TDS on professional or technical fees u/s 194J

This document covers

1. Professional Services
2. Technical Services
3. Persons responsible to deduct TDS
4. Rate of TDS
5. Threshold for deduction u/s 194-J
6. Time of Deduction of TDS
7. Non-Applicability of TDS u/s 194J
8. Payments by TPA’s to Hospitals
9. Due Date for TDS Payment
10. TDS Returns
11. Lower deduction /Nil deduction of TDS

1. Professional Services

Professional Services means services provided by a person in the course of carrying on following.

1. Legal Profession
2. Medical Profession
3. Engineering Profession
4. Profession of Accountancy
5. Technical consultancy
6. Interior decoration
7. Advertising
8. Authorized Representatives
9. Film Artist
10. Company Secretary
11. Information Technology
12. Sports Persons, Umpires and Referees, Coaches & Trainers, Team Physicians and Physiotherapists, Event Managers, Commentators, Anchors and Sports Columnists

2. Technical Services

Technical services includes the following services

1. Managerial Services
2. Technical Services
3. Consultancy Services
4. Provision of services if technical or other personnel

3. Persons responsible to deduct TDS (Deductor)

Any person other than individual/HUF whose total sales or turnover from the business does not exceeds Rs 1 crore in case of business and Rs 50 lakhs in case of profession are required to deduct TDS u/s 194-J on the following services

1. Fees for Professional services
2. Fees for technical services
3. Any Remuneration, fees, commission to a director of the company other than those on which TDS is deducted u/s 192
4. Royalty
5. Non-Compete Fees

4. Rate of TDS

• Fees for Technical Services -2%
• Fees for Professional Services -10%
• Royalty where such royalty is in the nature of consideration for sale, distribution, or exhibition of cinematographic films – 2%
• Other Royalty -10%
• All other cases -10%
• Business of operation of Call centre – 2%

5. Threshold for deduction u/s 194-J

The threshold for deduction of TDS u/s 194-J for various services are as follows

• Fees for Technical Services – Rs 30,000
• Fees for Professional Services – Rs 30,000
• Royalty (any)- Rs 30,000
• Non-Compete Fees – Rs 30,000
• Any Remuneration, fees, commission to a director of the company other than those on which TDS is deducted u/s 192 – Nil
• Business of operation of Call centre- Nil

6. Time of Deduction of TDS

TDS u/s 194-J needs to be deducted at the following times which ever is earlier

1. At the time of credit of amount to Payee
2. At the time of payment of amount to Payee

7. Non-Applicability of TDS u/s 194J

• Individuals or HUF are not required to deduct TDS on the amount paid as professional fees if it is exclusively for personal purposes.
• Individuals and HUF who are not liable for Audit are not required to deduct TDS on royalty and non-compete fees

8. Payments by TPA’s to Hospitals Deposits

Generally, Third Party Administrator’s (TPA) will be making payment on behalf of insurance companies to hospitals for settlement of medical/insurance claims under various schemes including cashless schemes. TPA’s are required to deduct TDS u/s 194-J @ 10% as the services rendered by hospitals to various patients are primarily medical services.

9. Due Date for TDS Payment

The due date for payment of TDS deducted u/s 194J is within 7 days from the end of the month in which deduction is made. However, for the March month, due date is April 30

10. TDS Returns

• TDS Returns needs to be filed in Form 26Q for all persons except the individuals or HUF who are not liable to Audit
• TDS Return filing is Quarterly
• The due date for the TDS Returns are as follows
  • April to June – July 31
  • July to September- October 31
  • October to December – January 31
  • January to March – May 31
• TDS Certificates needs to be issued within 15 days from the date of filing in Form 16A

11. Lower deduction /Nil deduction of TDS

The Payee can apply for lower deduction or nil deduction of TDS in Form 13 and submit the certificate to deductor for non-deduction or lower deduction of TDS