TDS u/s 194J is applicable while making payment for professional / Technical Services. Professional service means services of legal, medical, engineering, architectural, accounting, technical consultancy, interior decoration, advertising and other services notified by CBDT. Under this section not only professional and technical services are covered, the payments in the nature of Royalty, Director Fee and Non compete Fee are also falls under the ambit of this section.
1. Payments Covered : Under this section 194J –
Fee for Technical Services
Non Compete Fee
2. Who should deduct : The following persons are liable to deduct TDS on the payments of aforesaid nature –
Company, Firm, LLP, AOP, BOI
Individual and HUF whose books are required to be audited U/s 44AB in the preceding financial year.
Note : U/s 44AB Individual and HUF are required to get their books audited if turnover exceeds Rs. 1 Crore in case of business and Rs. 25 Lakhs in case of profession.
3. Threshold Limit
If the payments made to a single person for a particular financial year exceeds Rs. 30,000. This limit should be applied individually to the respective nature of payments.
Ex : M/s X pvt ltd a company made the following payments to Mr. Y – a) Technical Fee – Rs. 20000, b) Professional Fee – Rs. 35000 and c) Royalty – Rs. 29000. In this case TDS should be deducted on the payments of professional nature i.e Rs. 35000.
Note : If there is a segregation of service fee and service tax on the face of the bill, then no need to deduct TDS on service tax portion.
4. Time of Deduction
Tax should be deducted at the time of actual payment or credit to the account of the payee whichever is earlier. If fails to deduct interest @ 1% p.m or part of the month should be charged for the period of delay in deduction.
5. Rate of TDS
10% TDS should be deducted. No surcharge or education cess is applicable. 2% TDS is applicable for payment made to call centers. If payee not quoted his PAN, then the TDS @ 20% should be applied.
Conclusion of the Blog:
The TDS amount should be deposited to Govt on or before 7th day of succeeding month for the payments made in the month of April to February and for the the payments made in the month of March TDS should be paid on or before 30th of April.
Ex : TDS made in the month of –
April : Due date is 7th of May
December : Due date is 7th of January
March : Due date is 30th of April
If TDS is failed to deposit before the above due dates Interest @ 1.5% per month or part of a month will be charged.