TDS on Professional & Technical Fees: Section 194J
Once payments to one payee cross ₹50,000 in a financial year, 10% or 2% comes off before the money moves. Here's the whole rule, with a calculator.
The rate right now · TY 2026-27
| Rates | 10% Fees for professional services 2% Fees for technical services / call centres / film-exhibition royalty |
|---|---|
| Annual threshold | ₹50,000 per payee, per financial yearThreshold was ₹30,000 till 31-03-2025; raised by Finance Act 2025. |
| Effective from | 1 April 2025 |
| Who deducts | Any person (other than an individual/HUF not subject to tax audit) paying fees for professional or technical services. |
| Who's covered | Resident professionals: doctors, lawyers, CAs, consultants, designers, developers. |
| Under the Act 2025 | Under the Income-tax Act 2025, professional-fee TDS lives in the Section 393 table with its own numeric payment code. Rate and threshold unchanged. |
Rates per Section 194J, Income-tax Act 1961, as amended by the Finance Act, 2025 · verified 1 July 2026
Work out the TDS on a payment
TDS to deduct at 10%
₹12,000
The split
| Payment for the year | ₹1,20,000 |
| TDS @ 10% | − ₹12,000 |
| Net receipt | ₹1,08,000 |
Once the year's total crosses the threshold, TDS applies to the whole amount, not just the part above it. Without the payee's PAN, deduction jumps to 20% under the higher-of rule. Threshold was ₹30,000 till 31-03-2025; raised by Finance Act 2025. Runs in your browser; nothing is stored.
What changed
As of 1 April 2025, the annual threshold is up from ₹30,000 to ₹50,000. Threshold was ₹30,000 till 31-03-2025; raised by Finance Act 2025. Below the threshold nothing is deducted; cross it and TDS applies to the whole amount, not just the excess.
Rate history
| Period | Rate | Threshold | Set by |
|---|---|---|---|
| 1 Apr 2020 – 31 Mar 2025 | 10%Fees for professional services | ₹30,000 | Finance Act, 2020 |
| From 1 Apr 2025Current | 10%Fees for professional services | ₹50,000 | Finance Act, 2025 |
| From 1 Apr 2025Current | 2%Fees for technical services / call centres / film-exhibition royalty | ₹50,000 | Finance Act, 2025 |
Effective-dated from Finance Acts as notified in the Gazette of India · sources below
How Section 194J TDS works
TDS flips the collection point. Instead of the person earning the money paying tax months later, the payer holds back 10% or 2% at the moment of payment and deposits it with the government against the payee's PAN. The payee sees that credit in their Form 26AS and settles only the balance when they file. Here's how that plays out under Section 194J:
- Who deducts. Any person (other than an individual/HUF not subject to tax audit) paying fees for professional or technical services.
- Who's on the receiving end. Resident professionals: doctors, lawyers, CAs, consultants, designers, developers.
- When it triggers. At credit or payment, whichever comes first. Once the year's running total for a payee crosses ₹50,000, tax comes off the whole amount, not just the part above the line.
- Deposit by the 7th. Tax deducted in a month must reach the government by the 7th of the next month, through challan ITNS-281. March deductions get until 30 April.
- Report and certify. Non-salary deductions go into the quarterly Form 26Q return, and the payee gets a Form 16A certificate to match against their Form 26AS and AIS.
The section runs both ways. If you're the one being paid, this is why your money arrives 10% or 2% light. The deduction isn't extra tax, it's an advance against your final bill. Check your Form 26AS each quarter and claim the credit in your return; it's your money, already sitting with the government.
Where Section 194J trips people up
- Technical services (not professional) attract 2%, not 10%. The distinction follows the Explanation to old Sec 9(1)(vii).
- No PAN furnished → TDS at 20% under the old Sec 206AA machinery (higher-of rule).
- Individuals/HUF pay TDS here only if they were subject to tax audit in the preceding year.
- Directors' fees have no threshold: TDS applies from ₹1.
Sources
- Finance Act, 2025Official text (CBDT) · archived copy
- Finance Act, 2020Official text (CBDT) · archived copy
Section 194J: questions people actually ask
What is the TDS rate on professional fees in 2026?
10% once total payments to the professional in the year cross ₹50,000. For purely technical services the rate is 2%.
What is the 194J threshold for TY 2026-27?
₹50,000 per payee per year. It was ₹30,000 until 31 March 2025, when the Finance Act 2025 raised it.
Does Section 194J still exist under the new Income-tax Act 2025?
The rule survives but the address changed: professional-fee TDS now sits in the Section 393 payment-code table of the 2025 Act. Rate (10%) and threshold (₹50,000) are unchanged.
Is GST included when computing TDS under 194J?
No. If GST is shown separately on the invoice, TDS is deducted on the value excluding GST (CBDT Circular 23/2017).