TDS return under Section 194J is the quarterly filing (Form 26Q) required for tax deducted on payments for professional fees, technical services, royalty, and director remuneration exceeding ₹50,000 annually. Rates are 10% for professional services/fees and 2% for technical services/call centers, rising to 20% if the PAN is not provided.
What is the TDS rule for 194J? Under Section 194J, TDS must be deducted at the rate of 10% on payments for professional services and at 2% for technical services (not including professional services or royalties related to cinematographic films).
Section 194J governs the TDS provisions related to specified services. Any person paying fees to any resident person for these specified services (professional, technical, etc.) is required to deduct TDS under Section 194J.
How do we show 194J income in ITR? To reflect 194J income in your Income Tax Return (ITR), you need to report it under the "Income from Other Sources" section, specifying the payer's details, nature of payment, and the amount received, ensuring compliance with relevant tax regulations.
How to File TDS Return on the Income Tax Portal
If payment is made for any technical service, TDS has to be deducted at 2%, as prescribed by Section 194J. Technical services include software development, website design and maintenance, audio or video recording, and related activities like photography or editing work.
Understanding TDS Refund on Salary
A TDS refund is applicable when the tax deducted at source (TDS) by your employer exceeds your actual tax liability for the financial year. For example, if your total tax payable is ₹20,000 but your employer deducts ₹25,000, you are eligible for a TDS refund of ₹5,000.
Include Gross Receipts as Income: Report the full amount of professional or technical fees received as income under the appropriate head (e.g., "Profits and Gains from Business or Profession" or "Income from Other Sources") in your ITR.
Examples of professional fees
Section 194J covers the TDS against payment for professional fees (10%), royalty (10%), technical fees (2%), and directors' remuneration (10%). Section 194J of the Income Tax Act states the provisions for the mandatory tax deduction at source against the payments made for technical fees and professional fees.
What are the most common mistakes in TDS filing software? The most frequent errors include outdated software use, wrong PAN or TAN mapping, late return filing, and challan mismatches.
TDS certificates are issued by the deductor to the deductee. TDS certificates can be of two types: Form 16 (for TDS on Salary) and Form 16A (for TDS on non-Salary payments). As per Section 203 of the Income Tax Act, 1961, you are entitled to receive a certificate whenever a tax is deducted from your income source.
You can claim your TDS refund by following the steps mentioned below:
A payee who believes their total income will be below the taxable limit or justifies a lower rate of TDS can apply for a lower tds deduction 194j. They can do this by submitting Form 13 for tds to the Assessing Officer.
Claiming tax relief for professional fees as a self-employed individual is part of your self-assessed tax return. You need to enter the amount of your subscription, and the years you want to claim for in box 19 on the SA102 form.
What is the current threshold for TDS deduction under Section 194J? The threshold limit as of April 1, 2025, is Rs. 50,000 per financial year; TDS applies only if payments exceed this limit.
Fees for CPAs, bookkeepers, and other financial professionals are included in this category. These fees are in connection with financial audits, routine bookkeeping, and tax preparation.
However, before the salary is credited to your account, Tax Deducted at Source (TDS) is deducted by the employer. Therefore, you can claim a TDS refund when filing your income tax returns (ITR) for the financial year.
You can claim a TDS refund when the total TDS deducted during the financial year exceeds your actual tax liability. Common scenarios include: Your income is below the basic exemption limit, but TDS was deducted. Banks deduct TDS on fixed deposit interest, yet your total income is not taxable.
Thanks to the government's easy-to-use e-filing portal, many individuals with simple income sources can now file their returns online without needing to hire a Chartered Accountant (CA).
Rate of TDS : TDS is to be deducted at the rate of 2 percent on payments made to the supplier of taxable goods and/or services, where the total value of such supply, under an individual contract, exceeds two lakh ifty thousand rupees.
Do I need to file returns if tax has been deducted by my employer / bank? Yes, employers and banks deduct tax at source on salary and interest income respectively. You still need to disclose the income on which tax has been deducted and claim credit for TDS in the Income Tax Return.