TDS Section 194J is getting attention again after Finance Bill 2020, which brings some revisions to Section 194J. The same will come into effect from 1/04/2020. TDS Section 194J of the Income Tax Act 1961 includes provisions regarding the TDS deduction of fees for technical as well as professional services.
We prepared this article to keep you up to date about the changes and to provide a complete overview of Section 194J under TDS. Here you will also get information about the applicability, rate of TDS under section 194J and a lot more.
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Amendments in TDS Section 194J Due to Finance Bill 2020
As per the Finance Bill 2020, some amendments have been made to Section 194J under TDS, the same will take effect from 1/04/2020. Now let’s take a look at amendments to Finance Bill 2020
- TDS will be deducted under Section 194J at a rate of 2% in case of fees for technical services (not being professional services) and the rate reaches up to 10% of such sum in any other case.
- Individual or HUF having a total sales, gross receipts or turnover from the business or profession carried on by him exceeding 1 crore rupee in case of business or Rs 50 lacs in case of the profession during the Financial year immediately preceding the FY in which such interest is credited or paid, shall be liable to deduct TDS. Monetary limits shall be substituted wherever Section 44AB has
Read Also: Section 194I, 194IB & 194IC for TDS Under Income Tax Act
After talking about the changes due to the Finance Bill 2020 let’s back to the basic structure of Section 194J Under TDS
Who is Liable to Deduct TDS Under Section 194J?
Everyone except an individual/HUF who is liable to make the following payments to any resident is liable to deduct TDS Under Section 194J:
- Fees for professional services and for technical services or
- Any remuneration/ fees/ commission whatever name called to a director of a company other than the payment on which tax is deductible u/s 192 or Royalty or
- Non-compete fees u/s 28(VA)
Note: It includes Individual/HUF falling under the scope of section 44AB.
Meaning of Professional Services Under Section 194J
- Professional Services are defined under Section 194J includes
- Medical
- Legal
- Engineering
- Architectural profession
- Accountancy
- Technical consultancy, or
- Interior decoration
- The profession of film artist
- The profession of the authorized representative
- The profession of Company Secretary
- Anchors
- Commentators
- Event Managers
- Physiotherapists
- Referees and Umpires
- Sports Persons
- Sports Columnists
- Trainers and Coaches
Read Also: A Brief Study of Newly Added TDS Section 194M
Meaning of Fees for Technical Services Under Section 194J:
Payment for the following services comes under the fees for technical services under section 194J:
- Technical services
- Managerial services
- Consultancy Services
- Provision of services of technical or other personnel
Rate of TDS Deduction Under Section 194J
The rates of TDS deduction under TDS Section 194J are given below in the table:
| Category | Rate |
|---|---|
| If Payee is engaged only in the business of the operation of the call centre | 2% |
| If payment is made for royalty for the sale, distribution, or screening of a film | 2% |
| If payment made for technical service | 2% |
| Payee involved in any other business operation or profession comes under the scope of194J | 10% |
| If PAN is not furnished by the payee | 20% |
Time of TDS Deduction Under Section 194J
Tax Deducted at Source (TDS) under Section 194J of the Income Tax will be deducted at the time of:
- The credit of the amount to the payee’s account
- Payment of such amount to the payee in cash/ cheque/ draft or any other medium, whichever is earlier
It is to be noted that the term credit here has an interesting meaning where such amount is transferred to the Payee’s account (called suspense account or any other name) in the books of account of the person liable to make such payment shall be deemed to have been credited to the payee’s account and TDS shall be deducted accordingly.
The Threshold Section 194J Under TDS
Section 194J under TDS (Tax Deducted at Source) will be not deducted where the prescribed payment or credit does not exceed the prescribed threshold limit.
| Category | Threshold Limit |
|---|---|
| Fees for professional services | 30000 |
| Fees for technical services | 30000 |
| Royalty | 30000 |
| Non-compete fees | 30000 |
| Remuneration/ commission/fees payable to a director of a company | No such limit |
We would like to mention here that the limit is applied and varies for each of the above services in section 194J under TDS (Tax Deducted at Source). To understand it better we can take an example that if the payment amount to a person towards each of the above categories is less than Rs 30000 but exceeds Rs 30000 in aggregate then TDS is not to be deducted.
Conditions for Non-Applicability of TDS Section 194J
There are some cases where TDS Section 194J is not applicable, listed below:
- If the payment is made by an individual or HUF. But if the individual/ HUF falls under *44AB(a)/ 44AB(b)then the payment is liable to deduct TDS following Section 194J
- Further, an individual/HUF is not liable to pay TDS under section 194J if the payment is made or credited exclusively for personal purposes.
Notes: Section 44AB(a) is related to those Businesses whose Total turnover or gross receipts for an FY exceeds Rs. 1 crore, whereas Section 44AB(b) is related to those Professionals whose Total Gross Receipts for an FY surpasses Rs. 50 Lakhs.
Recommended: How New Income Tax Rules Will Affect the TDS You Pay on Services
General Queries on Section 194J Under TDS
Q.1 – Who will deduct TDS for services listed under Section 194J?
The Tax Deducted at Source or TDS liabilities arising from services under Section 194J for professional technical experts or consultants will be paid by the payer at the time of making payment for the respective services used. For example, if the payer has hired an engineer to avail his services, then, the payer is required to make the respective payments after deducting the TDS liability arising from it.
Q.2 – Should I deduct TDS if the consultancy services of a professional are availed for the personal use of payer before paying his fees?
No, the taxpayer is not obliged to deduct TDS for the services availed for personal use
Q.3 – Are there any tax exemptions for TDS under Section 194J?
The exemption under Section 194J can be availed by a payer if he pays the tax according to the TDS rate, regardless of the total amount payable. The maximum exemptions under such cases id INR 30,000
Q.4 – I do not have the PAN details of the payee. Should I still deduct TDS u/s 194J?
Absolutely. Moreover, you should do that without any hesitation as the rate of TDS for those individuals who have submitted their PAN is 10% but for those who have not, it is 20%. You should ask the professional to give the PAN details and if he refuses to do so just deduct the TDS at the rate of 20%
Q.5 – Will I be penalized for not paying TDS to the government?
Yes, after the collection of required TDS, the payer is required to submit the respective TDS to the government. If he fails to do so, he will have to face the consequences. The interest at the rate of 1.5% is applicable per month from the date of collection to the date of payment
i wanted to know at what rate tds to be deducted on amc for e lock intelligent lock management for guest room door lock
If I work as a lecturer with a direct contract to institute. I do not belong to any third-party contract. Monthly income credited to my bank account. Is the income will come in the category of 194jb or it will be as salaried income?
Dear Sir,
I am working as a Freelance corporate Trainer. In FY 2021-2022 my gross receipts from my clients / vendors exceeded 20 Lakhs. Every month my vendors deducting 10% TDS and depositing the same with my TDS account.
When I am going for ITR-3 Filling, My regular auditor is saying as TDS amounts are getting deposited in my account under section 194JB (professional or technical services). So GST filling is applicable for me. But another tax consultant is saying it is not required to Get GST Number and I can proceed with IRT-3.
I am totally confused, Please guide me. Do I need to register for GST or not?
Thanks in advance
Dear sir, You need to get Registered under GST if your gross receipts (Turnover) exceeds Rs.20 lakhs (For other than North -Eastern States) and Rs.10 lakhs (For North -Eastern States)
Dear Sir,
Can you please let me know the TDS deduction rate for Google cloud service and Amazon web services
Our company uses these services for developing our apps. So we pay monthly subscription charges for Google and Amazon. Now i’m not sure how much TDS should be deducted. Please let me know the tds rate and section.
Thank you
TDS is required to be deducted at the rate of 10% U/s 194J
HI… we run an consultancy firm where we provide medical staff for our clients. Once we generate the invoice every month, there is tax deduction under 194J 10%. We too have to deduct 10% TDS tax on the salaries paid to our employees. Can’t my services be considered as contract as i supply doctors and nurses, and hence be deducted under 194C… instead of being deducted at 194F
Hi
1. I am a software engineer in a company, which pays me monthly after deducting tax.
2. I am also giving professional services to an institution as part time job which have deducted TDS@10%.
In form 26AS, TDS deducted from both are mentioned. I tried to file ITR and uploaded my company’s(1) form-16 and added income from profession(2) also, but now it shows tax liability. Why tax is being calculated on salary mentioned in second part when TDS is already calculated on it?
Hi Preeti,
Usually, there won’t be any Tax liability on your salary income as TDS would have been deducted by your employer.
However when you consider your professional income there are chances that you will get a tax liability.
the reason is very simple. TDS on Professional Charges are deducted at 10%. But when you club this income with your salary, Your personal tax rate will be more than 10 %
eg: Suppose your Salary is 10 Lakhs and your employer has deducted salary and there is no liability.
But If You have a professional income of 1 lakh on which Rs 10,000 TDS deducted the you will have a liability of Rs 20,000. The reason being once your Income crosses Rs 10 Lakhs your personal tax rate will be 30%. TDS is deducted only at 10%. therefore the difference 20% (30%-10%) you will have to pay.
Note: Example is based on old Tax regime
I work for a company supplying a teaching service across via the internet.
I do not live in India and Invoice them for my services – but they have deducted TDS @ 30% as if I was an employee.
This cannot be correct can it?
Your comments would be useful as I have to speak to their finance manager
thanks
Fees-tech services, call center, royalty for sale etc.2%TDS Deducted Under Section 194J(a)
tell me tds rate & u/s of laboratory technical service bill
yes
I am a consultant to govt getting payment u/S 194 JB. Which IT form should i file for tax returns?
remuneration u/s194jb which ITR form be used to file the I T Return
1. Whether the fee paid(according to the fourth schedule of the Arbitration act) to the sole arbitrator is taxable under 194J and TDS is to be deducted while paying the fee?
2. The arbitrator has claimed Secretarial expenses and other misc. expenses too, whether they are taxable?
I am working as a White Label ATM Cash recycling Agency.
in a month based on the number of transactions done from my ATM, I am paid commission from the WLA operator. here is below payment I have received from the WLA operator till now.
September 1485, (TDS@5%->56) Remaining 1429 deposited in the bank
October 5458, (TDS@3.75%->205) Remaining 5253 deposited in the bank
November 10,475 (TDS@3.75%->393) Remaining 10,082 deposited in bank
December 14,917, (TDS@3.75% ->559). remaining 14,358 deposited in bank
kindly help me how to claim the TDS. Can I get this money back after filing income tax?
Once you file your ITR of the Financial Year in which TDS has been deducted then you will get the Refund amount of TDS deducted in excess of Tax Payable.
I provide website designing & consulting services to my customers. Can you please let me know the current TDS rate whether its 7.5 or 1.5 that my vendor has to deduct while making payment?
Hi
Soil testing will come under technical service?
Sir,
I have been engaged by the Govt Insurance as a Specialist after my retirement from the Insurance Company. I am not an engineer/Doctor, It is on a contract basis for one year which may be extended. Am I eligible for 194J?
Dear Sir
Have you received your clarification on the subject? Kindly tell me as I am also sailing in the same boat, a retired Govt employee, on one year contract as consultant. The remuneration (which is not same as FEE a consultant charges) being paid is Basic Pension minus Last Basic Pay. I am of the opinion that it is not covered under Sec 194J.
sir, my auditor put the nature of payment as 194JA instead of 194J in Q2 of this year. kindly clarify the section 194J and 194JA.
I am a salaried person and come in 30% slab of income tax. I also receive remuneration as a professional fee under 194J. how much tax I have to pay on the amount that I received in 194J slab money.
hi sir/mam, I have a doubt against TDS on section 194 j – i.e ..TDS on technical services,
section-194j is applicable on internet monthly charges …or monthly charges amount is more than 10,000 per month
kindly resolve my doubts as soon as possible plz
PLEASE REFER SECTION 194J OF INCOME TAX ACT 1961
I’m working as a graphics designer consultant and my salary is ₹15000 for the month. The TDS deduction was 7.5%. The transaction between me and the Co hasn’t been to ₹30000 yet, as it has just been a month. Am I liable to pay TDS?
AS PER SECTION 194J IF AMOUNT PAID OR CREDITED IS MORE THEN RS 30000, TDS REQUIRED TO BE DEDUCTED
payment of professional fees is as under
Q1 10000
Q2 15000
Q3 20000
Up to Quarter 2 payment of professional fees was less than Rs 30000 so no TDS is deducted but in Q3 cumulative payment has exceeded Rs 30000 so liability for payment of TDS arises on entire payment including Q1 and Q2.
Our query is that while filing TDS returns for Q3, details of Q1 and Q2 can not be included. If we now go back to Q1 and Q2 and include these details then the interest amount will have to be paid. So we want to know the correct procedure.
TDS on payment of professional fees is required to be deducted on an amount exceeding Rs 30,000. Your payment of the amount of Rs 30,000 exceeds in the 3rd quarter hence your liability arises in the 3rd quarter on an amount exceeding Rs 30,000 i.e. on Rs 15,000. There is no need to go back to Q1 and Q2.
I am a cricketer and tds was made under section 194JB…Which ITR form will be chosen for filing ITR…Please suggest me…
While I am preparing 26Q – Q2 for the financial year 2020-21, strangely I cannot able to find the 94J option in the deductee details (Annexure I part). is there any changes in the 194J deductions. Kindly share the correct section.
select 4JB
I have rendered my services at an engineering college as a Guest Faculty and got payment in 194J and got tax deducted at the source. Which ITR form should I fill? How much amount is exempted from tax? I got only 400000 as payment in FY 2019-20
ITR form depends on your other income.
Hi Sir
what if this the only income
can we take 44ADA
or we can show income under 44AD and claim an income of near about 60-70%
or we have to file as per normal provisions ITR 3?
We avail GSUITE services for Google email, drives etc, and till now we were paying 10% TDS on their invoice. Now with 194JA and JB, I understand that GSUITE SAC is defined as OTHER IT i.e. it should fall under technical service and hence a TDS rate of 2%.
Is my understanding correct?
Select Sub-section 194JA applicable rate will be 2% and select sub-section 194JB applicable rate will be 10%.
I rendered a professional service in March 2020. However, the payment is made on 22nd July 2020 and “date of payment” and “date of booking” have been entered in Form 26AS for FY20-21. Will this be counted for income in FY19-20 or FY20-21?
It counted as income of FY 2020-21
Am I hiring a dental doctor for salary is he come under 194 j or 192
I provide COVID19 related technical Consultancy services from lab development to training and guidance and also clinical trials Consulting services with scientific research guidance through my startup company. Last year’s gross revenue is less than 1 crore.
Also, all my services are directly related to COVID19 testing. So, shall I need to pay any TDS?
Yes, you have to pay TDS.
In FY_2020-21_Q1, I have deducted TDS on technical service 2% & 1.5% accordingly as per latest govt notification, but in traces, I have received default notice for the short deduction? Shall I submit a correction statement by selecting the section as 194JA? Or shall I contact the department?
Yes you can File Correction statement.
As in FY_2020-21_Q1 i have deducted technical service 2% & 1.5% accordingly as per latest govt notification 25% reduce TDS rate. but in traces, I have received default notice for short deduction?. any subsection needs to show in traces under 194J_Technical service. pls, suggest on this!
Yes, kindly refer the latest utility
Hi
Please select section 4JA for TDS on technical services @ 2% (1.5% till March 21)
and 4JB for TDS on professional services to avoid default in TRACES in case of 194J.
Yes Correct
Thank you.
What is the TDS rate deduction for hospital staff eg doctors/ staff nurse/ ward boy and pc/ lab technician or x-ray technician?
No specific TDS Rate deduction for hospital staff eg doctors/ staff nurse/ ward boy and pc/ lab technician or x-ray technician
As in FY_2020-21_Q1 i have deducted technical service 2% & 1.5% accordingly as per latest govt notification 25% reduce TDS rate. but in traces, i have received default notice for short deduction?. any subsection need to show in traces under 194J_Technical service. pls, suggest on this!
“Please contact to department”
Now department was updated in new version 3.3, in that version use section code 4JA
I have deducted 2% on technical services under 194J for Q1 F.Y.19-20. but the same is not processed and it shows 10% category only for processing. Why is that?
What is the flag need to be selected in Return for lower deduction of 2% for 194J
Department has not yet notify any flag for tecnical services u/s 194J
Lab testing charges are included in professional services or technical services.
There is a subsection under 194J for Technical services TDS @ 2%. Like 194Ia and 194Ib.
As per latest amendment in section 194J via Finance Act 2020, In case of fees for technical services TDS will be deducted at rate 2%.
We are engaged in the solar power plant installation and receive technical services from our consultants in terms of solar designs and drawings. It would attract TDS u/s 194J. But would it be treated as fees for professional services (10%) or fees for technical services (2%)?
Please refer to TDS chart notified by the department
We are into providing G suite services that are covered under ‘Other information Technology Service’ SAC 998319. Please confirm 2% TDS is applicable or 10% TDS?
TDS @ of 10% is applicable.
I am an accounts manager in a software company that is into the business of recruiting software employees and putting them on its payroll but will send them to work at client places through another contractor A. Billing will be sent to A and he will pay us by deducting 10% TDS. My question is whether our services come under professional services or technical services which attract only 2% TDS please clarify.
Thanks in Advance
Hi, Please help me by clarifying my doubt with Section 194j and Audit 44AB liability, I work as a Technical consultant, The company pays me 10,000 rupees per month and this is the only source of income I have, in which 2% TDS is being deducted so as I don’t have liability with 44AB can company deduct the TDS, If yes can I file form 15G self-declaration for non-deduction of TDS.
As per section 194J if payment made to the resident for fees for professional and technical services exceeding 30000, TDS should be deducted @ 10%
What are the TDS rate on Data Centre Charges & Software License fee
We process our company payroll through one software called paybooks, So please clarify for me, whether this service is technical service, then TDS @ 2% is applicable or 10% applicable.
Yes, this is technical service and TDS will be deducted at 2%. please refer to 194J for more clarification.