TDS on Professional Fees explained: this guide covers what TDS on Professional Fees means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 393(1) (Table: Sl. No. 6(iii)) of ITA 2025 (section 194J of the 1961 Act) covers TDS on professional fees, technical services fees, royalties, and director remuneration. Following an important amendment (effective April 2020, carried into ITA 2025), the rates are now split: 10% for professionals and 2% for pure technical services.
What Payments Are Covered?
- Fees for professional services (legal, medical, engineering, accounting, architecture, advertising, etc.)
- Fees for technical services
- Royalty
- Non-compete fees and exclusivity charges
- Remuneration or fees paid to directors (other than salary)
Rates Under Section 393(1) (Table: Sl. No. 6(iii))
| Nature of Payment | TDS Rate |
|---|---|
| Professional services (lawyer, CA, doctor, engineer) | 10% |
| Technical services (call centre, IT support, data processing) | 2% |
| Royalty | 10% |
| Non-compete fees | 10% |
| Director remuneration (non-salary) | 10% |
Threshold for TDS Under section 393(1) (Table: Sl. No. 6(iii))
TDS under section 393(1) (Table: Sl. No. 6(iii)) is required only if the payment to a single payee exceeds Rs. 50,000 per Tax Year. Amounts below this threshold are not subject to TDS. The threshold is per payee, not per invoice.
Technical Services vs Professional Services — Key Distinction
The 2% rate for technical services applies where the services are of a technical or managerial nature but do not require professional qualifications. For example: a call centre providing customer support = technical service (2%). A CA firm providing audit services = professional service (10%).
Director Fees Under section 393(1) (Table: Sl. No. 6(iii))
Sitting fees paid to non-executive directors and commission paid to directors (not treated as salary) must have TDS deducted at 10%. There is no threshold for director fees — TDS applies from the first rupee.
Compliance Requirements
- TDS deducted must be deposited by 7th of the following month (30 April for March)
- Quarterly return filed in Form 26Q
- TDS certificate issued in Form 16A quarterly
If Deductee is a Company
If the professional fee recipient is a company, the company can request the deductor not to deduct TDS by providing a declaration that tax on its income is nil (under section 395 of the Income-tax Act, 2025; section 197 of the 1961 Act). Otherwise, standard section 393(1) (Table: Sl. No. 6(iii)) rates apply.
GST and TDS Interaction
TDS under section 393(1) (Table: Sl. No. 6(iii)) is on the base fee amount excluding GST. If a CA charges Rs. 1,00,000 + Rs. 18,000 GST, TDS at 10% is on Rs. 1,00,000 = Rs. 10,000. The GST portion is not included in TDS computation.
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