The amount of TDS to be deducted depends on the type of payment.
- 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 the 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.
The following payments shall be subject to deduction of tax under section 194J.
(b) Fees for Professional services
(c) Fees for Technical Services
(d) Any remuneration, fees or commission (other than salary) payable to the Director of the Company
(e) Any sum paid or payable in cash or kind for:
• Not competing in business or
• Not sharing any know-how, patent, copyright, trademark, license, franchise or any other business or commercial rights of similar nature
Threshold Limit 194J
In accordance with the provisions of section 194J, the following threshold limit applies. Any payments made by an employer to a professional or contractor in the nature of fees, commission, remuneration, or any other form of payment must be reported to the tax authorities if they exceed the threshold limit. The limit is currently set at INR 30,000 per financial year.
- If the payment for the professional and technical services exceeds Rs 30,000, TDS must be deducted under section 194J. This Rs 30,000 maximum limit applies to each item or payment separately.
- No exemption limit in case remuneration or fees or commission to a director. Even if the payment is small, tax must be deducted before it can be made to the director.
194J TDS Rates
The following are the TDS rates under section 194J for Fees for Technical Services, Professional Fees, Royalties, Non-Compete Fees, and Director’s Remuneration. The payer must deduct TDS when making payments to individuals, HUFs, or any other entity. The payer must also deposit the deducted TDS to the government within the prescribed time, otherwise, they may be liable to pay interest and penalties.
- The rate of TDS is at @10%.
- W.e.f.1-4-2017, the tax on payments made to operators of call centers shall be deducted at a reduced rate of 2%.
- Note: TDS will be deducted @20% if PAN is not provided by the 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.
Time of Deduction TDS 194J
It is the responsibility of the person responsible for deducting TDS under section 194J to deduct TDS in accordance with the following rules. TDS needs to be deducted on time and at the correct rate.
- 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.
- 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 194J
Deductors are responsible for depositing TDS within the due date. Here is the time limit to make TDS payment online.
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 194J
Every quarter, the person responsible for deducting tax at source under section 194J must file Form 26Q, Statement of Tax Deducted at Source.
- 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
Defaults or late deductions of TDS 194J
Interest on default of TDS Payment: In the case of a payer who deducted TDS but delayed depositing it with the government, interest must be paid as follows.
No Deduction: From the date, such tax was required to be deducted until the actual deduction, interest shall be charged at 1% per month or part of the month.
Deducted but not Paid: The government shall be entitled to receive interest at a rate of 1.5% per month/part of a month from the date when the tax was deducted until the date of payment.
Failure to furnish TDS Statement: If a person is responsible for deducting tax at source, he is required to furnish a quarterly statement of tax deducted at source, otherwise he will be liable to pay a fee under Section 234E of Rs. 200 per day that the default continues. The fee, however, shall not exceed the amount of TDS.
Furthermore, he is liable for penalties under Sections 271H and 272A.
More Information About 194J
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.
FAQ on 194J TDS
Here are the most common and important questions visitors ask. All questions have been answered.
Q. According to section 194J, who is responsible for deducting TDS?
A. Tax deductions are required under this provision for all persons other than individuals and HUFs.If an individual or HUF’s turnover or gross receipts exceed Rs. 1 crore during the financial year immediately preceding the financial year in which the sum is paid or credited, then tax is liable to be deducted under this provision. For businesses, this amount is 1 crore, and for professionals, 50 lakhs.
Q. What payments or services are covered by Section 194J?
A. The following payments shall be subject to deduction of tax under section 194J. Royalty, Fees for Professional services, Fees for Technical Services, Any remuneration, fees, or commission (other than salary) payable to the Director of the Company, Any sum paid or payable in cash or kind for: Not competing in business or Not sharing any know-how, patent, copyright, trademark, license, franchise or any other business or commercial rights of similar nature.
Q. What is the most popular notification under section 194J?
Notification No. 88/2008, Dated 21-8-2008
In exercise of the powers conferred by clause (a) of the Explanation to section 194J of the Income-tax Act, 1961, Central Board of Direct Taxes hereby notifies the services rendered by the following persons in relation to the sports activities as “Professional Services” for the purpose of the said section, namely:
(a) Sports Persons,
(b) Umpires and Referees,
(c) Coaches and Trainers,
(d) Team Physicians and Physiotherapists,
(e) Event Managers,
(g) Anchors and
(h) Sports Columnists.
Q. Is the remuneration paid to consultant doctors employed by the assessee hospital the only type of payment subject to TDS under section 194J?
A. Remuneration paid to consultant doctors employed by the assessee hospital would be subject to TDS under section 194J and not under section 192. [IT v. Manipal Health Systems (P.) Ltd.  57 taxmann.com 255 (Karnataka)]
1 thought on “194J TDS on Professional or Technical Services AY 2023-24 & 2024-25”
i am paying ST on Purchases.Can i pay TDS on Amount After deducting Service tax.