Section 194J.
TDS on professional, technical & royalty payments.
Professional fees, technical services, royalty, director fees
When it applies
Section 194J applies on payments to professionals (lawyers, doctors, accountants, architects, consultants), payments for technical services (managerial, technical, consultancy), royalty for use of IP, and remuneration to directors (sitting fees and otherwise). The 2% rate for technical/call-centre/film royalty was introduced to ease compliance for these specific categories.
Who must deduct
Any person other than an individual/HUF not subject to tax audit. Companies, firms, LLPs, trusts, and audited individuals deduct under 194J. Sub-contractors of professionals also deduct on onward payments.
Common mistakes
- Applying 10% on technical services — they're at 2% since FY 2020-21.
- Treating reimbursements as professional fees — pure reimbursements with original bills are outside 194J.
- Missing director sitting fees — even non-executive directors getting just sitting fees attract 194J.
- Confusing 194J (professional/technical services) with 194C (work contracts) — the substance test matters.
Frequently asked
Is TDS deducted on advocate fees under 194J?
Yes. Advocates fall under 'professional services' for Section 194J. Deduct 10% TDS on the bill amount (excluding GST). Note that advocate fees are also under reverse-charge GST when paid by a business entity, but RCM is a GST concept separate from TDS.
What is the difference between professional and technical services?
Professional services means services rendered by a person in the course of carrying on a notified profession (legal, medical, accountancy, architecture, etc.). Technical services means managerial, technical, or consultancy services not in the nature of construction/assembly/manufacturing. The classification matters because the rates differ (10% vs 2%).
Does 194J apply on payments to an HR consultant?
Yes, typically under 'professional services' if the consultant is a registered HR professional providing advisory, or under 'technical services' if the engagement is more transactional (recruitment processing, payroll). Most full-spectrum HR consulting is at 10%; pure recruitment-as-a-service can be at 2%.