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What is the rate of TDS applicable on payment of Legal and Professional charges under Section 194J of Income Tax Act 1961 for Assessment Year 2018-19 ?

What is the rate of TDS applicable on payment of Legal and Professional charges under Section 194J of Income Tax Act 1961 for Assessment Year 2018-19 ? Correct Answer 10%

Section 194J stated that for any person who is paying fees to any resident person for specified services, then TDS is required to be deducted u/s 194J. However, TDS is to be deducted when the amount of payment in a year exceeds Rs.30,000/- at the rate of 10%.

Important Points

 Which services are covered under section 194J?

 The following type of services are covered under section 194J:

  1. Fees for professional service
  2. Fees for technical service
  3. Remuneration or fee or commission to a director of a company (which is not liable to TDS u/s 192).
  4. Royalty

Payment received (in cash or kind) under an agreement for:

  • Not carrying out any activity in relation to any business, or
  • Not sharing any know-how, patent, copyright, trademark, license, franchise, or any other business/ commercial right of similar nature/ information/ technique.

Additional InformationWho is required to deduct TDS u/s 194J?

 As per this section, any person (but not an individual or HUF) who pays resident fees for professional or technical services, will be required to deduct tax at source u/s 194J.
However, individuals or HUF will be required to deduct TDS if they are liable to audit u/s 44AB (a) and (b).

The person here means :

  1. Central or State Government
  2. Local Authority
  3. Corporation
  4. Company
  5. Cooperative Society
  6. Trust
  7. University
  8. Registered Society
  9. Firm
  10. Individual/HUF/AOP/BOI required to get accounts audited u/s 44AB (a) and (b).

Related Questions

Which two of the following are correct about TDS Certificates? a) TDS on non-salary payment - Form 16 b) TDS on salary payment - Form 16 A c) TDS on sale of property - Form 16 B d) TDS on rent - Form 16 C Choose the correct option from those given below 
Which two of the following are correct about TDS Certificates?
1. TDS on non-salary payment - Form 16
2. TDS on salary payment - Form 16 A
3. TDS on sale of property - Form 16 B
4. TDS on rent - Form 16 C
Choose the correct option from those given below:
Which of the following components are true about tax planning?
1. Tax planning is the process of analyzing a financial plan or a situation from a tax perspective.
2. The objective of tax planning is to make sure there is tax efficiency. With the help of tax planning, one can ensure that all elements of a financial plan can function together with maximum tax-efficiency.
3. Reducing tax liability and increasing the ability to make contributions towards retirement plans are critical for success.
4. Tax planning comprises various considerations such as size, the timing of income, timing of purchases, and planning are concerned with other kinds of expenditures.
5. The chosen investments and the various retirement plans should go hand-in-hand with the tax filing status as well as the deductions in order to create the best possible outcome.
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