{"id":29774,"date":"2021-05-06T11:32:39","date_gmt":"2021-05-06T06:02:39","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=29774"},"modified":"2021-05-06T11:32:41","modified_gmt":"2021-05-06T06:02:41","slug":"section-194j-under-it-act","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/section-194j-under-it-act\/","title":{"rendered":"Section 194J under IT Act- All You Needs to Know"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The tax deduction at source (aka TDS) has been rather beneficial in tax collections in the country by covering the source of income itself. It is helpful to both the taxpayers and the Government. From the government viewpoint, <a href=\"https:\/\/corpbiz.io\/tds-return-filing\"><strong>TDS<\/strong><\/a> helps in controlling tax evasion to a significant extent by placing the liability on most working entities to make tax deductions in respect of certain expenses as per the provision of the Act. Moreover, it maintains the seamless inflow of taxes for the government throughout the year.  In this write-up, we will talk about Section 194J under IT Act- All You Needs to Know.&nbsp; <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/section-194j-under-it-act\/#Significance_of_TDS_from_Taxpayers_Viewpoint\" >Significance of TDS from Taxpayer\u2019s Viewpoint<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/section-194j-under-it-act\/#Types_of_Payments_Encompassed_under_Section_194J\" >Types of Payments Encompassed under Section 194J<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/section-194j-under-it-act\/#Threshold_Limit_Applicable_to_the_Tax_Deduction\" >Threshold Limit Applicable to the Tax Deduction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/section-194j-under-it-act\/#Rate_of_Tax_Deduction_under_Section_194J\" >Rate of Tax Deduction under Section 194J<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/section-194j-under-it-act\/#Consequences_of_Late_Deduction_or_Non-Deduction\" >Consequences of Late Deduction or Non-Deduction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/section-194j-under-it-act\/#Prescribed_Timeline_for_Paying_Taxes_Under_Section_194J\" >Prescribed Timeline for Paying Taxes Under Section 194J<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/section-194j-under-it-act\/#TDS_Certificate\" >TDS Certificate<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/section-194j-under-it-act\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Significance_of_TDS_from_Taxpayers_Viewpoint\"><\/span>Significance of TDS from Taxpayer\u2019s Viewpoint<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>For taxpayers, TDS is a way to\nunloading the burden of addressing tax liabilities during the filing of income\ntax returns. That is because they avail credit against taxes deducted at\nsource. Professional fees or fees for technical services are a common type of\nexpense for businesses operating in India.<\/p>\n\n\n\n<p>Some examples of professional fees included fees paid to the doctor, CA, engineer, advertisers, architect, interior decorators, accountant, etc. Technical services usually include a rendering of technical, managerial, and consultancy services. The payments to residents fall under the regime of section 194J.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/tds-payment-due-date-through-challan\/\">What is TDS Payment Due Date through Challan?<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Types_of_Payments_Encompassed_under_Section_194J\"><\/span>Types of Payments Encompassed under Section 194J<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>The types of payment to Indian nationals encompassed under this section are as follows:-<\/strong><\/em><\/p>\n\n\n\n<ul><li>Professional fees<\/li><li>Fees applicable to technical services<\/li><li>Remuneration paid to officials (directors) excluding salary (For example, setting fees to make an appearance in the board meetings)<\/li><li>Royalty<\/li><li>Payments in the form of non-complete fees (i.e., fees paid against professional activities that are incomplete in nature for a specified time &amp; within certain geographical boundaries) or fees paid against negligible sharing of technical knowledge.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Threshold_Limit_Applicable_to_the_Tax_Deduction\"><\/span>Threshold Limit Applicable to the Tax Deduction<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Tax must be deducted in case\nthe payment is higher than Rs 30,000 during a certain financial year. But,\nthere is no such limit applies to the payment made to a director. The tax\ndeduction must be made regardless of the sum of the amount.<\/p>\n\n\n\n<p>Every individual who is paying\na certain amount as a fee for professional or technical services is obligated\nto make tax deduction at the source with the given exceptions:-<\/p>\n\n\n\n<ul><li>In case of a person or\nHUF conducting a business: Where the turnover limit does not surpass Rs 1 crore\nduring the preceding financial year.<\/li><li>In case of a person or\nHUF pursuing a profession: Where the turnover does not surpass INR 50 Lakh\nduring the preceding financial year.<\/li><\/ul>\n\n\n\n<p>In general, all entities (other\nthan person\/HUF who are not obligated to conduct a tax audit in the preceding\nyear) need to make a tax deduction.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Rate_of_Tax_Deduction_under_Section_194J\"><\/span>Rate of Tax Deduction under Section 194J<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>Fees for professional or technical services:-<\/strong><\/em><\/p>\n\n\n\n<table class=\"table table-bordered\">\n<tbody>\n<tr>\n<td width=\"432\">\n<p><strong>&nbsp;<\/strong><\/p>\n<ul>\n<li><strong>Sum payable or paid&nbsp; towards fees related to the technical services<\/strong><\/li>\n<li><strong>Sum payable or paid towards royalty regarding sale, or distribution of cinematographic films;<\/strong><\/li>\n<li><strong>Any other sum<\/strong><\/li>\n<\/ul>\n<\/td>\n<td width=\"160\">\n<p><strong>&nbsp;<\/strong><\/p>\n<ul>\n<li><strong>2%<\/strong><\/li>\n<\/ul>\n<ul>\n<li><strong>2%<\/strong><\/li>\n<\/ul>\n<ul>\n<li><strong>10%<\/strong><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n<p>Any payment that falls under\nthis section is subject to TDS @ 10%. From April 1st, 2020, the tax authority\ndecided to impose a TDS @ 2% on the payment fees related to technical services.\nHowever, w.e.f. 01.04.2017, Authority opted to impose a reduced rate of 2% as a\nTDS on payments made to operators of call centers. In case the payee fails to\nprovide his\/her PAN detail, the deduction rate would be 20%.<\/p>\n\n\n\n<p>The tax deduction should be\ndone at the time of making the actual payment of the expense or passing such entry\nin the accounts, whichever earlier.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Consequences_of_Late_Deduction_or_Non-Deduction\"><\/span>Consequences of Late Deduction or Non-Deduction<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Non-deduction of tax or late\nfiling has a two-fold consequence:-<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">1: Disallowance of a Part Related to the Expenditure<\/h3>\n\n\n\n<ul><li>30% of the expenditure shall be disallowed in the financial year in which the claim for the same is availed (taken to the P&amp;L account).<\/li><li>On the contrary, the 30% disallowed shall be re-allowed in the financial year in which the TDS is paid to the Central Government.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">2. Imposition of Interest until the Payment Date<\/h3>\n\n\n\n<p>In case of delayed tax payment,\ninterest has to be paid in addition to the TDS to the Government. The interest\nrate is estimated on the given way:-<\/p>\n\n\n\n<ul><li><strong><em>Where Tax has not be Deducted: &#8211;<\/em><\/strong> The interest @ 1%\/month shall be applicable from the date on which such tax was supposed to be deducted up to the date of actual deduction.<\/li><li><strong><em>Where Deducted Tax has not been Remitted to the Government: &#8211;<\/em><\/strong> Interest shall be imposed @ 1.5%\/month from the date on which the tax deduction was done up to the date of payment to the central Government.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Prescribed_Timeline_for_Paying_Taxes_Under_Section_194J\"><\/span>Prescribed Timeline for Paying Taxes Under Section 194J<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<table class=\"table table-bordered\"><tbody><tr><td>\n  <strong><em>Payment<\/em><\/strong>\n  <\/td><td>\n  <strong><em>Non \u2013 Govt. Deductor<\/em><\/strong>\n  <\/td><td>\n  <strong><em>Govt. &nbsp;Deductor<\/em><\/strong>\n  <\/td><\/tr><tr><td>\n  Payment is made before\n  1st&nbsp;March\n  <\/td><td>\n  7th day from the end\n  of the month\n  <\/td><td>\n  7th day \n  from the end of the\n  month\n  <\/td><\/tr><tr><td>\n  Payment is made in&nbsp; March\n  <\/td><td>\n  April 30th\n  <\/td><td>\n  Tax payment is made on\n  the payment date to the payee; but the corresponding challan should is\n  furnished by the 7th day from the end of the month\n  &nbsp;\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"TDS_Certificate\"><\/span>TDS Certificate<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>It is not\neasy for the individual to keep track of TDS as the deductions are collected on\na continual basis. The deductor grants a TDS certificate to the payee as per\nsection 203 of the IT Act. Banks also grant such certificates for deductions on\npension payments, etc. The certificate is legitimate only if it is granted at\nthe deductor\u2019s letterhead. Everyone should seek a TDS certificate whenever it\nis applicable.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The amount deducted in the form of TDS depends on the amount you earn. TDS is applicable to the prevailing income source. Both the taxpayers and the <em><strong>Government<\/strong><\/em><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Government\"><em><strong>[1]<\/strong><\/em><\/a><\/sup> avail several benefits from TDS. When you pay via cash, credit card, or cheque, a certain tax amount is deducted, which is submitted to the central agencies. If you have a string of queries related to section 194J, don\u2019t hesitate to share the same with us. We would be glad to hear from you. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/lets-understand-the-ways-to-make-tds-payment-online\/\">Let\u2019s Understand the ways to Make TDS Payment Online <\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The tax deduction at source (aka TDS) has been rather beneficial in tax collections in the country by covering the source of income itself. It is helpful to both the taxpayers and the Government. From the government viewpoint, TDS helps in controlling tax evasion to a significant extent by placing the liability on most working [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":29792,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[237],"tags":[1716],"acf":{"service_id":"90"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":4860,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/29774"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=29774"}],"version-history":[{"count":8,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/29774\/revisions"}],"predecessor-version":[{"id":29793,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/29774\/revisions\/29793"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/29792"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=29774"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=29774"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=29774"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}