Scope of Section 194J of Income Tax Act:
Every person (Other than an individual or HUF) making a payment to resident payee any sum by way of –
- Fees for professional services; or
- Fees for technical services; or
- Any remuneration or fees or commission is liable to deduct tax at source.
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.
However, below persons are not liable to deduct TDS on such payments:
- An individual or HUF carrying on business whose turnover does not exceed Rs 1 crore during the previous financial year.
- In case of an individual or HUF carrying on profession whose turnover does not exceed Rs 50 lakh during the previous financial year.
Services covered under section 194J:
The following services are covered under this section
- 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.
Time limit for Deduction of TDS under Section 194J:
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
Rate of Deduction of Tax Under Section 194J:
| Nature of Payment | Rate of TDS |
|---|---|
| Fees for Technical Service | 2% |
| Operators of Call Centres | 2% |
| Royalty for sale, Distribution or Exhibition of Cinematographic Films. | 2% |
| All other payments | 10% |
| Payee does not furnish his/her PAN | 20% |
Following cases 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.
Due date of TDS deposit and Filing of TDS returns:
The Deductor is liable to deposit TDS with the Government with following dates:
| Particulars | Due date of Deposite |
|---|---|
| April-February | 7th of Next following next Month |
| March month | 30th April |
The Deductor is liable to File TDS Returns in the Form 26Q with the Government with following due dates:
| Quarter | Due Date for Return |
|---|---|
| April to June | 31st of July |
| July to September | 31st of October |
| October to December | 31st of October |
| January to March | 31st of May |
Due dates for Issue of TDS Statement:
Here the TDS statement means Form 16A which is issued by specified persons who is required to deduct the TDS.
Form 16A is issued to the deductee with the following due dates
| Particulars | Due Date |
|---|---|
| April-June | 15th August |
| July-September | 15th November |
| October-December | 15th February |
| January-March | 15th June |
Consequences Non compliance of TDS deposit and TDS Return within Due Date:
| Particulars | Rate of Interest/Penalty |
|---|---|
| When TDS not deducted | 1% per month or part of the month |
| TDS deducted but not Deposited to the Government | 1.5% per month or part of the month |
| Late filing of TDS Return | As per Section 234E, Late fee is 200 per day but not exceeds TDS amount |
