The provisions relating to TDS on fees for professional and technical services have been restructured under the Income-tax Act, 2025. The earlier Section 194J of the Income-tax Act, 1961 is now covered under Section 393(1) [Table: Sl. No. 6(iii).D(a) and 6(iii).D(b)], effective from 1st April, 2026.
This restructuring classifies payments into technical services and professional services, while also separately covering payments made to directors. The core provisions relating to deduction of tax at source continue to remain applicable.
Quick Reference – Section Mapping & Reporting
- New Section (IT Act 2025): Section 393(1)
- Table Reference:
- Sl. No. 6(iii).D(a) – Technical Services / Call Centre / Film Royalty
- Sl. No. 6(iii).D(b) – Professional Services & Others
- Nature of Payment: TDS on Fees for Professional and Technical Services
- Earlier Section (IT Act 1961): Section 194J
- Return Form: 26Q
- Code (for return filing):
- 1026 – Technical services / call centre / film royalty
- 1027 – Professional services
- 1028 – Director remuneration
Applicability of TDS
TDS is required to be deducted on payments made to a resident for professional services, technical services, royalty, or director remuneration. These provisions apply to notified services and specified categories of payments covered under this section.
Nature of Payments Covered
Payments covered under this section are classified as follows:
Section 393(1) Sl. No. 6(iii).D(a) – Technical Services
- Fees for technical services (not being professional services)
- Payments to call centers
- Royalty for sale, distribution or exhibition of cinematographic films
Section 393(1) Sl. No. 6(iii).D(b) – Professional Services
- Fees for professional services
- Royalty (other than covered above)
- Any sum referred under applicable provisions
Director Payments
- Remuneration
- Fees
- Commission
- Any payment made to a director (other than salary)
Who is Required to Deduct TDS?
The obligation to deduct TDS applies to all persons making such payments, except individuals and HUFs who are not liable for tax audit under Section 63 in the preceding financial year.
Time of Deduction
TDS shall be deducted at the earlier of the following events:
- At the time of credit of the amount to the account of the payee
- At the time of payment by cash, cheque, draft or any other mode
Rate of TDS
| Section 393(1) | Nature of Payment | Rate(%) |
|---|---|---|
| Sl. No. 6(iii).D(a) | Technical Services | 2 |
| Sl. No. 6(iii).D(b) | Professional Services | 10 |
| Sl. No. 6(iii).D(b) | Director Payments | 10 |
In cases where PAN is not furnished, tax shall be deducted at 20%, as per applicable provisions.
Threshold Limit
TDS shall be deducted only when the prescribed limit is exceeded:
- ₹50,000 for technical services and professional services
- Special Case – Director Payments: In the case of payments made to directors (other than salary), there is no threshold limit prescribed for TDS applicability. Tax is required to be deducted on the entire amount paid or credited to the director, regardless of the amount involved.
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