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TDS · Glossary

Section 194J

TDS on professional and technical service fees — 10% / 2% with Rs. 50K threshold.

Updated 2026-10-08Source: Income-tax Act · CGST Act · CBDT/CBIC

What it means

Section 194J of the Income Tax Act, 1961 mandates TDS on payments for professional fees (10%), fees for technical services (2%), royalty, and director fees. Threshold raised from Rs. 30,000 to Rs. 50,000 in Budget 2025 (effective 1 April 2025) per deductor per year.

Deductors: companies, LLPs, partnerships, audited individuals/HUFs. Deductees: residents providing professional/technical services. TDS is computed on the service value EXCLUDING GST per CBDT Circular 23/2017 when GST is shown separately on the invoice.

For amounts paid or credited on or after 1 April 2026 (whichever happens first), the Income-tax Act 2025 applies and Section 194J is reported under Section 393(1) (professional fees at Table Sl. No. 6(iii)); the rates and thresholds are unchanged.

A worked example

Priya invoices Rs. 1,00,000 + 18% GST = Rs. 1,18,000. Client deducts 194J TDS @ 10% on Rs. 1,00,000 (not the gross Rs. 1,18,000) = Rs. 10,000. Net wire: Rs. 1,08,000.

If your client deducts 194J on the GST-inclusive amount (Rs. 11,800 instead of Rs. 10,000), point them to CBDT Circular 23/2017 dated 19 July 2017 — it is unambiguous. Most accidental over-deduction comes from this single mistake.

Run it on your own numbersFree TDS Calculator — no signup.

FAQ

When does the 194J threshold reset?
Per financial year, per deductor. So if Client A paid you Rs. 49,000 in March 2026 (no TDS), then Rs. 60,000 in April 2026 — the April payment opens a fresh Rs. 50,000 window, now under s.393(1) Sl. 6(iii) of the Income-tax Act 2025. Because that one payment alone exceeds Rs. 50,000, TDS of 10% applies to the whole Rs. 60,000 (Rs. 6,000).
What if the client deducts under 194C (1%) instead of 194J (10%)?
Wrong section, lower deduction — they’ll get a notice and you’ll have to true-up at ITR. For genuinely professional / technical work (design, dev, consulting), 194J is correct. For pure contract / works (data entry, transcription, basic editing), 194C is correct. Push back politely and reference your engagement letter if they’re mis-classifying.

Going deeper: Section 194J TDS Explained for Freelancers — Budget 2025 Threshold Change — 10 min read.

Look up the details

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Sources

Income-tax entries cite the Income-tax Act 1961, which governs FY 2025–26 (the return filed in 2026); from tax year 2026–27 the Income-tax Act 2025 applies, with new section numbers shown where we give them. GST law is unchanged. General information, not tax advice; verify with your CA before you file.

Related terms

TDS

TDS (Tax Deducted at Source)

Mechanism where the payer withholds and deposits income tax on the payee's behalf.TDS

Form 16A

TDS certificate issued by deductors for non-salary TDS (e.g., 194J, 194C).TDS

Form 26AS

Consolidated annual tax statement showing all TDS, advance tax, and refunds.

Compliance without the vocabulary

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