Tax FAQ

Advise You Can Trust On!

Rate of TDS on Fees For Professional Services under section 194J of the Income Tax Act

Section 194J of the Income Tax Act, 1961 deals with TDS on Payment made to professional such as sports persons, coaches, trainers, anchors etc. TDS on technical services and royalty payment is also covered under section 194J of the Income Tax Act.

NATURE OF PAYMENT

Following payment are covered under this section –

Payment Remark
Fees for professional servicesHere ‘Professional services’ means the services rendered by a person in the course of carrying on –

  • Advertising profession
  • Any profession notified u/s 44AA
  • Any profession notified for the purpose of section194J

following profession have been notified:

  • Sports persons
  • Umpires and referees
  • Coaches and Trainers
  • Team physicians and Physiotherapists
  • Event manager
  • Commentators
  • Anchors and
  • Sports columnists
Fees for technical servicesHere’ Fee for technical services’ shall have the same meaning as in section 9(1)
Royalty Here ‘Royalty’ shall have the same meaning as in section 9(1)
Any some referred to in section 28(va)Sections 28(va) covers payment for non-complete / non- sharing agreements for detail refer BPV head.

Meaning of Royalty Section 9 of the Income Tax Act

“Royalty” means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head “Capital gains”) for—

(i)  the transfer of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property ;

(ii)  the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or trade mark or similar property ;

(iii)  the use of any patent, invention, model, design, secret formula or process or trade mark or similar property ;

(iv)  the imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill ;

(iva) the use or right to use any industrial, commercial or scientific equipment but not including the amounts referred to in section 44BB.

(v)  the transfer of all or any rights (including the granting of a licence) in respect of any copyright, literary, artistic or scientific work including films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting, but not including consideration for the sale, distribution or exhibition of cinematographic films ; or

(vi)  the rendering of any services in connection with the activities referred to in sub-clauses (i) to (iv), (iva) and (v).

Fees for professional or technical services.

194J. (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,

shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income-tax on income comprised therein :

Provided that no deduction shall be made under this section—

(A)  from any sums as aforesaid credited or paid before the 1st day of July, 1995; or

(B)  where the amount of such sum or, as the case may be, the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year by the aforesaid person to the account of, or to, the payee, does not exceed—

(i)  thirty thousand rupees, in the case of fees for professional services referred to in clause (a), or

(ii)  thirty thousand rupees, in the case of fees for technical services referred to in clause (b), or

(iii)  thirty thousand rupees, in the case of royalty referred to in clause (c), or

(iv)  thirty thousand rupees, in the case of sum referred to in clause (d) :

Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such sum by way of fees for professional services or technical services is credited or paid, shall be liable to deduct income-tax under this section :

Provided also that no individual or a Hindu undivided family referred to in the second proviso shall be liable to deduct income-tax on the sum by way of fees for professional services in case such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family.]

(2) [***]

(3) [***]

Explanation.—For the purposes of this section,—

(a)  “professional services” means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AA or of this section;

(b)  “fees for technical services” shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9;

(ba)  “royalty” shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;

(c)  where any sum referred to in sub-section (1) is credited to any account, whether called “suspense account” or by any other name, in the books of account of the person liable to pay such sum, such crediting shall be deemed to be credit of such sum to the account of the payee and the provisions of this section shall apply accordingly.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>