Section 194J – TDS on Professional or Technical Fees

Meaning and applicability of Section 194J – TDS – Professional, Technical Fees

Section 194J – TDS – Professional, Technical Fees- Any person who is paying fees to any resident person for specified services, then TDS is required to be deducted u/s 194J @ 10% if such payment in a year exceeds Rs 30,000.  See updated TDS chart after the relaxation due to COVID Lockdown.

Who is liable to deduct TDS (Deductor)?

• Central government or state government
• Local authority
• Corporation
• Company
• Co-operative society
• Trust
• University
• Registered Society
• Firm
• Individual/HUF/AOP/BOI required to get accounts audited u/s 44AB

Which services are covered under this section?

• Professional services.
• Technical services
• Remuneration or fee or commission to a director of a company (which is not liable to TDS u/s 192).
• Royalty
• Non-competence fees.

What is the meaning of Professional services?

• Legal services
• Medical services
• Engineering services
• Architectural services
• Accounting services
•  Interior decoration services
• Advertising services
• Notified professions like sports activities; sportspersons, umpires, referees, coaches, trainers, team physicians, physiotherapists, event managers, commentators, anchors, sports columnists

Related Topic:
Notification for Deduction of TDS at Lower Rate

What is the meaning of Technical services?

Includes:

• Managerial 
• Technical
• Consultancy services

Excludes: 

• Construction
• Assembly
• Mining

Is there any limit up to which no TDS is required to be deducted?

No TDS is required to be deducted if the payment in a year does not exceed Rs 30,000. This limit of Rs 30,000 is applicable individually for payment as professional fees or technical fees or royalty or non-competence fees. However, there is no such limit for fees paid to the director for rendering his professional services, meaning thereby TDS is required to be deducted even if a single rupee is paid to them.

Related Topic:
Section 194C – TDS on payment to contractor or subcontractor

Example:

No TDS is required to be deducted in the above scenario. 

What is the rate with which TDS is to be deducted?

When TDS is to be deducted?

Earlier of:

• Credit to the account of the receiver
• Actual payment

What is the time limit to Deposit TDS?

What is the time limit to file TDS return?

Any consequences of non-compliance of section 194C?

• Levy of interest: If TDS is not deducted at all (1% per month or part of the month) or deducted but not deposited then interest is required to be paid on such amount (1.5% per month or part of the month). 

• Disallowance of expenses: The person is not eligible to claim a deduction of expenses under head PGBP. Among such expenses, 30% of the amount shall be disallowed. However, if TDS is deposited in subsequent years then such disallowed expense shall be allowed in the year in which TDS is deposited. 

Other important points:

• Any payment made to recruitment agencies is liable to deduct TDS under this section.
• TDS under this section will be applicable on the amount (excluding GST) only if the GST value is shown separately on the bill.
• Any payment in the form of the commission made by the media house to the advertising agency will be liable to deduct TDS under this section. 

What is relief on TDS due to COVID Lockdown?

Yes, the government has reduced the TDS rate u/s 194J for the period starting from 14th May 2020 to 31st March 2021 by 25%.

you can see the revised TDS chart here.  Section 194J – TDS – Professional, Technical Fees is discussed here.