TDS
TDS on Professional & Consultancy Fees — Section 194J
Section 194J requires 10% TDS on professional or consultancy fees once payments to a payee cross ₹50,000 in a financial year. From FY 2026-27 it's filed as Section 393(1), payment code 1027.
Section 194J covers payments for professional services — legal, medical, engineering, architectural, accountancy, interior decoration, advertising, and other notified consultancy work — as well as certain technical services and royalty payments, which are taxed separately at 2% rather than 10%. If you're paying a lawyer, chartered accountant, doctor, architect, or management/business consultant, this is almost always the section that applies.
The 10% rate applies once your total payments to that one payee for the financial year exceed ₹50,000 — it doesn't matter whether that's one large invoice or several smaller ones that add up. If the deductee hasn't furnished a valid PAN, Section 206AA overrides this with a flat 20% instead.
From FY 2026-27, this is formally Section 393(1) — Table 1, Sl. 6(iii)(b) under the Income-tax Act, 2025, filed against payment code 1027 on your TDS challan and return. The old "Section 194J" name is what most people still search for and recognise, so it stays the primary reference here, with the new code noted for when you're actually filing.
Worked example
On a ₹75,000.00 payment at 10%, TDS is ₹7,500.00 and the net payment is ₹67,500.00. That's a consultancy fee to a business consultant, PAN furnished — since it exceeds the ₹50,000 threshold, TDS applies to the full amount, not just the portion above ₹50,000. Without a PAN, Section 206AA's flat 20% would apply instead of the section rate.
Frequently asked questions
Does the ₹50,000 threshold apply per invoice or per year?
Per financial year, per payee, on an aggregate basis — not per invoice. If you pay the same consultant ₹20,000 in April and another ₹35,000 in August, the second payment takes the yearly total past ₹50,000, so TDS applies from that point (and, per how this threshold rule typically works, on the full cumulative amount paid to them that year, not just the excess).
Is this the same as Section 194J for technical services?
No — Section 194J covers both, but at different rates. Professional/consultancy services (legal, medical, accountancy, and similar) are taxed at 10%. Technical services, certain royalty payments, and call-centre-type services are taxed at 2% under the same section. Check which category your payment actually falls under before applying a rate.
What's Section 393(1) and do I need to use it instead of 194J?
Section 393(1) is where this provision now lives under the Income-tax Act, 2025, in force from 1 April 2026 — it consolidates the old 194-series into one section, referenced by numeric payment codes (1001–1067) on challans and returns instead of the old section number. For FY 2026-27 filings onward, use payment code 1027 rather than citing "194J" on the challan.