Section 194J — TDS on Professional & Technical Fees
Updated: 3 June 2026 | Income Tax Act, 1961 | Section 194J
Section 194J requires TDS on fees paid for professional or technical services. Rate: 10% for professional services (doctors, lawyers, CAs, architects, engineers) and director fees (other than salary); 2% for purely technical services, call centres, and software royalty (effective AY 2022-23 per Finance Act 2020). Threshold: aggregate payments exceeding ₹30,000 per payee per financial year. Includes medical fees, legal fees, audit fees, consulting fees, and technical consultancy.
10% / 2%
TDS on professional/technical fees under Section 194J — 10% for professionals & directors, 2% for technical services & call centres.
Section 194J TDS Rates by Service Type
| Service Category | TDS Rate | Threshold | Examples |
|---|---|---|---|
| Professional services | 10% | ₹30,000 p.a. | Doctor, lawyer, CA audit, architect, engineer, interior decorator |
| Purely technical services | 2% | ₹30,000 p.a. | IT support, repair & maintenance (technical), testing services |
| Call centre services | 2% | ₹30,000 p.a. | BPO, KPO, call centre operations |
| Royalty on software (qualifying) | 2% | ₹30,000 p.a. | Software licence fees treated as royalty |
| Director fees (non-salary) | 10% | ₹30,000 p.a. | Sitting fees, commission to directors |
| Non-compete fees | 10% | ₹30,000 p.a. | Non-compete agreements under business transfer |
| No PAN furnished | 20% | — | — |
What Services Are Covered Under Section 194J?
Section 194J covers: (a) fees for professional services — legal, medical, engineering, architectural, accountancy, interior decoration, technical consultancy, and any other profession notified under Section 44AA; (b) fees for technical services — managerial, technical, or consultancy services (excluding construction, assembly, mining, or carriage); (c) royalty; (d) non-compete fees under agreements not to carry on any business; and (e) remuneration or fees to a director of a company (other than salary).
From AY 2022-23, purely technical services (those that require technical skill but not professional expertise in the Section 44AA sense) are taxed at the reduced 2% rate. Mixed contracts involving both professional and technical elements are typically taxed at 10% if the dominant purpose is professional.
Frequently Asked Questions
What is the TDS rate under Section 194J?
Section 194J has two TDS rates: (1) 10% for fees for professional services (doctors, lawyers, CAs, architects, engineers, etc.), fees for technical services where it is not purely technical, royalty, and non-compete fees. (2) 2% (reduced rate from AY 2022-23 onwards, per Finance Act 2020) for fees for purely technical services, fees to call centres, and royalty on sale or distribution of software (where it qualifies as royalty for software). Director fees (not salary) are taxed at 10% under Section 194J.
What is the difference between 194J professional vs technical services?
Professional services under 194J include services rendered by professionals as defined in Section 44AA — legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, and notified professions. Technical services (taxed at 2% from AY 2022-23) are services involving technology, managerial, or consultancy work that are not covered under the definition of professional services — such as IT support services, call centre operations, and software royalties. The distinction is important as it determines whether 10% or 2% TDS applies.
What is TDS rate on CA fees under Section 194J?
TDS on CA (Chartered Accountant) fees, including audit fees, is deducted at 10% under Section 194J as CA is a notified profession under Section 44AA. If the aggregate fees paid to a CA during the financial year exceed ₹30,000, TDS at 10% must be deducted on the entire payment. There is no reduced 2% rate for CA fees — the 2% rate applies only to technical services and call centres, not to professional services.
When is Section 194J applicable vs Section 194C?
Section 194J applies to professional services (doctors, lawyers, CAs) and technical services requiring expertise. Section 194C applies to work contracts — construction, manufacturing to specification, advertising, transport, catering, and labour supply. The key distinction: if the primary nature of the contract is rendering professional expertise or knowledge, use 194J (10%). If the primary nature is executing a work or task using resources/manpower, use 194C (1%/2%). Contracts with IT companies for software development may fall under 194J if technical expertise is the primary deliverable, or 194C if it is a fixed-scope work contract.
How to claim TDS credit deducted under Section 194J?
TDS deducted under Section 194J is reflected in Form 26AS and the Annual Information Statement (AIS) on the income tax portal. The deductee (professional/service provider) can claim this TDS as a credit against their final income tax liability while filing their ITR. Enter the TDS amount in Schedule TDS2 of the ITR. If TDS exceeds your total tax liability, the excess is refunded. Ensure the PAN provided to the deductor matches your income tax PAN to avoid credit mismatch.
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