Section 194J of Income Tax -TDS on Fees for Professional or Technical Services
About TDS on Fees for Professional or Technical Services as per Section 194J of the Income Tax Act
Section 194J - TDS on Fees for Professional and technical Services - Analysis
Section 194J of the Income Tax Act,1961 prescribes the TDS on any fees paid for Professional or Technical Services.
Who is liable to deduct TDS u/s 194J?
Any person (other than Individual or HUF) who pays any fees for professional or technical services, royalty or remuneration to Directors (other than salary) to any resident person is required to deduct TDS.
In the case of Individual or HUF, TDS is required to be deducted only when the turnover of the business of the Individual or HUF is above 1 Crore or if in the profession, the turnover of the profession is above 50 lacs.
What is the threshold limit for deduction of TDS on Professional or Technical Services?
No TDS is required if the amount of Professional or Technical Services fees paid is up to Rs.30000/- during a Financial year.
What is the rate of TDS u/s 194J?
Rate of TDS deduction u/s 194J is :
(a) 2% if it is :
(i) Fees for Technical Services
(ii) Royalty like consideration for sale, distribution or exhibition of cinematographic films
(b) 10% if it is :
(i) Fees for Professional Services
(ii) Any royalty other than listed above
(iii) Remuneration to Directors (other than salary)
If the payee is engaged in the business of only a call centre, the rate of deduction will be 2%.
Definition of Professional, Technical Services and Royalty :
The definition of the above terms will be as under :
(a) "professional services" means services rendered by a person in the course of carrying on legal, medical, engineering or architectural professions or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AA or of this section;
(b) "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries";
(c) "royalty" means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head "Capital gains") for—
(i) the transfer of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property ;
(ii) the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or trade mark or similar property ;
(iii) the use of any patent, invention, model, design, secret formula or process or trade mark or similar property ;
(iv) the imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill ;
(iva) the use or right to use any industrial, commercial or scientific equipment but not including the amounts referred to in section 44BB;
(v) the transfer of all or any rights (including the granting of a licence) in respect of any copyright, literary, artistic or scientific work including films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting
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