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Section 194 J TDS on Fees for professional or technical services

Section 194 J TDS on Fees for professional or technical services
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As you know Professional & technical services attracts TDS under section 194 J of Income tax act. The Section 194j came into force  from 1st day of July, 1995.The current rate of tax deduction under this section is 10 % ( ten percent).TDS Shall be deducted in case

(1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of—

(A) fees for professional services, or

(B) fees for technical services, [or]

(Ba) any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 192, to a director of a company, or

(C) royalty, or

(D) any sum referred to in clause (va) of section 28

The clause (va) of section 28

Any sum, whether received or receivable, in cash or kind, under an agreement for—

(a) not carrying out any activity in relation to any business; or

(b) not sharing any know-how, patent, copyright, trade-mark, licence, franchise or any other business or commercial right of similar nature or information or technique likely to assist in the manufacture or processing of goods or provision for services:

Finance Act 2016 Update ( Amendment of section 28) :  From 1st April 2017  the word “or profession” shall be inserted   after the words “any business”.

Some of the professional services falls under this section are.

TDS under 194 j is applicable to following services.

  1. Chartered Accountant
  2. Accounting Professional Services
  3. Legal Services
  4. Medical Services
  5. Engineering Services
  6. Architect Services
  7. Technical Consultancy Services
  8. Interior decoration services
  9. Advertising services like, designing and ad film making.

Section 194 J is applicable when payment made to the following professionals

  1. Authorized representative
  2. Film professionals like Actors,Cameraman,Director,Music directors,Art directors,editors,singers,lyricist,Story writer,Costume designer,
  3. Company Secretary.
  4. Sports man
  5. Umpires
  6. Referees
  7. Trainers
  8. Coaches
  9. Event managers
  10. Commentators
  11. Anchors
  12. Sports columnist
  13. Team Physicians and physio therapist.

Who and from whom should Deduct TDS on Professional and technical services?

  • As per Income tax Act TDS should be deducted by all other than Individual and HUF.
  • Individuals and HUF Who were liable liable to be audited under section 44 AB In the previous Financial year is not entitled for this exemption.
  • Individuals and HUF availing exemptions shall make sure that, such payments are to be made exclusively for personal use.
  • The Person deducting TDS under this section should issue Form 16 with the amount of tax deducted with total consideration paid to the deductee.
  • The person from whom the deduction is made can claim the TDS paid with the income tax to be paid or can claim a refund in case of a non tax payer.

Finance Act 2016 Update on surcharge.

In cases in which tax has to be deducted under section 194 J of the Income-tax Act, the deductions shall be made at the rates specified in those sections and shall be increased by a surcharge, for purposes of the Union

(a) in the case of every individual or Hindu undivided family or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, being a non-resident, calculated at the rate of fifteen per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees;

(b) in the case of every co-operative society or firm, being a non-resident, calculated at the rate of twelve per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees;

(c) in the case of every company, other than a domestic company, calculated,—

(i) at the rate of two per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees but does not exceed ten crore rupees;

(ii) at the rate of five per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds ten crore rupees.

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