As per 194J

TDS is to be deducted on Professional Technical Royalty Services Normally at 10%

However, in case of payment to call center, TDS Rate is 2%

 

However, No TDS is to be deducted if annual amount is upto 30000 per annum. If Amount is 30001 then TDS is deducted.

 

Section Description Cutoff Rates
194J Professional Service/Technical/Royalty/Non Compete fees 30000 p.a 10% for Professional
2% for Other than Professional

 

 

Changes in 194J Due to Lockdown

However,Due to Lockdown,Government has temporarily reduced Rate by 25%

hence,TDS Rate on Professional Service/Technical/Royalty/Non Compete fees is Changed as follows

 

    Current Rate New Rate (Temporary)
TDS on Professional Service/Technical/Royalty/Non Compete fees Professional 10% 10%*75%=7.5%
Other than Professional 2% 2%*75%=1.5%

 

Note - This New Rate is Temporary only if TDS Deducted form 14 May 2020 to 31 Mar 2021

After this old Rate will be applicable

 

Services covered

Example  

(1) Professional Services

CA service / Audit fees / Lawyer / CS / CWA

(2) Technical Service

Engineering Co / Technical inspection

(3) Royalty

Fees for patent / Copy right / Trademark

(4) Employees on contract doing white collared Job

Accountant / Salesman / Engineer hired directly or through agency

 

Question

Q1.

1.Bill from CA for Audit fees Rs 10000 per quarter

View Answer

 

Q2.

Bill from CA Professional Charges Rs 15000 per annum + Rs 2000 pm for Certificate Issue Charges

View Answer

 

Q3. 

Cash Sales made Rs 30 lacs 5% Royalty paid to AB Technologies for using its technologies

View Answer

 

TDS On Call Center

Example

Suppose a Mobile Company Vodafone hires the services of A Ltd. where A Ltd. will operate call center of Airtel at a cost of 1 lacs

  • Vodafone will deduct 10% TDS in this case and pay A ltd 90000 (Till 31 May,2017)
  • From 1 June 2017,2% TDS will be applicable. Vodafone will deduct 2% TDS in this case and pay A Ltd. 98000
  1. Tax Practical
  2. Practical TDS (Non Salary)

About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 10 years. He also provides Accounts Tax GST Training in Delhi and Pune.