Section 194J — TDS on Professional & Technical Fees

TDS on Chartered Accountant fees, including audit fees, is 10% under Section 194J, because accountancy is a notified profession under Section 44AA. There is no reduced 2% rate for CA fees — the 2% rate applies only to purely technical services and call centres. Once aggregate CA fees in the year cross the Rs50,000 threshold (FY 2025-26), 10% is deducted on the entire amount.

Both medical (doctor) and legal services are professions notified under Section 44AA, so TDS is 10% under Section 194J once payments in the year exceed Rs50,000. The same 10% rate applies to architects, engineers, company secretaries, cost accountants and interior decorators.

If the deductee does not furnish a valid PAN, TDS is deducted at the higher of the normal 194J rate or 20% under Section 206AA. In practice this means 20% for both professional and technical payments, and no threshold benefit if the deductor cannot verify the PAN.

From FY 2025-26 (AY 2026-27) the threshold is Rs50,000, raised from Rs30,000 by the Finance Act 2025 with effect from 1 April 2025. No TDS is deducted until aggregate payments in a category cross Rs50,000 in the financial year. Once crossed, TDS applies on the entire amount, not only the portion above Rs50,000.

No. The Rs50,000 threshold is applied separately to each category of payment — professional fees, technical fees, royalty and non-compete fees. Each category has its own Rs50,000 window per payee per year, so payments in one category are not clubbed with another for the threshold test.

No. Director remuneration or fees (other than salary taxed under Section 192) have no threshold under Section 194J — TDS at 10% is deducted from the first rupee. The Rs50,000 exemption applies only to professional, technical, royalty and non-compete payments, not to director fees.

Any person other than an individual or HUF must deduct TDS under Section 194J. An individual or HUF must deduct only if they were liable to tax audit under Section 44AB in the preceding financial year (business turnover above Rs1 crore or professional gross receipts above Rs50 lakh). Payments for purely personal purposes by such individuals/HUFs are outside 194J.

Professional services under 194J are those rendered in a profession notified under Section 44AA — legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration — taxed at 10%. Technical services (taxed at 2% from AY 2022-23) are managerial, technical or consultancy services that require technical skill but do not fall within the Section 44AA professions, such as IT support and call-centre operations.

Section 194J applies where the primary deliverable is professional expertise or knowledge (10%). Section 194C applies to work contracts — construction, manufacturing to specification, advertising, catering, transport, labour supply (1% individual/HUF, 2% others). If a contract mainly executes a task using resources or manpower, it is 194C; if it mainly renders professional or technical expertise, it is 194J.

Pure reimbursements supported by evidence, billed separately from the professional/technical fee, are generally not subject to 194J TDS. But if reimbursements are bundled into a single consolidated bill without break-up, the tax department may treat the whole amount as fees liable to TDS. Keep expense reimbursements on separate invoices.

TDS must be deposited by the 7th of the following month (for March, by 30 April). The deductor files Form 26Q quarterly and issues Form 16A to the deductee. Late deposit attracts interest at 1.5% per month under Section 201(1A), and late filing attracts a Rs200/day fee under Section 234E.

Failure to deduct or deposit 194J TDS can lead to disallowance of 30% of the expenditure under Section 40(a)(ia), interest under Section 201(1A) (1% per month for non-deduction, 1.5% for non-payment after deduction) and penalty. The deductor is also treated as an assessee-in-default for the tax not deducted.

TDS under 194J appears in your Form 26AS and Annual Information Statement (AIS). Claim it in Schedule TDS of your income-tax return as a credit against your final tax liability; any excess is refunded. Ensure the PAN you gave the deductor matches your PAN so the credit is not mismatched.

If your clients are businesses (or audited individuals/HUFs) and your fees cross Rs50,000 in a category during the year, they deduct 10% (professional) or 2% (technical) as 194J TDS before paying you. You claim that TDS in your ITR. Many freelancers with receipts up to Rs75 lakh can also opt for presumptive taxation under Section 44ADA to declare 50% of receipts as income.

The substance of Section 194J continues under the new Income-tax Act 2025 (applicable from AY 2026-27) — it is renumbered as Section 393 in the new Act, but the 10%/2% rates, the Rs50,000 threshold and the professional-vs-technical distinction remain the same. For search and reference, "Section 194J" stays the well-known identifier.