TDS on professional fees is 10% under section 194J, and fees for technical services carry 2%, once the payments of that type to one person go above ₹50,000 in FY 2025-26. Fees or commission paid to a company director, other than salary, carry 10% from the first rupee.
In the TDS return these split into two codes: 194JA for the 2% items and 194JB for the 10% items. Legal advice, audit, medical consultation and architects' drawings all sit in 194JB. From tax year 2026-27 these fees are listed in section 393 of the 2025 Act, and the rates have not moved. Payments for work, such as a contractor's labour bill, belong under 194C instead. Every other section is on the TDS rate chart, and the basics are in what TDS is.
Quick facts
Professional fees
10% (194JB)Technical services
2% (194JA)Yearly limit
₹50,000 per type of payment to one payeeDirector fees
10% with no limitNo PAN
20%Who deducts
Anyone paying except individuals and HUFs not under tax auditFrom tax year 2026-27
One entry in section 393 of the 2025 Act
194J TDS rate and limit table
| Payment | Return code | Rate | Yearly limit |
|---|---|---|---|
| Fees for technical services (not professional) | 194JA | 2% | ₹50,000 |
| Royalty for sale, distribution or exhibition of films | 194JA | 2% | ₹50,000 |
| Payment to a call centre operator | 194JA | 2% | ₹50,000 |
| Fees for professional services | 194JB | 10% | ₹50,000 |
| Other royalty | 194JB | 10% | ₹50,000 |
| Non-compete fee | 194JB | 10% | ₹50,000 |
| Director's fees, sitting fees, commission (not salary) | 194JB | 10% | No limit |
Each type has its own ₹50,000 test. A company can pay one engineer ₹45,000 as professional fees and ₹40,000 as royalty in the same year without TDS, because neither head crosses ₹50,000. For payments made before 1 April 2025 the limit was ₹30,000.
Professional services versus technical services
The split decides whether you deduct 10% or 2%, so it matters. Professional services are those done by people in the professions the law lists: legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, advertising, and other notified ones such as company secretaries, film artists, sports persons and event managers.
Technical services mean managerial, technical or consultancy work that is not a listed profession, for example a firm that maintains your servers or runs a testing lab for you. If a doctor, lawyer or chartered accountant signs the invoice for advice, treat it as professional. If an outside firm supplies a technical team, treat it as technical, unless the job is plain labour, which goes under 194C.
Worked example of TDS on professional fees
Audit and IT support for a trading company. In FY 2025-26 the company pays a chartered accountancy firm ₹1,20,000 as audit fees, plus GST of ₹21,600 shown separately.
Step 1: The fee is professional, and ₹1,20,000 is above ₹50,000. TDS at 10% on the fee without GST: ₹12,000.
Step 2: The firm receives ₹1,41,600 minus ₹12,000, which is ₹1,29,600.
Step 3: The company also pays an IT firm ₹75,000 for server upkeep. That is a technical service, so TDS is 2%: ₹1,500.
Step 4: A one-time legal opinion costs ₹40,000. It is below ₹50,000 and no other legal fees are due to that lawyer in the year, so no TDS.
Total TDS for the year on these bills: ₹13,500, deposited, at the latest, on the 7th of the next month and reported in Form 26Q.
Who deducts and who does not
- Must deduct: companies, firms, LLPs, trusts, societies, government bodies, and individuals or HUFs whose accounts were audited under section 44AB for the preceding year.
- Personal payments: an individual paying a doctor or lawyer for personal or family needs does not deduct.
- Individuals not under audit: they deduct under section 194M at 2% only when payments for contract work, commission or professional fees to one resident cross ₹50 lakh in the year.
- Non-resident professionals: TDS falls under section 195, not 194J.
Tax is due at credit or at payment, whichever happens earlier. A professional's bill booked on 25 March and paid on 10 April carries TDS in March.
Professional fees TDS under the Income-tax Act, 2025
| Point | FY 2025-26 | Tax year 2026-27 |
|---|---|---|
| Section | 194J of the 1961 Act | TDS table under section 393 of the 2025 Act |
| Rates | 10% and 2% | Same rates |
| Yearly limit | ₹50,000 | ₹50,000 |
| Return form | Form 26Q | Form 140 |
Anything booked from 1 April 2026 carries the new payment code. Fees for FY 2025-26 stay under 194J, even if a correction is filed later.
194J mistakes seen in TDS returns
| Slip | Fix |
|---|---|
| Reporting a 10% professional fee under 194JA | Use 194JB for professional fees; a wrong code triggers a short deduction notice |
| Waiting for ₹50,000 before deducting on director fees | Director fees carry TDS from the first rupee |
| Taking TDS on the GST amount too | Deduct on the fee alone when GST is shown separately |
| Clubbing technical and professional fees for the limit | Test each type against ₹50,000 on its own |
| Depositing the deducted tax after the 7th | Interest runs at 1.5% for each month or part; work it out with the late payment interest tool |
General guidance on Indian TDS for professional fees only. Your facts may differ and the law is amended often; get a chartered accountant's view, or see the e-filing portal for the latest position.
Sources we checked
- Income-tax Act, 1961, section 194J
- Income-tax Act, 1961, section 194M
- Income-tax Act, 2025, section 393
- Income-tax Act, 1961, section 206AA
Frequently asked questions
What is the TDS rate under section 194J?
Section 194J has two rates: 10% on professional fees, other royalty, non-compete fees and director fees, and 2% on technical services, film royalty and call centre payments. A payee without PAN suffers 20%.
Below what amount is no TDS needed on fees?
The TDS on professional fees limit for FY 2025-26 is ₹50,000 a year for each type of payment to one person. Director fees have no limit.
What is the difference between 194JA and 194JB?
194JA is the code for the 2% items, mainly fees for technical services. 194JB is the code for the 10% items, mainly professional fees. Both come from the same section 194J.
Is TDS deducted on director remuneration?
If the director is an employee, the pay is salary and TDS follows section 192. Sitting fees, commission and other fees that are not salary carry 10% under 194J with no threshold.
Is TDS on consultancy fees under 194J or 194C?
Consultancy by a professional or a technical consultant falls under 194J. A contract to supply labour or carry out physical work falls under 194C.
Is TDS on royalty covered by 194J?
Yes. Royalty for the sale, distribution or exhibition of films is at 2%, and other royalty is at 10%, both above ₹50,000 a year.