section 194J under the Income Tax Act
- Section 194J stated that any person who is paying fees to any resident person for specified services, then TDS is required to be deducted u/s 194J.However,TDS is to be deducted when amount of payment in a year exceeds Rs.30,000/- at the rate of 10%.
- As per this section, any person (but not an individual or HUF) who pays to a resident fees for professional or technical services, will be required to deduct tax at source u/s 194J.
- However, individual or HUF will be required to deduct TDS if they are liable to audit u/s 44AB (a) and (b).
Person here means :
- Central or State Government
- Local Authority
- Corporation
- Company
- Cooperative Society
- Trust
- University
- Registered Society
- Firm
- Individual/HUF/AOP/BOI required to get accounts audited u/s 44AB (a) and (b)
Services are covered under section 194J
Following type of services are covered under section 194J:
- Fees for professional service
- Fees for technical service
- Remuneration or fee or commission to a director of a company (which is not liable to TDS u/s 192).
Royalty - Payment received (in cash or kind) under an agreement for:
-: Not carrying out any activity in relation to any business, or
-: Not sharing any know-how, patent, copyright, trademark, license, franchise or any other business/ commercial right of similar nature/ information/ technique.
Limit to deduct TDS u/s 194J
This limit of Rs. 30,000/- is not a total limit for all services. It shall be calculated individually for payment as professional fees or technical fees or royalty or non-competence fees.
Rate & time of tax deduction u/s 194J
The rate of tax deduction u/s 194J is 10%.
And the time of deduction is earlier of,
– The credit of income to the account of the payee (receiver) or
– Actual payment (in cash, cheque, draft or other modes).
| Particular | Rate of TDS (if PAN available) | Rate of TDS (if PAN not available) |
|---|---|---|
| Payment given to resident person | 10% | 20% |
| Payment given to the business of running only call center | 2% | 20% |
Section 194J not applicable
These are the exception to section 194J applicability:
- Where the payment made by an individual or HUF is for personal purposes only.
- If payment is made to a non-resident contractor or sub-contractor.
- Where the amount of payment (at one time or in total during the whole financial year) does not exceed Rs. 30000.
