Last Updated on May 24, 2022 by

The Income Tax Act, 1961 has specified different sections for TDS deductions on payments. These sections highlight the TDS deductible from different types of payments made. One such section is Section 194J which details the TDS rules on professional fee or fees paid for technical services. 

Let’s explore this section in detail.

Section 194J

Section 194J states that if a payment is made to a professional and the payment is a fee for the services that they have rendered, the payee should deduct a TDS from the fee before paying it. So, suppose you pay a fee to a lawyer, architect, CA, doctor, or any other professional for their service, then you are liable to deduct a TDS from the payment at specified rates under Section 194J.

Section 194J specifies TDS deduction on the following types of payments:

  • Professional fee
  • Royalty
  • Fees for technical services
  • Remuneration paid to directors of a company, except their salary
  • Any type of non-compete fee (payment done for not conducting any business or profession for a specific time and within specific geographical boundaries)
  • A fee paid for not sharing technical knowledge or know-how

Terms and conditions for TDS deduction under Section 194J

While Section 194J is quite simple, there are some terms and conditions for TDS deductions that you should know about. These terms and conditions are as follows:

  • TDS is applicable only if the fee paid exceeds Rs 30,000 in a financial year. In the case of lower amounts, TDS is not applicable. For example, say you pay a fee of Rs 25,000 to an advocate for professional services availed. Since the amount paid does not exceed the threshold limit of Rs 30,000, no TDS is deductible. However, if the fee is Rs 40,000, TDS would apply. However, the rule is not applicable for fees paid to directors. In such cases, TDS is deductible irrespective of the amount. So, if Rs 10,000 is paid to directors, TDS would be deducted from the same. 
  • Individuals and HUFs (Hindu Undivided Families) engaged in business and having a turnover of less than Rs 1 cr in the last financial year are not required to deduct TDS on professional or technical fees
  • Individuals and HUFs engaged in rendering services and having a turnover of less than Rs 50 lakh are not required to deduct TDS
  • TDS should be deducted either at the time the payment is recorded in the books of account or at the time of actual payment, whichever is earlier

Rate of TDS deduction

Under Section 194J, the rate of TDS deduction depends on the type of payment made. It is as follows: 

Type of paymentRate of TDS 
Any type of payment covered under Section 194J10%
Fees paid for technical services 2%
Payment to call centre operators 2%
If the PAN details of the payee are not available 20%

Payment of TDS deducted under Section 194J

After deducting TDS, the payer has to submit the same to the government. There is a specified time limit for submitting the TDS. This time limit is as follows:

Date of payment of the feeGovernment deductorNon-government deductor 
TDS deducted on payments done before 1 March Within 7th day from the end of the month Within 7th day from the end of the month 
TDS deducted on payments done in March 30  AprilThe TDS should be paid on the date when the fee is paid. The corresponding challan, however, should be deposited within the 7th day from the end of the month 

Impact of non-compliance with Section 194J

If you are liable to deduct TDS on a professional fee or fee paid for technical services, you should fulfil your liability, and that too, within the due date. If, however, you do not deduct TDS or delay TDS deduction and/or submission, the following consequences would accrue:

  • 30% of the expenditure allowed for tax exemption would be disallowed in the year that you claim the exemption. However, if you pay the TDS to the government, the disallowed expenditure would be re-allowed.
  • If you delay submitting the TDS to the government, you would have to pay interest on the delayed payment. This interest would be paid at 1% if you have not deducted TDS at all. The interest would be paid from the date the TDS was not deducted to the date that it is deducted. On the other hand, if you have deducted TDS but not submitted the same within the specified timeline, the interest rate would be 1.5%. This would be payable from the date TDS was deducted to the date it was actually submitted. 


If you avail of professional or technical services and you are liable for deduction of TDS on the same, understand the rules of deduction. Deduct TDS at the specified rates and submit the deducted TDS timely to fulfil your duty. This would help you avoid complications arising out of non-compliance with Section 194J.

Ayushi Mishra
Notify of
Inline Feedbacks
View all comments

The blog posts/articles on our platform are purely the author’s personal opinion and do not necessarily represent the views of Anchorage Technologies Private Limited (ATPL) or any of its associates. The content in these posts/articles is for informational and educational purposes only and should not be construed as professional financial advice. Should you need such advice, please consult a professional financial or tax advisor. The content on our platform may include opinions, analysis, or commentary, which are subject to change, without notice, based on market conditions or other factors. Further, the use of any third-party websites or services linked on the website is at the user's discretion and risk. ATPL is not responsible for the content, accuracy, or security of external sites. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. The examples and/or securities quoted (if any) are for illustration only and are not recommendatory. Any reliance you place on such information is strictly at your own risk. In no event will ATPL be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of this website.

By accessing this platform and its blog section, you acknowledge and agree to the Terms and Conditions of this website, Privacy Policy and Disclaimer.