TDS Section 194J: Rate, Threshold and When It Applies
5 min read · TDS
Section 194J covers TDS on fees for professional or technical services, royalty, and non-compete payments. The single most common error is applying the wrong rate — because 194J has two — so here's the distinction and the practical rules.
The two rates
Professional services → 10%. Legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, and other notified professions.
Technical services → 2%. Fees for technical services (that are not professional), royalty for the sale/exhibition of cinematographic films, and payments to call-centre operators. This 2% category was carved out to reduce cascading with GST on the same service.
On TRACES the two carry different nature-of-payment codes (4JA vs 4JB), so a professional payment reported under the technical code — or taxed at the wrong rate — triggers a mismatch notice.
Threshold
TDS applies once payments in a financial year cross the section threshold. Budget 2025 revised this threshold effective FY 2025-26, so confirm the current limit before deducting — deducting below the threshold, or missing it above, are both defaults.
No PAN and non-filers
If the deductee doesn't furnish a valid PAN, §206AA requires TDS at the higher of the normal rate or 20%. For a specified non-filer, §206AB applies a higher rate (broadly twice the normal rate, or 5%, whichever is higher). Both are easy to miss when deducting manually.
Filing
194J deductions are reported quarterly in Form 26Q, and the deductee's credit shows up in their Form 26AS / AIS. Getting the section, rate and PAN right at deduction time is what makes the return reconcile cleanly at filing.
OnGravy tags each payment with the correct section and rate and prepares your 26Q — no manual rate lookups.
Try OnGravy →General information, not tax advice. Thresholds change — confirm the current figure with your CA.