Section 194J TDS Rules FY 2025-26 – Rates & Limits

Section 194J of the Income Tax Act mandates Tax Deducted at Source (TDS) on payments made to resident professionals and technical consultants. From April 1, 2025, the threshold limit has been increased to ₹50,000 per year per category.

1. Key TDS Rates (FY 2025-26)

  • Fees for Technical Services: 2%
  • Royalty (Film-related): 2%
  • Call Centre Operators: 2%
  • Professional Services: 10%
  • Other Royalties & Non-Compete Fees: 10%
  • Directors' Remuneration: 10% (No threshold)

Note: If PAN is not provided, TDS is deducted at 20%.

2. Who Must Deduct TDS?

  • Companies & Firms: Always required to deduct TDS
  • Individuals & HUFs: Required only if turnover exceeds:
    • ₹1 crore (Business)
    • ₹50 lakh (Profession)
  • Exception: No TDS for personal payments

3. Threshold Limits Explained

The ₹50,000 limit applies separately to:

  • Professional fees
  • Technical fees
  • Royalty
  • Non-compete fees

Example: ₹40,000 (professional) + ₹20,000 (technical) → No TDS since both are below ₹50,000 individually.

4. Practical Example

Scenario: XYZ Pvt Ltd pays ₹1,00,000 to a Chartered Accountant

  • Total Amount: ₹1,00,000
  • TDS Rate: 10%
  • TDS Amount: ₹10,000
  • Net Payment: ₹90,000

Deposit Deadline: 7th of next month (30th April for March)

5. Penalties for Non-Compliance

  • 1% interest per month for delay in deduction
  • 1.5% interest per month for delay in deposit
  • 30% expense disallowed under Income Tax

6. FAQs

What are Professional Services?
Legal, medical, engineering, accountancy, advertising, etc.

Is TDS applicable on GST?
No, if GST is shown separately.

Can TDS be lower?
Yes, using Form 13 from AO.

Where to check TDS?
Form 26AS or AIS on Income Tax Portal.