Section 194J(a) of the Income Tax Act: TDS on Professional and Technical Fees Explained

In today’s knowledge-driven economy, payments made to consultants, professionals, and technical service providers are common in every business. But did you know that such payments are subject to TDS under Section 194J(a) of the Income Tax Act?

Whether you’re a startup founder, a CA making professional payments, or a business owner availing of legal or technical services, understanding Section 194J(a) is not optional. It is mandatory to deduct TDS on certain specified payments, and failure to comply can result in penalties, interest, and disallowances.

Let’s decode what Section 194J(a) is all about, who should deduct TDS, when to deduct it, and the rates applicable.

What is Section 194J(a) of the Income Tax Act?

Section 194J deals with TDS on fees for professional or technical services, royalty, non-compete fees, and director remuneration. Clause (a) specifically relates to fees for professional services.

In simple terms, if you're making a payment to a person for professional services like:

✅ Legal consultancy
✅ Technical services
✅ Chartered accountancy
✅ Architectural, medical, or engineering services

...then you're liable to deduct TDS under Section 194J(a).

Applicability of Section 194J(a)

Who is required to deduct TDS?

✔ Any individual, HUF, company, firm, or entity (other than individuals/HUFs not liable to tax audit) making payments to a resident for professional services.

When is it applicable?

✔ When the total amount paid or credited in a financial year exceeds ₹30,000 per payee.

What types of services are covered?

✔ Professional services under Section 194J(a) include:

• Legal
• Medical
• Engineering
• Architectural
• Accountancy
• Technical consultancy
• Interior decoration
• Film artists, company secretaries, and information technology services

TDS Rate under Section 194J(a)

As per the latest provision:

• 10% TDS is to be deducted on fees for professional services under Section 194J(a).
• If the PAN is not furnished, TDS at 20% will apply under Section 206AA.

So, always ensure the recipient has a valid PAN and your books reflect the correct deductions.

Threshold Limit under Section 194J(a)

TDS under Section 194J(a) applies only if the total amount paid in a financial year exceeds ₹30,000 to a single payee. This threshold is per payee, not per invoice.

Example:
If you pay ₹10,000 per month to a consultant, the total in a year becomes ₹1,20,000—so TDS applies even if no single payment crosses ₹30,000.

Due Dates and Compliance

Here’s a quick compliance calendar for TDS under Section 194J(a):

Important Clarifications

🔹 TDS under Section 194J(a) is not applicable if the payee is a non-resident (in that case, Section 195 will apply).
🔹 Even if the service provider has not raised a TDS-compliant invoice, you are still liable to deduct TDS on your end.
🔹 TDS is applicable on the gross amount, including GST if not separately mentioned."

Common Mistakes to Avoid

❌ Not deducting TDS just because the amount per invoice is below ₹30,000.
❌ Ignoring TDS applicability on freelance or part-time professionals.
❌ Deducting TDS under the wrong section (e.g., 194C instead of 194J(a)).
❌ Delayed deposit of TDS, leading to interest and penalty under Section 201(1A).

Real-life Example

You run a marketing firm and hire a freelance content strategist for ₹50,000. Even if it’s a one-time payment, since the amount exceeds the threshold, you must deduct ₹5,000 (10%) as TDS under Section 194J(a) and deposit the remaining ₹45,000.

Failure to deduct and deposit this will:

• Attract 1% interest per month from the date of deduction to the payment.
• Disallow the expense in your P&L, increasing your taxable income.

FAQs on Section 194J(a):

Q1. What is Section 194J(a)?
It mandates TDS at 10% on payments for professional services like legal, medical, technical consultancy, and more."

Q2. When does TDS under Section 194J(a) apply?
When the total payment to a professional exceeds ₹30,000 in a financial year.

Q3. What is the TDS rate under Section 194J(a)?
10% if PAN is furnished. Otherwise, 20% under Section 206AA.

Q4. What if I don’t deduct TDS?
You may face interest, penalty, and disallowance of the expense under Section 40(a)(ia).

Q5. How do I deposit and report TDS?
Deposit using Challan 281, file Form 26Q quarterly, and issue Form 16A to the payee.

Conclusion

Section 194J(a) of the Income Tax Act is a vital provision that ensures tax compliance on professional service payments. Whether you’re working with a doctor, consultant, architect, or a CA, you must deduct TDS on time and avoid legal consequences.
With proper understanding and timely action, TDS under Section 194J(a) can be a smooth and compliant process.

👉Still unsure whether TDS under Section 194J(a) applies to your payments? Don’t take chances—consult the experts at Callmyca.com and let us help you stay 100% compliant while optimising your tax outflow. Book a free session today!