TDS on Professional Fees 2025-26 — Section 194J Rate, Threshold & 194J vs 194C

Updated: 3 June 2026 | FY 2025-26 | Section 194J | Income-tax Act, 2025

TDS under Section 194J is deducted on professional and technical service fees. Rate: 10% on professional fees (doctors, lawyers, CAs, architects, engineers, company secretaries); 2% on technical services (including call centre fees, software royalty, IT support); 10% on director fees (non-salary, no threshold). Threshold: ₹30,000 per payee per year. Who deducts: any person (company, firm, individual/HUF subject to tax audit) making payment in the course of business.

10% / 2%

Section 194J TDS: 10% on professional fees, 2% on technical services.
Threshold ₹30,000/year per payee. Director remuneration: 10% with no threshold limit.

Section 194J — TDS Rates by Payment Type

Payment Nature	TDS Rate	Threshold	Examples
Professional fees	10%	₹30,000/year	CA, doctor, lawyer, architect, engineer, CS
Technical services	2%	₹30,000/year	IT support, manpower supply, software maintenance, call centre
Royalty (software)	2%	₹30,000/year	Software licensing royalty
Director remuneration (non-salary)	10%	No threshold	Sitting fees, commission to directors
Non-compete fees	10%	₹30,000/year	Fee paid for not competing in a business

Section 194J vs Section 194C — Which Section Applies?

Factor	Section 194J	Section 194C
Nature of payment	Professional / technical fees	Contract work / labour/service contract
TDS rate	10% (professional), 2% (technical)	1% (individual/HUF), 2% (others)
Threshold	₹30,000/year	₹30,000/single or ₹1L/year
Who it covers	Doctors, CA, lawyers, IT consultants, architects	Contractors, sub-contractors, transporters, printers
IT services example	Software consulting, architecture design, testing	Software development "work contract" (product delivery)
Advertising	Agency professional fees	Ad production work contract

How to Claim TDS Credit — Form 26AS & ITR

TDS deducted under Section 194J is deposited to the government by the deductor and reflects in your Form 26AS and Annual Information Statement (AIS) within 7 days of deposition. To claim credit:

Step 1: Download Form 26AS from the income tax portal (incometax.gov.in) and verify all 194J TDS entries match your records.

Step 2: File your ITR — use ITR-3 if professional income is business/profession income (showing P&L), or ITR-4 if opting for presumptive taxation under Section 44ADA (50% of gross receipts for professionals).

Step 3: In Schedule TDS of the ITR, enter TDS details — TAN of deductor, gross payment amount, TDS amount. The system auto-fetches from 26AS — verify the pre-filled data.

Step 4: TDS credit is applied against your total tax liability. If TDS exceeds liability, the refund is issued after ITR processing (typically 15–45 days after verification).

Frequently Asked Questions

What is the TDS rate on CA fees or professional fees under Section 194J?

TDS under Section 194J on professional fees (including fees to CA, doctors, lawyers, architects, engineers, company secretaries, and other listed professions) is deducted at 10%. This applies when the total payment to a single payee exceeds ₹30,000 in a financial year. Director's fees (non-salary) are also subject to 10% TDS under Section 194J with no threshold limit. Technical services attract a lower 2% TDS rate.

Section 194J vs 194C — which applies to IT services or software development?

The distinction: Section 194C (1%/2% TDS) applies to "work contracts" — where a contractor carries out specific work using their own labour/materials (printing, manufacturing, construction, software development under a work contract). Section 194J (10%/2%) applies to "professional fees" or "technical services" — where specialized knowledge/skill is provided. Pure IT consulting, software testing, or data analytics by an individual consultant = 194J at 10%. Software development work contract for a product = could be 194C at 2%. If in doubt, 194J is the safer classification for IT professionals/consultants.

What is the threshold limit for TDS deduction under Section 194J?

The threshold limit under Section 194J is ₹30,000 per financial year per payee. If cumulative payment to one professional exceeds ₹30,000 in a year, TDS at 10% (or 2% for technical services) is deducted on the entire amount including the earlier payments. However, for director remuneration (non-salary) under Section 194J, there is NO threshold — TDS must be deducted from the first rupee.

Can a freelancer submit Form 15G or 15H to avoid TDS under Section 194J?

No. Form 15G and Form 15H are only applicable for preventing TDS on interest income (Section 194A), dividend income, etc. They cannot be used to prevent TDS under Section 194J on professional or technical fees. A freelancer or professional can instead apply to the Assessing Officer for a lower deduction or nil deduction certificate under Section 197 if their income is low or losses are expected. The deductor must then deduct TDS at the rate specified in the certificate.

How to claim credit for excess TDS deducted under Section 194J?

TDS deducted under Section 194J is reflected in Form 26AS and the Annual Information Statement (AIS). To claim credit: (1) File your ITR (ITR-3 for professionals with business income, ITR-2 if declaring as other income). (2) In Schedule TDS, enter the TDS amounts from Form 26AS — TAN of deductor, amount of TDS, year of deduction. (3) The TDS credit is set off against your total tax liability. (4) If TDS exceeds your total tax liability, the excess is refunded by the Income Tax Department after ITR processing. Ensure PAN is correctly quoted with the deductor to avoid mismatches.

TDS Rate Chart Section 194C File ITR Freelancer Tax Form 26AS

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