Before I explain how to calculate TDS on professional fees, let me brief you about TDS on professional services. Section 194J of the Income Tax Act, 1961 states that one can deduct TDS when they make these payments to a resident in a fiscal year (more than Rs. 30000):
Royalty
Non-compete fee as per the Section 28(VA)’s Income Tax Act
Amount charged as technical service fee
Amount charged as professional services fee
All payments that fall under this section shall be subject to TDS at the rate of 10 percent.
With effect from 01-04-2017, the tax on payments made to call centers operators shall be deducted at a reduced rate of 2%.
From 01-04-2020, the payment of fees for technical service shall be subject to TDS at the rate of 2 %.
Professional services imply the services that are carried out by an individual in the engineering, medical, legal, architectural, or medical profession. These also contain other professions that come under Section 44AA, like technical consultancy, advertising, interior decoration, accountancy, authorized representatives, and film artists, company secretaries.
Sports columnists, team physicians, physiotherapists, coaches and trainers, umpires and referees, anchors, commentators, event managers, and sportspersons also come under it.
Note:I want you to remember that if professional services are offered to the employer by his employee then such an amount isn’t covered under Section 194J. It comes under section 192, which is TDS on salary.
Even though the TDS rate on professional services is 10%, but if the payee doesn’t furnish their PAN, then the rate of the deduction will be 20%.
I hope now you know how to calculate TDS on professional services.
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How to calculate TDS on professional fees?
Mohan
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3 Year
2021-09-09T16:50:00+00:00 2021-09-20T16:20:24+00:00Comment
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