List of technical services under section 194j

TDS Section 194J is a provision in the Income Tax Act 1961 that deals with the deduction of TDS on fees for technical and professional services. The section is getting attention again after the Finance Bill 2020, which has made some revisions to it. The revised version of the section will come into effect from 1/04/2020. By Section 194J, TDS shall be withheld at a rate of 2% for fees for technical services (which are not professional services) and up to 10% of such costs in all other circumstances. What is 194J in income tax? Professional fees or fees for technical services are frequent types of payments that a corporate entity makes. Fees paid to a lawyer, doctor, engineer, architect, chartered accountant, interior decorator, advertiser, etc. are some typical examples of professional fees. The provision of administrative, technical, or consulting services falls under the category of technical services. Residents who receive such payments are covered by section 194J. Types of payments covered The following types of payments to residents are covered by this section: • Paying experts • Royalty • Directors’ compensation, excluding salary (E.g., sitting fees to attend board meetings) • Payments in the form of non-compete fees (i.e. fees paid to refrain from engaging in any profession or business for a certain period and within specific geographic restrictions) or fees paid to refrain from disclosing any technical information or know-how. • Technical service fees Tax Reduction ...

Any person (other than individual or huf who is not liable to • Fees for professional services • Fees for technical services • Royalty • Any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under • Non-Compete fees as referred under section 28(va) It is to be noted that if professional or technical services is provided by an employee to his employer then such amount is not covered under Section 194J but covered under section 192 i.e TDS on salary. Also Read: Rate of TDS TDS is to be deducted under this section at the rate of 10%.If the recipient of income doesn’t furnish his PAN to deductor then TDS is to be deducted @ 20%.No surcharge, education cess or SHEC shall be added to the mentioned rates. Also, TDS is to be deducted on fees excluding the GST component. From 1st June 2017TDS is to be deducted at the rate of 2% where the payee is engaged only in the business of operation of a call centre. Tax is to be deducted at the time of credit of such income to the account of the payee or at the time of payment whichever is earlier. TDS not required to be deducted in following cases • If payment is made by an Individual or HUF exclusively for personal purposes, then tax is not required to be deducted. • Assessee can apply to assessing officer forno TDS or TDS at lower rate under Section 197. • No tax is required to be deducted where the amount of such sum or the aggregate of the amounts of such sums credited or paid or like...

Difference between Professional & technical services in the preview of section 194J of Income tax act, 1961 Section 194J of Income tax act, 1961 speaks about the applicability of TDS provisions on Professional and Technical services. Before understanding the difference between both these services, below is key highlights of this section 194J. Applicability – This section is applicable on below trans: 1. Professional services fees 2. Technical services fees 3. Remuneration paid to directors excluding salary 4. Royalty 5. Payment in the nature of non-compete fees e.g., fees paid to not share know how etc. Threshold limit – TDS has to be deducted in case the payment is greater than Rs.30K during the year. ( There is no such limit for payment made to a director). Rate of deduction of TDS – Any payment covered under this section shall be subject to the TDS at the rate. 1. 2% in case of technical services w.e.f. 1st April 2020 2. 10% in case of all other services covered under this section So as mentioned above this section is providing two different rates for Technical and professional services. New rate of 2% has been introduced by the CBDT with effect from 1st April 2020. Here very interesting question arise that what is the difference between professional and technical services. So let us discuss: Definition of both Professional and technical services is given in Income tax act as mentioned below: “ Professional services ” means services rendered by a person in the cours...

For professionals and individuals who are offering technical services, the Government of India has made it easy to collect taxes by deducting them from the sources of income. TDS on professional fees or fees for technical services falls under Section 194J and is charged at a rate of 10% when payments are made to residents. Examples of careers where TDS is deducted at the source includes professions such as law, architecture, interior design, medicine, advertising, etc. Tax payments made by individuals working in these professions are classified under the 194J . What is Section 194J of the Income Tax Act? According to Section 194J of Income Tax Act, a person employed in professional or technical services is liable to pay income tax at the prescribed rate of 10% directly from their income sources. The rules and regulations of the Government of India also state that individuals should get their financial accounts audited if their sales, gross receipts, or annual business turnover exceeds the monetary limits defined under sections 44AB (a) and 44AB (b) of the Income Tax Act of India. What is the Purpose of TDS? TDS provisions were introduced to the nation by the Central Board of Direct Taxes under the Income Tax Act, 1961. TDS is a form of direct tax and Section 194J The Government introduced TDS for the following reasons: • To decrease the time required between tax paid to the Government and payments received through income sources. • To prevent cases of tax evasion by indivi...

Finance Act 2020 – TDS under section 194J FA 2020 has introduced lower rate of deduction @ 2% instead of 10%, under section 194J, if the service is in the nature of: 1. Technical service; or 2. Royalty in the nature of consideration for sale, distribution or exhibition of cinematographic films For the part of royalty, there should be no confusion to understand as it has been categorically included only for one segment. However, when one tries to interpret and differentiate the inclusions under professional service or technical service, they will refer to the definition under the act, which has been reproduced under: professional service is 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 fees for technical services means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head “Salaries”. So as per the definition of professional service, consultancy which is in the nature of t...