Friday, June 8, 2012

TDS ON FEES FOR PROFESSIONAL OR TECHNICAL SERVICES U/S 194J


on Friday, June 8, 2012

Purview of TDS Section 194J fees for Profession or technical services 

Any person not being an individual or a HUF who is responsible for paying to a resident by way of fees for professional or technical services royalty and any sum referred to clause (va) of section 28 is liable to deduct tax at source in case aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year by the aforesaid person to the account of, or to the payee exceeds Rs. 20,000/-. This limit of Rs. 20,000/- has been enhanced to Rs. 30,000/- w.e.f. 1.7.2010.

Individuals and/ or HUFs who are subject to tax audit u/s 44AB during the financial year immediately preceding the financial year in which such fee for professional or technical services including royalty is credited or paid are also liable to deduct tax at source.

This section is applicable with effect from 1.7.1995.

Moreover where any such income by way of Professional or Technical services etc. is credited to ‘Suspense Account’ or to any other account shall also be liable to deduct tax at source.

Meanings of the word ‘Professional Services’ and ‘Fees for Technical Services’ 

As per explanation appended to this Section the meaning of the word `Professional Services, Fees for Technical Services and Royalty’ has been defined as under:

Professional Services’ means 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’ shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9, which is as under: 

‘fee for technical services means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provisions 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’.

Royalty’ shall have the same meaning as in Explanation to clause (vi) of sub –
section (1) of Section 9 

Other Professions notified by the Board under section 44AA(1)

Other professions notified by the Board u/s 44AA(1) are : 

(1) The profession of authorised representative
“authorised representative” means a person who represents any other person,on payment of any fee or remuneration, before any Tribunal or authority constituted or appointed by or under any law for the time being in force, but does not include an employee of the person so represented or a person carrying on legal profession or a person carrying on the professional accountancy. 

[Notification No. SO 18E dated 12.1.1977] 

(2) The profession of film artist

“film artist” means any person engaged in his professional capacity in the production of a cinematograph film, whether produced by him or by any other person, as –,
(i) an actor;
(ii) a cameraman;
(iii) a director, including an assistant director;
(iv) a music director, including an assistant music director;
(v) an art director, including an assistant art director;
(vi) a dance director, including an assistant dance director;
(vii) an editor;
(viii) a singer;
(ix) a lyricist;
(x) a story writer;
(xi) a screen-play writer; 
(xii) a dialogue writer; and
(xiii) a dress designer. 

[Notification No. SO 18E dated 12.1.1977]

(3)The profession of company secretary
‘company secretary’ means a person who is a member of the Institute of  Company Secretaries of India in practice with in  in practice with in the meaning of sub-section (2) of section 2 of the Company Secretaries Act, 1980.
[Notification No. SO 2675 dated 25.9.1992] 

(4) The profession of information technology
[Notification No. SO 385 E dated 4.5.2001]

(5) The profession of Sports.

Sports Persons,
Umpires and Referees,
Coaches and Trainers,
Team Physicians and Physiotherapists,
Event Managers,
Commentators,
Anchors and
Sports Columnists.

Read more: http://www.simpletaxindia.net/2008/08/tds-us-194-j-scope-of-professional.html#ixzz1xA98aEdk
[  88/2008/F.NO. 275/43/2008-IT(B), DATED 21-8-08 ]

CBDT vide Notification No. 890(E) dated 26.9.2000 [F. No. 142/49/2000-TPL] has treated the following services as information technology enabled products or services for the purposes of sections 10A(b)(i)(2), 10B(b)(i)(2), 80HHE(b): 

(a) Back office Operations  
(b) Call Centres
(c) Content Development or Animation
(d) Data Processing 
(e) Engineering & Design
(f) Geographic Information System Services
(g) Human Resources Services (o) Site Services
(h) Insurance Claim Processing 
(i) Legal Databases
(j) Medical Transcription
(k) Payroll 
(l) Remote Maintenance
(m) Revenue Accounting
(n) Support Centres Web 

No deduction if sum paid/credited for personal purposes 

Individuals and H.U.F. covered by section 44AB need not deduct tax at source on payment for Professional services in case such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu Undivided Family.

[3rd Proviso to section 194J(1) w.e.f. 1.6.2003]. 

Status of Advertising Professionals 

Payment for Advertising have been covered under section 194C as well as u/s 194J . In this connection C.B.D.T. has clarified that section 194C will apply to payments made to the advertising agency in connection with services rendered by such agency in the area of advertising. When payments are made by advertising agency to professionals engaged by such agency in connection with the execution of advertising jobs, the payments to these professionals e.g. film artist, an actor, a cameraman etc. would attract the provisions of section 194J. 

[Circular No 714 dated 3.8.1995 (215 ITR (St) 5)]

It was further clarified that any payment is liable for tax deduction only under one section.

[Circular No. 720 dated 30.8.1995] 

Persons liable to deduct tax at source 

Any person, not being an individual or a Hindu Undivided Family, who is responsible for paying to a resident any sum by way of 
(a) Fees for Professional Services, or
(b) Fees for Technical Services.
(c) Royalty; or (w.e.f. 13.7.2006)
(d) Any sum referred to in clause (va) of Section 28 (w.e.f. 13.7.06)
as and when the aggregate of the amounts of such credited or paid or likely to be credited or paid during the financial year exceeds Rs. 30,000/-. 

Individuals or HUFs who are subject to tax tax audit under Section 44AB during the financial year immediately preceding the financial year in which such sum by way of fees for Professional or Technical Services is paid or credited shall also be liable to deduct tax at source. However if the payment by such individuals and/or H.U.F. is for personal purposes of such individual or any member of the family no deduction of tax is required to be made. 

Time of deduction and Rate 

At the time of credit of such sum to the account of the payee or at the time of payment thereof in cash/ cheque etc. whichever is earlier.

Tax is required to be deducted at source @ 10%

This rate of 10% has been enhanced from 5% w.e.f. 1.8.2007. 

Amendment Proposed by Union Budget 2012-13 

Remuneration to a Director other than in the nature of Salary shall be liable to deduct tax at source @10% u/s 194J (w.e.f. 1.7.2012).Cut off limit of Rs 30000/- is not applicable.

Citation of Circulars/ Case Laws 

(1) Payments to hospital liable to TDS Payments to a hospital for rendering medical services liable to TDS u/s 194J.

[Circular No. 715 dated 8.8.1995 (215 ITR (St) 17)] 

(2) Payments to an electrician attracts the provisions of section 194C  Payments to an electrician or to a contractor who provides services of an electrician will be in the nature of payment made in pursuance of a contract for carrying out any work, and therefore attract the provision of section 194C. 

[Circular No. 715 dated 8.8.1995] 

(3) Payments by advertisement agency to certain professionals When an advertising agency makes payments to a film artist such as  cameraman etc., tax will be deducted at source.

[Circular No. 715 dated 8.8.1995] 

(4) multilevel TDS on software to go wef 01.07.2012 (source Finance Minister statement )

(5) TDS on service tax on professional services fees under section 194 -1 is applicable.

(read clarification TDS on service tax on Professional fees u/s 194J)

(6) Multilevel TDS on Software to end wef 01.07.2012.(finance Minister announcement) 



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  1. GOOD. PL CLARIFY WHETHER TDS IS TO BE DEDUCTED BY AN EDUCATIONAL INSTITUTION WHILE PAYING REMUNERATION TO A VISITING PROFESSOR WHO IS NOT ITS EMPLOYEE?
    sandhyaramagopal@yahoo.com

    ReplyDelete
    Replies
    1. In my view tds is deductible u/s 194J if honorarium is more than cut off amount given in the section.

      Delete
  2. which return form to be filled for TDS under 194j

    ReplyDelete
    Replies
    1. 194J means you have income from profession ,so return should be filed on ITR-4

      Delete
  3. is there any section in 194 j in which it is stated that there should be any kind of tax deduction for contractul teacher's working in schools.

    ReplyDelete
    Replies
    1. If contractual teacher is working as an employee then it is covered under 192 otherwise in 194J .

      so check agreement ,if contract of employment though at contracted rate it is covered under 192
      if contract of service then it is covered under 194J

      Delete
  4. sir my relative is working as contractual teacher in kendriya vidyalaya and income tax officer send a letter to deduct the tds as per 194j. Sir is there any kind of tds deduction for those contractual teachers or not? If yes then what is its limit ?

    ReplyDelete
    Replies
    1. TDS deduction is responsibility of school not your relative.
      Further to check whether your relative is covered under 194J or 192(salary) we have top check contract with school.

      If contract is for employment at fixed rate then tds u/s 192 is applicable.

      If contact is for providing services than tds u/s 194J applicable.

      Delete
  5. hi.
    kindly guide.

    my friend is a retainer with a company and the company pays him a fixed sum monthly (after deducting 10% as tax) as retainer fee for professional services. He incurs substantial expenses on employing a computer operator and chauffeur (both of which are required for carrying out his professional services). How can he claim rebate in tax because on account of these expenses ? Also please guide as to what are the formats acceptable as proof of payment to computer operator and chauffeur ?

    ReplyDelete
    Replies
    1. already answer by rej rani

      You can deduct exp. which has been incurred to earn professional income . For computer operator an driver salary ,take monthly receipt of salary from them . Pay through cheque if possible.Further you can claim stationary , computer labtop depreciation , internet exp. , telephone etc etc . keep bills intact with you .Where not available take payment receipt from receiver ....Prepare books of Accounts and claim all such exp.

      Delete
  6. sir my relative got the salary in the basis of total period he taught in hole month so under which section he came in 194j or is in 192

    ReplyDelete
  7. HI please guide
    I am working abroad but getting some payment in India as cosultation fee. Is this ammount is liable to for TDS. And what is this 30000 cutoff, is that in a FY if all amount exceed than 30000 then TDS will be deducted.

    ReplyDelete
  8. Hi please guide,
    I am working abroad and getting some payment in india, is this amount is also liable for TDS. And what is cutoff 30000 means..

    ReplyDelete
  9. hello,
    i have received the form16A from my employer. the total TDS deducted is Rs.38700. i filled the return for the same. now i got the mail from incometax dept that the amount Rs38700 has not been received by them , instead they have received Rs. 32000. so there is a mismatch of Rs.6000. pls let me know how to rectify this problem?? thanks.

    ReplyDelete
    Replies
    1. Only your employer can correct ,match your form 16 with online form 26as and locate the difference and inform your employer to take NA to rectify ETDS return

      please read below link for mismatching

      http://www.simpletaxindia.net/2012/04/demand-notice-mis-matching-of-tds-in.html

      Delete
  10. Hi, Please guide.

    Is it TDS is applicable on Invoice raised as "Charges towards Website Designing". If TDS is applicable than what's the section & what's the rate of TDS deduction.

    ReplyDelete
  11. WHICH SECTION OF TDS APPLICABLE ON DATA RECOVERY WORK FROM COMPUTER HARD DISK 194C OT 194J

    ReplyDelete
  12. Hi,
    I have one doubt. Our company pays statutory clearance charge (charges towards handling filing all excise document with dept)to an individual who is not a professional.

    Does it attract TDS. If so at what rate.

    ReplyDelete
  13. Dr Hemlata KatiyarApril 12, 2013 at 8:19 PM

    Hello Sir

    I have an income of Rs 20000/- PM as professional fee out of which Rs 2000/- are being deducted every month by the employer. At the end of the year I would end up paying 24000/- on an income of Rs 240000/- out of which only 50000/- is taxable for women taxpayers. Is there any provision to pay within the authd limit of tax applicable on Rs 50000/-

    ReplyDelete
    Replies
    1. No such direct rule in this regard. However you may apply to your ito for less tds rate on form 13 .If ITO issue you less tds rate certificate then your client can deduct tax at less rate (given in certificate )

      Delete
  14. we are a company, we received invoice from a vendor for his service of Email server hosted mail box usage charges. In which section we need to deduct the tax and reason for it?

    ReplyDelete
  15. A person who is a freelance copy editor, that is to say he/she receives files in word or any other format, has to go through the same as a proof reader and make corrections as required and return to sender. Would this be a contract or professional service? Please clarify. Thanks in advance.

    ReplyDelete
  16. Hi,

    I am working for a production house as a business development person.I'm being paid 15000 pm, on professional basis, on which 10% TDS is cut. Please guide me, as to how I can avoid this, or reduce it or reclaim it if possible? I am new to this. So pls explain in lay man's terms.

    Eternally grateful, Shruti.

    ReplyDelete
    Replies
    1. You can get refund by filing the income tax return on itr-4 ,download itr-4 and get it filed through profession help and file it to income tax department.

      Income tax department will release the refund in few months

      Delete
  17. I am an IT engineer got TDS deducted from my Traning Period Honararium under 194Jfor which i have filed ITR 4 in which i have shown only income and TDS deducted while other fields have not filled and this Form i submitted as books maintained... so whether i am on right path or i did a mistake????

    ReplyDelete
    Replies
    1. you have to field other columns also,as books has been maintained .Further books are must if gross receipt is more than 150000 in current year or in any of the last three preceding previous years

      Delete
  18. IT Engineer ......
    16A is given quarterly to me and 2nd quarter i have received Rs. 24600 and TDS as of Rs. 2960
    3rd quarter Rs. 19667 and tds as of Rs. 1967
    fourth quarter Rs. 15000 and TDS as of Rs. 1500
    so whether under books not mained is proper??? if i do so then do i need to fill all the fields then ????

    ReplyDelete
    Replies
    1. YES , Book are not required so select books not maintained ,field not required will automatically faded

      Delete
  19. thanks a tonn sir .......... sir will you guide me further more as m trying to have command on income tax as m practicing as tax practitioner but having command on MVAT only having basic knowledge of IT but i want detailed knowledge..
    Sir My name is Adv. Priya Mehta, M from Yavatmal - Maharashtra

    ReplyDelete
  20. m working with an airlines from last 5.6 years but i havent file any return of income tax but now i am willing to get loan from bank in which i need to produce returns of 3 years then what should i do in this case ....
    If the company has deducted tax which i hadnt claimed by filling return then what is the solution??
    if there is no any deduction of tax but i m having other deductions like group insurance and medi claim then what should i do??
    Which ITR i should file and how can i file return for last 3 years including current year??
    In case my TDS is deducted and there is a refund in last years then how can i claim this now?? can i claim this or not??

    ReplyDelete
    Replies
    1. What was your Income for last three years and what amount of tax deducted each year provide details .

      Further in last two year return up to salary income of 500000 is not required to be filed .

      Delete
    2. m earning approx 14-15 thousand rs per month

      Delete
    3. but the bank is demanding three returns of Income tax then what should i do???

      Delete
    4. Bank can also process loan on the basis of salary certificate from employer .further you can file return for ay 12-13 and ay 13-14 only

      Delete
    5. okey thanks .... one more question what if i have refund in AY 11-12 and 12-13 then can i claim this now??? if yes then how??

      Delete
    6. You can file ay 12-13 return only (including refund) up to 31.03.2014 .

      ay 11-12 return can not be filed

      Delete
  21. I am working as a credit officer in the bank where i get salary around of Rs. 8000/- per month i have deduction of Provident Fund only and investment in shares so which ITR i need to file? and whether the deduction of investment in shares is available unders any provision??

    ReplyDelete
  22. I DEBIT AS EXPENSES 35000/- FOR PROFESSIONAL EXPENSES IN LAST YEAR I.E 31.3.2013 AND NO DED. TDS NOW TODAYS I PAY PAYMENT TO CONSULTANT I AM WORRIED. PL GIVE ADVISE

    ReplyDelete
    Replies
    1. Tds must have been deducted at the time of credit given to professional , please inform your status like individual or partnership firm and turnover , whether you covered under audit case etc .

      Delete
  23. which section of tds applicable on Courier service agent 194c or 194j

    ReplyDelete
  24. i am having a query regarding TDS for contract based teachers...can u help me ..i have no idea about all this things....
    i was working on contract as teacher in training institute with salary Rs.4000/- pm. I worked for 12 months and by totalling varing amounts i got in this 12 months is approx. Rs.42,000/- . I left the job on 31 Jan 14 . now 2 days back i got call from institute saying they need my pan card number and as my payment is above 30,000 so i have to pay TDS 10% = 3100 rupees. I am not having any idea about this.hope i will get an answer from you how this thing is calculated. i have already left my job 2 months back so still i have to pay them?

    Kindly advice

    ReplyDelete
    Replies
    1. They have employed you as professional and in such case tds @ flat 10 % applicable if payment exceeding 30000. so they are deducting it correctly .however you can get refund from income tax department by filing return of income

      Delete
  25. What if TDS was not deducted as per professional service from a training institute?
    What can be done?

    ReplyDelete
  26. what if tds was not cut according to professional services rule from an education institute?

    ReplyDelete
  27. I am a self employed professional. I pay a salary of rs 8000 per month to my driver.. do I need to deduct TDS from his salary. How to maintain record of the payment made???

    ReplyDelete
    Replies
    1. driver is your employee and covered under tds section 192 (salary)his income is less than 250000(Basic exemption limit ) so no tds is required to be deducted.

      Further you should get a receipt of payment from your driver and if possible make payment through cheque where ever possible.

      Delete