TDS on Professional fees, technical services, royalty, director fees — Section 194J (now 393)
Rate
| Type of payment | Rate (with PAN) | Notes |
|---|---|---|
| professional services | 10% | — |
| technical services call centre | 2% | — |
| royalty film | 2% | Royalty for sale/distribution/exhibition of cinematographic films — verify |
| royalty other | 10% | — |
| director fees | 10% | — |
No valid PAN: 20% or the normal rate, whichever is higher (Section 397(2), old 206AA).
Threshold
TDS applies when: ₹50,000 aggregate in the year. Once a threshold is crossed, TDS applies on the full amount, not just the excess.
Worked example
Paying ₹1,00,000 (plus GST) to a CA / consultant on 10 June 2026:
Exemptions & relief
- Personal-purpose payments by individual/HUF
If you get it wrong
Late deduction: 1% per month or part thereof, from date deductible to date deducted.
Late deposit: 1.5% per month or part thereof, from date deducted to date deposited.
Late return: Rs 200/day (234E equivalent), capped at TDS amount in the statement.
Non-deduction: 30% of expenditure disallowed for non-deduction/non-deposit (40(a)(ia) equivalent); wrong payment code can trigger the same — verify scope under 2025 Act.
Good to know
- Threshold Rs 50,000 (FA2025); technical 2% (code 1026), professional 10% (code 1027), director 10% (code 1028)
- Classic error: software/IT support is TECHNICAL (2%) not professional (10%)
FAQs
What is the new section number for 194J from FY 2026-27?
Under the Income Tax Act 2025, 194J now falls under Section 393. The payment/return code is 1026 or 1027 or 1028.
What is the TDS rate under section 194J?
10% for professional services; 2% for technical services call centre; 2% for royalty film; 10% for royalty other; 10% for director fees. If the payee has no valid PAN, 20% applies (or the normal rate, whichever is higher).
What is the threshold for 194J?
₹50,000 aggregate in the year.
Which TDS return is 194J reported in?
Form 140 (was 26Q), filed quarterly.
Written and reviewed by a CA firm. Verified 2026-06-08 against the Income Tax Act 2025 / Finance Act 2025. General information, not advice for your specific case.