Section 194J - TDS on Professional/Technical Services, Royalty, Director's Remuneration
# Section 194J - TDS on Fees for Professional/Technical Services
## Who Deducts
Any person, except:
Individual / HUF whose total sales, gross receipts or turnover ≤ ₹ 1 crore (business) / ≤ ₹ 50 lakhs (profession) in the immediately preceding F.Y.
However, even small Individual/HUF must deduct TDS on Fees for Professional Services (FPS) or Fees for Technical Services (FTS)paid to a director of a company.
## Payee
Any resident.
## Coverage
Fees for Professional Services (FPS)
Fees for Technical Services (FTS)
Royalty
Non-compete fees u/s 28(va)
Director's remuneration (other than salary)
## Threshold
> ₹ 50,000 in a F.Y. for each category of income.
> Note: Threshold applies separately to each category (FPS, FTS, Royalty, etc.).
> Threshold does NOT apply to payments to directors of a company.
## Rate of TDS
Nature of Payment
Rate
Payee engaged ONLY in business of operation of call centre
2%
FTS (other than professional services)
2%
Royalty in nature of consideration for sale, distribution or exhibition of cinematographic films
2%
Other payments (FPS, other royalty, non-compete, director's remuneration)
10%
## When to Deduct
At the time of credit OR payment, whichever is earlier.
## Personal Purposes Carve-out
Individual/HUF deducting under 194J need not deduct where FPS is credited / paid exclusively for personal purposes (does not apply to FTS).
Worked example
### Example 1
Example 1: ABC Ltd. pays ₹ 80,000 to a Chartered Accountant for audit fees.
Example 2: XYZ Ltd. pays ₹ 1,00,000 to a technical consultancy firm for technical services (FTS).
Solution: TDS @ 2% (FTS).
TDS = 2% × ₹ 1,00,000 = ₹ 2,000.
### Example 3
Example 3: A Pvt. Ltd. pays director's sitting fees of ₹ 30,000 to a director.
Solution: Threshold of ₹ 50,000 does NOT apply to director's remuneration → TDS @ 10%.
TDS = 10% × ₹ 30,000 = ₹ 3,000.
### Example 4
Example 4: XYZ pays ₹ 70,000 royalty for distribution of a cinematographic film.
Solution: TDS @ 2% (cinematographic film royalty).
TDS = 2% × ₹ 70,000 = ₹ 1,400.
⚠️ Common exam mistakes
Applying 10% to FTS — FTS rate is 2%, not 10%
Applying threshold to director's remuneration — no threshold for directors
Confusing professional services (10%) with technical services (2%) — they have different rates
Aggregating FPS and FTS — threshold is per category separately
Applying 10% to royalty for cinematographic films — this attracts 2%
Bare-Act text Section 194J · Income-tax Act, 1961 · click to expand
Any person, not being an individual or a Hindu undivided family (subject to threshold), who is responsible for paying to a resident any sum by way of (a) fees for professional services, (b) fees for technical services, (ba) any remuneration or fees or commission by whatever name called other than those on which tax is deductible u/s 192, to a director of a company, (c) royalty, or (d) any sum referred to in clause (va) of section 28, shall, at the time of credit of such sum to the account of the payee or at the time of payment, whichever is earlier, deduct an amount equal to two per cent (in case of FTS, royalty for cinematographic films, payee being call centre operator) or ten per cent (in other cases).