30 Oct
SECTION 194J TDS ON FEES ON PROFESSIONAL OR TECHNICAL SERVICES
SECTION 194J – TDS ON FEES ON PROFESSIONAL OR TECHNICAL SERVICES
As
per the Finance Bill 2020, the subsequent amendments are created in TDS Section
194J which can get from 01/04/2020.
What’s
TDS Section 194J?
Section
194J of the Income Taxation Act 1961 contains provisions with relevancy TDS
deduction on fees for professional or technical services.
WHO IS RESPONSIBLE
TO DEDUCT TDS U/S 194J?
Every
person aside from an individual/HUF who is responsible to make the subsequent
payments to any resident is responsible to deduct TDS u/s 194J:
1)Fees
for professional services which has
a)
Medical,
legal, engineering, or architectural profession, accountancy, technical
consultancy, or interior decoration.
b)
Professional
services notified in section 44AA, The profession of a film artist, The
profession of authorized representative, The profession of Company Secretary
c)
Professional
Services rendered in relevance to sports activities notified by CBDT for
section 194J, Sports Persons, Referees and Umpires, Trainers and Coaches,
Commentators, Anchors, Sports Columnists, Event Managers, Physiotherapists
Managerial services - Consultancy Services - Provision of services of technical
or different personnel or
2)
Fees for technical services which includes Managerial services, Consultancy
Services, Provision of services of technical or different personnel or
3)
Any remuneration/fees/commission no matter name is known as to a director of a corporation
aside from the payment of salary
4)
Royalty or
5)
Individual/HUF falling under the beneath of section 44AB are included.
RATES FOR TDS
DEDUCTION UNDER TDS SECTION 194J
TDS
under section 194J is subtracted at the subsequent rates:
1)
Payee
engaged only in the business of the operation of call centre - 2%
2)
Payee
engaged in the other business operation/profession lined under the scope of194J - 10%
3)
If
PAN is not furnished by the recipients - 20%
WHEN TO DEDUCT TDS
UNDER SECTION 194J?
TDS
under Section 194J of the Income Tax is to be subtracted at the time of:
1)
Credit
of such rupees to the account of the recipient
or
2)
Payment
of such amount to the payee in cash/cheque/draft/any different mode, whichever
is earlier.
THRESHOLD UNDER TDS
SECTION 194J
In
case the prescribed payment/credit exceeds the prescribed threshold limit.
Ø
Threshold
Limit Fees for professional services - Rs 30000
Ø
Fees
for technical services - Rs 30000
Ø
Royalty
- Rs 30000
Ø
Non-compete
fees - Rs 30000
Ø
Remuneration/commission/fees
payable to a director of a company - No such limit
CONDITIONS FOR
NON-APPLICABILITY OF TDS SECTION 194J
TDS
Section 194J isn’t applicable within the following cases:
-
If the prescribed payment is made by an individual/HUF. However, if the payment
is made by an individual/HUF that falls under:-
Ø
44AB
(a)/ 44AB (b) is liable to deduct TDS under section 194J.
Ø
Section
44AB(a) includes those Businesses whose Total turnover or gross receipts for a
financial year exceeds Rs. 1 crore
Ø
Section
44AB(b) includes those Professionals whose Total Gross Receipts for a financial
year exceeds Rs. 50 Lakhs.
Ø
Further,
AN individual/HUF isn’t liable to pay TDS under section 194J if the payment is
made or credited exclusively for personal purposes.
Amendment
in Finance Bill 2020 in TDS Section 194J:
As
per the Finance Bill 2020, the subsequent amendments are created made in TDS
Section 194J which can get from 1/04/2020:
Ø
The
rate at which TDS will be deducted under Section 194J will be 2% if there is a
technical service fee (for non-commercial service) and in any other case 10% of
such amount
Ø
Individual / HUF, whose total sales, total
receipts or business or business turnover is Rs. 1 crore in case of a business
or Rs. If it is Rs 50 lakh, they will be liable to deduct TDS if such interest
is deposited or paid.
Author
Santosh
Patil
Alliance
Tax Experts
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