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Guide · TDS

TDS on Professional Fees — 10% Above Rs 50,000

The Section 194J TDS rate on professional and technical fees, the new Rs 50,000 threshold from Budget 2025, who must deduct, the no-PAN rate and the deposit and return due dates.

Written by
TaxClue Income-Tax Desk
Updated
18 August 2026
Reading time
5 min
Questions
15 answered
  • Updated August 2026
  • CA Reviewed
  • Deductor & Payee Guide
Quick Answer

TDS on professional fees is deducted at 10% under Section 194J once the aggregate payment to a payee crosses Rs 50,000 in a financial year (raised from Rs 30,000 by Budget 2025, effective 1 April 2025). Technical services are deducted at 2%, royalty and non-compete fees at 10%, and 20% if the payee does not furnish a PAN. Any person liable to tax audit — and every company, firm or LLP — must deduct it. Under the Income-tax Act, 2025 this provision is renumbered as Section 393 from AY 2026-27.

New Rs 50,000 threshold from FY 2025-26

Budget 2025 raised the Section 194J threshold from Rs 30,000 to Rs 50,000 a year, effective 1 April 2025. Older guides still show Rs 30,000 — for FY 2025-26 and FY 2026-27 the correct figure is Rs 50,000, and it is checked separately for each category (professional fees, technical fees, royalty, non-compete).

At a glance

Section 194J TDS Rates & Thresholds

Rates for FY 2025-26 by nature of payment, with the reduced 2% for technical services and the higher rate where PAN is not quoted.

Nature of PaymentSection (New / Legacy)ThresholdTDS RateNo-PAN Rate
Professional services (CA, lawyer, doctor, architect)393 (earlier 194J)Rs 50,000/year10%20%
Technical / consultancy services (incl. call centre)393 (earlier 194J)Rs 50,000/year2%20%
Royalty393 (earlier 194J)Rs 50,000/year10%20%
Non-compete fees393 (earlier 194J)Rs 50,000/year10%20%
Director remuneration (non-salary)393 (earlier 194J)No limit10%20%

Threshold is computed separately for each category, not as a single combined limit. Director remuneration (other than salary) has no threshold — TDS applies from the first rupee.

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Deductor side

Who Must Deduct TDS on Professional Fees?

Any person paying for professional or technical services must deduct 194J TDS, except an individual or HUF whose books were not subject to tax audit in the preceding financial year. In practice this covers:

  • Companies — private and public
  • Partnership firms and LLPs
  • Government bodies and local authorities
  • Trusts, societies and associations
  • Individuals and HUFs who were liable to tax audit in the previous year
You need a TAN and must file the TDS return

To deduct TDS you must hold a TAN, deposit the tax by challan and file a quarterly TDS return (Form 26Q). Failing to deduct or deposit attracts interest at 1%/1.5% per month, plus disallowance of 30% of the expense under Section 40(a)(ia).

A salaried individual or a small HUF not under tax audit does not deduct 194J TDS on personal payments (for example, paying your own CA or doctor).

Timing

When to Deduct & Deposit — Due Dates

TDS under 194J is deducted at the earlier of credit to the payee's account (including any suspense account) or actual payment by cash, cheque or any other mode.

  1. 1Bill receivedProfessional / technical services invoice
  2. 2Deduct at earlier ofCredit in books or payment
  3. 3Deposit by challan7th of the next month (30 Apr for March)
  4. 4File Form 26QQuarterly TDS return
  5. 5Issue Form 16ATDS certificate to the payee
EventDue date
Deposit of TDS (Apr–Feb)7th of the following month
Deposit of TDS for March30 April
TDS return Form 26Q — Q1 (Apr–Jun)31 July
TDS return Form 26Q — Q2 (Jul–Sep)31 October
TDS return Form 26Q — Q3 (Oct–Dec)31 January
TDS return Form 26Q — Q4 (Jan–Mar)31 May

Form 16A (TDS certificate) is issued within 15 days of the return due date. Late deposit attracts interest of 1.5% per month.

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Common confusion

Professional Fees (194J) vs Contractor (194C)

The wrong section means the wrong rate. Professional fees (194J) cover intellectual or specialised expertise; contractor payments (194C) cover work, labour or supply contracts.

194J

Professional / technical fees

  • Rate 10% (2% for technical services)
  • Threshold Rs 50,000 per category / year
  • CA, lawyer, doctor, architect, consultant
  • Royalty, non-compete, director fees
  • Renumbered Section 393 from AY 2026-27
194C

Contractor / sub-contractor

  • Rate 1% (individual/HUF) or 2% (others)
  • Threshold Rs 30,000 per contract or Rs 1,00,000/year
  • Works contracts, labour, supply, transport
  • Physical work, not intellectual expertise
  • Also consolidated under the 2025 Act
GST is excluded if shown separately

TDS under 194J is deducted on the fee excluding GST, provided the GST component is shown separately on the invoice. If GST is not separately indicated, TDS applies to the whole invoice value. This is different from GST TDS under Section 51, which is a separate levy.

✓It is 194J (professional) if

  • You pay a CA, lawyer, doctor, architect or engineer
  • You pay for consultancy, technical or managerial services
  • The payment is royalty, non-compete or director sitting fees

!It is likely 194C (contractor) if

  • You pay for a works or labour contract
  • You pay a transporter, caterer or event supplier
  • The vendor supplies goods or manual work, not expertise
Sources
  1. Section 194J / 393: incometax.gov.in
  2. CBDT / TDS: Income Tax Department
  3. Threshold Rs 50,000 (eff. 1 Apr 2025): Finance Act, 2025
  4. Income-tax Act, 2025 — Section 393 (renumbering w.e.f. AY 2026-27)

Disclaimer: This guide is general information based on the law and notifications in force when it was last updated. It is not professional advice for your case — rates, thresholds and due dates change, so check the current position or speak to our CA team before you act on it.

People also ask

TDS on Professional Fees — Frequently Asked Questions

Short, direct answers to the 15 questions readers ask most on this topic.

TDS on professional fees is 10% of the gross fee under Section 194J (renumbered Section 393 under the Income-tax Act, 2025). Technical or consultancy services are deducted at the reduced rate of 2%, while royalty and non-compete fees are at 10%. If the payee does not furnish a PAN, TDS is deducted at 20%. TDS is computed on the amount excluding GST when GST is shown separately on the invoice.

No. If the aggregate payment to a professional during the financial year does not exceed Rs 50,000, no TDS is required under Section 194J. Budget 2025 raised this threshold from Rs 30,000 to Rs 50,000 with effect from 1 April 2025, so for FY 2025-26 and FY 2026-27 the limit is Rs 50,000. Once payments cross Rs 50,000 in the year, TDS applies to the full amount, not just the excess.

No. The Rs 50,000 threshold is applied separately to each category of payment — professional fees, technical fees, royalty and non-compete fees. You do not add them together. For example, Rs 40,000 of professional fees and Rs 40,000 of technical fees to the same payee each stay below the threshold, so no TDS is deducted on either.

Fees for technical services (including managerial, technical or consultancy services such as call-centre operations) attract TDS at 2% under Section 194J, against 10% for professional services. Correctly classifying a payment as professional versus technical is important because it changes the rate from 10% to 2%.

If the payee does not furnish a valid PAN, TDS under Section 194J is deducted at 20% under Section 206AA, instead of 10% or 2%. Always collect and verify the payee's PAN before deducting, and quote it correctly in the TDS return, or the higher 20% rate applies.

Any person paying for professional or technical services must deduct 194J TDS, except an individual or HUF whose books were not subject to tax audit in the preceding year. This covers all companies, partnership firms, LLPs, government bodies, trusts and societies, plus individuals and HUFs who were liable to tax audit. A salaried person paying their own CA or doctor need not deduct TDS.

Yes. To deduct and deposit TDS you must first obtain a TAN (Tax Deduction and Collection Account Number). You quote the TAN on every challan, TDS return and Form 16A certificate. Deducting TDS without a TAN is not possible, and applying is a one-time online process.

Yes. Payments to a freelancer for professional or technical services attract TDS under Section 194J once the aggregate crosses Rs 50,000 in the financial year — provided you are a deductor (company, firm, or an individual/HUF under tax audit). Professional work is deducted at 10% and technical services at 2%.

TDS is deducted at the earlier of crediting the amount to the payee's account (including a suspense account) or actual payment. The deducted TDS must be deposited by the 7th of the following month; for amounts deducted in March the due date is 30 April. You then file a quarterly TDS return in Form 26Q and issue Form 16A to the payee.

TDS on professional fees (a non-salary payment to a resident) is reported in Form 26Q, filed quarterly. Due dates are 31 July (Q1), 31 October (Q2), 31 January (Q3) and 31 May (Q4). Form 16A, the TDS certificate for the payee, is issued within 15 days of the return due date.

Interest applies at 1% per month for failure to deduct and 1.5% per month for failure to deposit after deduction, until the tax is paid. In addition, 30% of the professional-fees expense can be disallowed under Section 40(a)(ia) while computing business income, and late filing of the TDS return attracts a fee of Rs 200 per day under Section 234E.

No. TDS under Section 194J is deducted on the fee excluding GST, provided the GST component is shown separately on the invoice. If GST is not separately indicated, TDS is deducted on the entire invoice value. This income-tax TDS is separate from GST TDS under Section 51 of the GST law.

Section 194J covers professional and technical fees (rate 10% / 2%, threshold Rs 50,000 per category) for intellectual or specialised expertise such as a CA, lawyer or consultant. Section 194C covers contractor payments (rate 1% for individual/HUF, 2% for others, threshold Rs 30,000 per contract or Rs 1,00,000 a year) for works contracts, labour and supply. Applying the wrong section applies the wrong rate.

Yes. Directors' remuneration that is not salary — such as sitting fees or commission — is covered under Section 194J and deducted at 10%, with no threshold, so TDS applies from the first rupee. Remuneration paid as salary to a whole-time or managing director is instead covered under Section 192 (TDS on salary).

The Income-tax Act, 2025 renumbers Section 194J of the 1961 Act as Section 393, with effect from AY 2026-27. The rates, the Rs 50,000 threshold and the scope are unchanged. In everyday practice, TDS challans, returns and professionals still refer to it as "194J", and the two references mean the same provision.