TDS Under Section 194J(a) & 194J(b)

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The existing section code 194J (i.e. Fees for Professional or Technical Services) has been sub-divided now into two sections, 194J(a) and 194J(b), effective from August 7 2020. u/s 194J(a) of the Income Tax Act, is related to TDS deduction on fees for Technical Services, and u/s 194J(b) of the Income Tax Act is related to TDS deduction on fees for Professional Services. Every person excluding an individual or a HUF, making payment to a resident for notified services, will be covered u/s 194J(a) & 194J(b) in the Income Tax Act.

  • Payments that are being covered u/s 194J(a)

– Fees for Technical Services
– Call center
– Royalty for sale
– Distribution or exhibition of cinematographic films etc..

  • Payments that are being covered u/s 194J(b)

– Professional services
– Royalty etc…

  • Tax Deduction Rate

– Tax deduction rate for u/s 194J(a) is 2% and for 194J(b) is 10%
– In case of payee fails to furnish PAN, he will be liable to pay TDS at the rate of 20%

  • Threshold Exemption Limit

In case of payment does not exceed the directed Threshold exemption limits, TDS will not be deductible.
TDS is required to be deducted if the amount of payment in a year exceeds Rs. 30,000.
However, Threshold exemption limit is not available only in the case of Fees / Commission / Remuneration paid to director of the company, other than Salary.

Procedure of preparing e-Returns for TDS / TCS

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