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)

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)

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 (Querist)

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

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