Section 194J – TDS on Professional Services or Technical services

Section 194J – TDS on Professional Services or Technical services. TDS is required to be deducted by the service receiver to the service provider under 194J. TDS is a mandatory deduction, which needs to be deposited into government treasury as on prescribed date and specified rate.• Section 194J – Professional fees, technical fees, royalty or remuneration to a director. Now Check more details for ” Section 194J – TDS on Professional Services or Technical services” from below…

Section 194J – TDS on Professional Services or Technical services

Where section 194J (TDS on professional fees or technical services) is applicable?

Deductor (service receiver) should deduct TDS under 194J @ 10% on all the following payments, where it exceeds Rs.30000 during any financial year. (Exception- threshold of Rs. 30000 is not applicable to remuneration paid to directors other than that taxed under the head of the salary)

  • professional service (includes legal service, medical service, accounting service, any consultancy,) or
  • technical services or consultancy (technical, managerial,) or,
  • where service provider receives the benefits as royalty or,
  • where the receiver receives non-compete fees or fees received for not carrying any activity with respect to any business or,
  • where the service provider is a director and the remuneration paid to him (apart from the salary)

This even makes following payments to be covered under the purview of the section 194J

  • payments made to hospitals
  • payments made to artists by advertising agencies
  • payment made to share registrar etc.

Exclusion from the TDS purview with respect to section 194J

However, the article states expressly that following would be excluded from the applicability

  • where total sales, gross receipts, or turnover is not more than
  • where any technical or professional fees is paid, or credited for the personal use of such individual or HUF, or
    • 1 crore in case of business
    • 25 lakhs in case of profession

Simply put, where any individual or HUF is not liable to a tax audit in any year under section 44AB.

  • Consideration received for construction, assembly or mining,
  • Any payment received which would be liable to be taxed under the head salary.
  • Where aggregate of the sum of money received, do not exceed Rs.30000 in any financial year.
  • TDS is not to be deducted from the service tax.

Liability for deduction

  • In case of individual or HUF – Liable to deduct TDS under section 194J if their books of accounts are required to be audited under section 44AB for the preceding financial year.
  • In any other case – Mandatory that TDS under section 194J must be deducted, where TDS is required to be deducted as per the conditions.

Time limit

  • In case of government agencies – Deduction done by or on behalf of the government is liable to deposited on the same day as that of deduction.
  • In any other cases – TDS should be deposited within one week from the end of the month on which TDS was deducted.
  • For TDS deducted on amounts paid or credited on 31st March (end of the year)

To be deposited within two months from 31st March of the year in which it is paid or credited.

Interest liability

Where the Deductor fails to deduct TDS, then he will be liable for interest @ 1% per month till deduction.

Where the Deductor fails to deposit, TDS deducted, then he will be liable to pay interest @ 1.5% per month till the TDS is paid.

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