Contract work by a Professional

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This discussion clarifies the correct TDS (Tax Deducted at Source) applicable to interior designers. If the designer provides only design and consultancy services, TDS is deducted at 10% under Section 194J as professional services. However, if the designer undertakes the entire project, including materials and execution (turnkey basis), it's considered contract work, and TDS is deducted at 1% or 2% under Section 194C.

Smrity

Smrity

(Querist)
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13 August 2025 Hello All,

Recently we had deducted 10% on the professional charges of an Interior Designer.

What if the person is taking the contract work, will the TDS be 94C

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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13 August 2025 ✅ 1. If it is Professional Services
Section: 194J
TDS Rate: 10%
Definition: Includes services rendered by persons in the field of interior decoration, architecture, engineering, etc.
Interior design services fall under the professional services definition as per Explanation (a) to Section 194J.
➡️ So, if only design and consultancy is provided (e.g. layouts, 3D renders, site supervision), TDS @10% u/s 194J is correct.
✅ 2. If it is Contract Work (Turnkey basis)
Section: 194C
TDS Rate:
1% if payee is an individual or HUF
2% if payee is any other (e.g., company, firm)
Definition: Applies when supply of materials + execution of work is involved.
➡️ If the interior designer is executing the entire contract including materials, then it's considered a works contract, and TDS u/s 194C is applicable.

Smrity

Smrity

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14 August 2025 Thank you , for solving the query in detailed, understanding the crux of the query....

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