## Section 194J — TDS on Professional & Technical Services

### Threshold Limit

Threshold of ₹50,000 is to be checked separately for each category:

Fees for Professional Services (FPS)
Fees for Technical Services (FTS)
Royalty
Non-compete fees

### Aggregation Rule

→ Limit of ₹50,000 is checked head-wise / category-wise, NOT collectively.

### TPA Payments to Hospitals

When Third Party Administrators (TPAs) pay hospitals on behalf of insurance companies for cashless treatment of policyholders:

→ TDS is deductible u/s 194J (treated as professional service)

### Exemption for Individuals/HUF

Individuals & HUF are NOT required to deduct TDS u/s 194J on:

Royalty
Non-compete fees

(They remain liable for FPS/FTS if their turnover exceeds prescribed limits.)

### Software Acquisition Exception

TDS u/s 194J is NOT attracted on acquisition of software from a resident transferor if ALL three conditions are satisfied:

1. Software acquired in a subsequent transfer without any modification

2. TDS has been deducted on the previous transfer

3. Transferee obtains a declaration from transferor that tax has also been deducted along with PAN

### Sports Event Management

→ Notified by CBDT as professional service → TDS u/s 194J applicable

Worked example

### Example 1

Example 1 — Separate Threshold Check:

During the PY, Mr. X (a deductor) pays:

FTS (Fees for Technical Services): ₹45,000
FPS (Fees for Professional Services): ₹48,000

Analysis: TDS u/s 194J is NOT applicable because the ₹50,000 limit is to be checked separately for each category. Both FTS (₹45,000) and FPS (₹48,000) are individually below ₹50,000.

Example 2 — Software Acquisition:

ABC Ltd. acquires software from XYZ Ltd. (resident) without modification. XYZ Ltd. had already deducted TDS when it acquired the same software from the original developer, and provides a declaration along with its PAN.

Analysis: All 3 conditions satisfied → No TDS u/s 194J is required by ABC Ltd.

⚠️ Common exam mistakes

Aggregating FPS, FTS, royalty, and non-compete fees together to check the ₹50,000 threshold — each must be tested separately.
Assuming Individual/HUF must always deduct TDS on royalty/non-compete fees — they are exempt from this.
Forgetting that ALL three software-acquisition conditions must be cumulatively met for the 194J exemption.
Applying 194C to TPA payments to hospitals — these are professional services u/s 194J.

Bare-Act text Section 194J · Income-tax Act, 1961 · click to expand

Third Party Administrators Pay to the Hospital - TDS will be deductible u/s 194J. Individuals & HUF are not required to deduct TDS u/s 194J on royalty and Non compete fees. TDS not attracted on acquisition of software from resident transferor if (1) Software acquired in a subsequent transfer without any modification (2) TDS has been deducted on previous transfer (3) transferee obtain a declaration from transferring that tax has also been deducted along with PAN.

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Section 194J - TDS on Fees for Professional/Technical Services

Worked example

⚠️ Common exam mistakes