TDS Under Section 194J(a) & 194J(b)
This query is : Resolved
22 May 2025
Please mention Name of services under section
TDS Under Section 194J(a) & 194J(b) would be deducted
Please mention Name of services under section
TDS Under Section 194J(a) & 194J(b) would be deducted
22 May 2025
https://taxguru.in/income-tax/section-194j-tds-professional-technical-fees.html
https://www.suvit.io/post/section-194j-tds
https://www.suvit.io/post/section-194j-tds
23 May 2025
Section 194J of the Income Tax Act, 1961, deals with Tax Deducted at Source (TDS) on "Fees for Professional or Technical Services, Royalty, and Non-compete Fees."
The primary distinction between Section 194J(a) and 194J(b) lies in the TDS rate applied to different categories of payments.
Here are the services/payments under each sub-section:
TDS Under Section 194J(a) - @ 2% (Statutory Rate)
This sub-section applies a 2% TDS rate (or 1.5% during the temporary reduction period from May 14, 2020, to March 31, 2021) on the following payments:
Fees for Technical Services (FTS):
Any consideration (including any lump sum consideration) for the rendering of managerial, technical, or consultancy services.
Exclusions: It specifically excludes consideration for any construction, assembly, mining, or like project undertaken by the recipient, or consideration which would be income of the recipient chargeable under the head "Salaries".
Royalty:
Any consideration (including any lump sum consideration) for:
The transfer of all or any rights (including the granting of a license) in respect of a patent, invention, model, design, secret formula or process or trademark or similar property.
The use of any patent, invention, model, design, secret formula or process or trademark or similar property.
The transfer of all or any rights (including the granting of a license) in respect of any copyright, literary, artistic, or scientific work (excluding cinematograph films or video tapes for use in connection with television or sound recording).
The transfer of all or any rights (including the granting of a license) in respect of any cinematograph film or video tape for use in connection with television or sound recording.
The imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or trademark or similar property.
The imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill.
The use of any industrial, commercial or scientific equipment.
The sale, distribution, or exhibition of cinematograph films.
Any Sum Referred to in Clause (va) of Section 28:
Payments received for not carrying out any activity in relation to any business or profession, or not sharing any know-how, patent, copyright, trademark, licence, franchise, or any other business or commercial right of a similar nature or information or technique likely to assist in the manufacture or processing of goods or provision of services. (Commonly known as Non-compete Fees).
Fees Paid to a Director (other than Salary):
This typically includes sitting fees paid to directors for attending board meetings or committee meetings, or commission paid to a director (if not considered as salary). It specifically excludes any amount chargeable under the head "Salaries" from its ambit.
TDS Under Section 194J(b) - @ 10% (Statutory Rate)
This sub-section applies a 10% TDS rate (or 7.5% during the temporary reduction period from May 14, 2020, to March 31, 2021) on the following payments:
Fees for Professional Services:
This refers to services rendered by a person in the course of carrying on any of the following professions (as defined in Explanation to Section 194J):
Legal Profession: Lawyers, advocates, solicitors.
Medical Profession: Doctors, surgeons, medical practitioners.
Engineering Profession: Engineers.
Architectural Profession: Architects.
Accountancy Profession: Chartered Accountants, Cost Accountants, Company Secretaries.
Technical Consultancy: Technical consultants.
Interior Decoration: Interior decorators.
Advertising: Advertising agencies.
Sports Persons: Sportspersons, umpires, referees, coaches, trainers, sports managers, event managers, commentators, anchors, and other persons connected with sports activities.
Film Artists: Actors, directors, music directors, art directors, editors, singers, lyricists, story-writers, screenplay writers, dialogue writers, choreographers, and any other person associated with the production of cinematograph films or television programmes.
Other Notified Professions: Any other profession as is notified by the Central Board of Direct Taxes (CBDT) for the purposes of Section 44AA (maintenance of accounts by specified professionals). Examples include IT professionals and Company Secretaries.
The primary distinction between Section 194J(a) and 194J(b) lies in the TDS rate applied to different categories of payments.
Here are the services/payments under each sub-section:
TDS Under Section 194J(a) - @ 2% (Statutory Rate)
This sub-section applies a 2% TDS rate (or 1.5% during the temporary reduction period from May 14, 2020, to March 31, 2021) on the following payments:
Fees for Technical Services (FTS):
Any consideration (including any lump sum consideration) for the rendering of managerial, technical, or consultancy services.
Exclusions: It specifically excludes consideration for any construction, assembly, mining, or like project undertaken by the recipient, or consideration which would be income of the recipient chargeable under the head "Salaries".
Royalty:
Any consideration (including any lump sum consideration) for:
The transfer of all or any rights (including the granting of a license) in respect of a patent, invention, model, design, secret formula or process or trademark or similar property.
The use of any patent, invention, model, design, secret formula or process or trademark or similar property.
The transfer of all or any rights (including the granting of a license) in respect of any copyright, literary, artistic, or scientific work (excluding cinematograph films or video tapes for use in connection with television or sound recording).
The transfer of all or any rights (including the granting of a license) in respect of any cinematograph film or video tape for use in connection with television or sound recording.
The imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or trademark or similar property.
The imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill.
The use of any industrial, commercial or scientific equipment.
The sale, distribution, or exhibition of cinematograph films.
Any Sum Referred to in Clause (va) of Section 28:
Payments received for not carrying out any activity in relation to any business or profession, or not sharing any know-how, patent, copyright, trademark, licence, franchise, or any other business or commercial right of a similar nature or information or technique likely to assist in the manufacture or processing of goods or provision of services. (Commonly known as Non-compete Fees).
Fees Paid to a Director (other than Salary):
This typically includes sitting fees paid to directors for attending board meetings or committee meetings, or commission paid to a director (if not considered as salary). It specifically excludes any amount chargeable under the head "Salaries" from its ambit.
TDS Under Section 194J(b) - @ 10% (Statutory Rate)
This sub-section applies a 10% TDS rate (or 7.5% during the temporary reduction period from May 14, 2020, to March 31, 2021) on the following payments:
Fees for Professional Services:
This refers to services rendered by a person in the course of carrying on any of the following professions (as defined in Explanation to Section 194J):
Legal Profession: Lawyers, advocates, solicitors.
Medical Profession: Doctors, surgeons, medical practitioners.
Engineering Profession: Engineers.
Architectural Profession: Architects.
Accountancy Profession: Chartered Accountants, Cost Accountants, Company Secretaries.
Technical Consultancy: Technical consultants.
Interior Decoration: Interior decorators.
Advertising: Advertising agencies.
Sports Persons: Sportspersons, umpires, referees, coaches, trainers, sports managers, event managers, commentators, anchors, and other persons connected with sports activities.
Film Artists: Actors, directors, music directors, art directors, editors, singers, lyricists, story-writers, screenplay writers, dialogue writers, choreographers, and any other person associated with the production of cinematograph films or television programmes.
Other Notified Professions: Any other profession as is notified by the Central Board of Direct Taxes (CBDT) for the purposes of Section 44AA (maintenance of accounts by specified professionals). Examples include IT professionals and Company Secretaries.
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