Section 194J governs TDS on professional fees, technical fees, royalty, and director's remuneration. Default rate: 10% (professional fees), 2% (technical fees, royalty for software). Threshold: ₹30,000 per payee per year. The calculator picks the right rate based on the service type and computes the deductible TDS.
When to use this
Use when: a company pays a freelance consultant (CA, lawyer, designer, doctor, software developer), pays royalty for software / books, pays a director's sitting fees or commission, pays technical fees to a sub-contractor (call centre, IT staffing).
Frequently Asked Questions
Is the rate 10% or 2% for software royalty?
2% for royalty paid for the use of software (added in FY 2020-21). 10% for everything else under 194J. The 2% rate applies even when the recipient is a non-resident (subject to DTAA). Confirm with the contract terms - sometimes it's not obvious whether a payment is royalty or fees.
What if the freelancer has no PAN?
TDS rate jumps to 20% under Section 206AA. Always collect PAN before paying - it's a legal requirement for TDS deduction, and the 20% rate is much worse than the standard 10%. If the freelancer is genuinely without PAN, deduct 20% and let them claim refund via ITR.
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