You are here
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
Audit fees A/C Dr. 10000
To C.A 9000
To TDS 194J Non Co 1000
Q2.
Bill from CA Professional Charges Rs 15000 per annum + Rs 2000 pm for Certificate Issue Charges
View Answer
Professional Charges A/C Dr. 15000
To C.A 13500
To TDS 194J Non Co 1500
Certificate Issue Charges A/C Dr. 2000
To C.A 1800
To TDS 194J Non Co 200
Q3.
Cash Sales made Rs 30 lacs 5% Royalty paid to AB Technologies for using its technologies
View Answer
Cash A/C Dr. 3000000
To Sales 300000
Royalty Expense A/C Dr. 150000
To AB Technologies 135000
To TDS 194J Non Co. 15000
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
