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Simple explanation of sec 194J by tax expert

Kavitha N 
on 24 July 2019

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Meera, a Student Company Secretary, she was quite clear about all the laws related to Company Act, 2013. But she was quite unclear about the laws related to Income Act, 1961 especially Section 194J. So she approached her good friend Krishna who is an expert in Income Act, 1961.

Meera: Hey Krishna, Can you please explain about Section 194J of Income Act, 1961?

Sure Meera, Krishna started to explain to Meera.

Similarly like how Lord Krishna gave his gyan to Arjuna. Tax expert Krishna started giving his gyan to Student Company Secretary Meera.

Krishna proceeded, See Meera now you are a Student Company Secretary once you have employed as a full time Company Secretary or a Consultant as a professional for your professional services rate of 10% will be deducted from your income and paid to the Government.

The purpose of this provision is the Smartness of our Government; to cover the taxes of all the professional and technical services rendered by the Professionals.

Let's read the section of the Bare Act

Section 194J: Section 194J not only limited to professional and technical services but also for Royalty and Remuneration paid to a Company director and payment made in the nature of non - compete fees.

Rate of TDS

  • Rate of 10% if a Permanent Account Number is furnished by the payee.
  • Rate of 20% if  a Permanent Account Number is not furnished by the payee and 
  • The rate for operators of call center is lower and equal to 2% of the transaction value.

Threshold Limit: Threshold Limit: Rupees 30,000 per annum.

Time Limit for Tax payment: The time limit for Tax payment is on or before the 7th of every month.

Consequence of Delayed or Missed TDS: Below are the penalties in case an individual or entity availing services forgets to deduct TDS while making the payment.

1. Decrease in Tax Benefit in lieu of Expenditure: If an individual or entity fails to deduct TDS then 30% of their expenditure for the services received will be disallowed. The full tax benefits of expenses made by a tax assesse are thus allowed only after the deduction and timely payment of TDS to the government.

2. If TDS not deducted: 1% of interest is payable per month on the actual deduction.

3. TDS deducted but not deposited to the Government: 1.5% of interest is payable per month

Hope this clears your confusion Meera!
Yes! Certainly Krishna, thanks for the gyan.
Krishna, I have learnt other section as well through the reference of this one Section.
That's Great right
We always tend to boost our resume by certification or through by gaining experience in various fields.
Likewise, other sections also in your kitty

Yup, that is 

  1. Section 192 - Salary
  2. Section 28 - Profits and gains of business or profession
  3. Section 44AB - Audit of accounts of certain persons carrying on business or profession.
  4. Section 44AA - Professional Services and
  5. Section 9 - Income deemed to accrue or arise in India.

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Category Income Tax
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Kavitha N 

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