Section 194J deals with TDS on professional or technical services.
Whenever a person is liable to pay an amount exceeding the specified limit for professional or technical services, he will deduct TDS at specified rates under section 194J.
For Example, Mr. A receives some services from a doctor of Rs. 45000. Mr. A will deduct TDS on Rs. 45,000 and pay the balance amount to the doctor.
But don’t worry section 194J is not applicable for every person. It is applicable for some specified persons dealing in some specified transactions and the amount payable must exceed the specified monetary limit.
Transactions for which section 194J is applicable
- Fees for Professional services
- Fees for Technical services
- Any remuneration or fees or commission paid to director of a company, other than those which are taxable under section 192.
- Sum mentioned in section 28(va) like any sum, whether received or receivable, in cash or kind, under an agreement for—
(a) not carrying out any activity in relation to any business; or
(b) not sharing any know-how, patent, copyright, trade-mark, license, franchise or any other business or commercial right of similar nature or information or technique likely to assist in the manufacture or processing of goods or provision for services:
Note: (a) “professional services” includes profession mentioned in section 44AA including
- architectural profession
- the profession of accountancy
- technical consultancy
- interior decoration
(b) “fees for technical services” shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9;
(ba) “royalty” shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;
When TDS Under Section 194J is deducted
TDS under section 194J shall be deducted at the time of credit of such sum to the account of payee or at the time of actual payment, whichever is earlier.
Note: Even if a person is crediting in his books the amount to suspense account, he will be liable to pay TDS from that day onwards.
Who are persons liable to pay TDS under Section 194J
The Following persons are liable to pay TDS under section 194J.
- All persons except Individuals and Hindu Undivided Family (HUF)
- Individuals and Hindu Undivided Family (HUF) are liable to deduct tax under section 194J only if they were liable to tax audit in the preceding financial year.
- Individuals and HUF are also not liable to deduct TDS under section 194J if the services are received and used exclusively for personal purposes.
Note: Tax audit is applicable only when the gross receipts/turnover exceeds the monetary limit specified in section 44AB.
In the above example if Mr. A uses the service only for his personal use then no TDS is deducted.
What is the rate of TDS under section 194J
The rate of TDS is 10% on the gross amount payable.
No surcharge and Cess is applicale.
In the above example Rs.4500 will be deducted by Mr. A from the total sum payable if he using the services for commercial use or he was liable for tax audit in the last year.
What is the monetary limit for TDS under section 194J
TDS is not deducted if the amount payable does not exceed Rs. 30,000 in the financial year to the same person.
In the above example Mr. A is liable to deduct TDS since the amount exceeds Rs. 30,000/-
What is the proof of TDS deducted under section 194J
The deductor (person deduction TDS) will issue TDS certificate to the Deductee in Form No. 16A.
What is the rate of interest rate for late payment of TDS
You can comment for any query on TDS under section 194J.