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Fees for professional and technical Services.
Fees for professional and technical Services.
If you are a person who is responsible to pay money to a resident professional for the services he has rendered to you by the means of fee, charges, royalty etc... Read this article to find out how you can discharge your responsibility in regards to TDS as per the provisions of section 194J of the Income Tax Act.
TDS means Tax Deducted at Source. It means that this tax is deducted and deposited to the Income tax department on a periodic basis. So, TDS is like an advance tax which is paid before filing the return of Income. TDS is applicable under various sections of the Income Tax Act, In this article we shall talk about the provisions of section 194J viz Payment of Fees for Professional and technical services.
I have categorized this section into four questions, the answers of which will help you understand this section in no time and without any complication.
Who is liable to deduct TDS?
Any person apart from Individuals and HUFs who has received service is liable to deduct the TDS.
Please note that, If the Individual or HUF was required to perform a statutory audit in the previous year due to his gross turnover exceeding the monetary limit of Rs; 1 crore, such individual and HUF shall also be liable to deduct TDS.
What are the payment for services defined under this section?
(a)fees for professional services, or
(b) fees for technical services, or
(c) any remuneration or fees or commission, other than those on which tax is deductible under section 192 (salary), to a director of a company, or
(d) royalty, or
(e) any sum paid for not sharing a know how, patent copyright etc or for not carrying out any activity in relation to any business
What is the rate of TDS?
The rate of TDS shall be 10%
Please note that in case of operation of a call center, TDS shall be 2%.
Who are not required to deduct TDS before payment?
1. Any person who paid an amount to a professional before 1st July 1995
2. If the total amount paid for services in a year to such professional doesn't exceed 30000.
3. If the Individuals or HUF mentioned above as liable to deduct have used the services for personal purposes.
