What is TDS on professional services?

From 1 April 2020, the payment of fees for technical service shall be subject to TDS at the rate of 2\%. With effect from 01.04. 2017, the tax on payments made to operators of call centres shall be deducted at a reduced rate of 2\%. In case the payee does not furnish his PAN then the rate of deduction would be 20\%.

How is TDS on professional services calculated?

Rate of TDS TDS is to be deducted under this section at the rate of 10\%. If the recipient of income doesn’t furnish his PAN to deductor then TDS is to be deducted @ 20\%. No surcharge, education cess or SHEC shall be added to the mentioned rates. Also, TDS is to be deducted on fees excluding the GST component.

What is TDS process?

The concept of TDS was introduced with an aim to collect tax from the very source of income. As per this concept, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government.

What is the limit for professional TDS?

Rs.30,000
Under Section 194J, Rs. 30,000 is the maximum limit which is applicable to each item or payment independently. TDS under this section is also applicable on commission or remuneration or fees given to a company’s director, even though the amount is not a part of the main salary.

Is professional tax and TDS same?

TDS amount is like advanced Tax. Professional tax is collected by state government. You may work in any organisation , but practicing your profession you are paying tax to the state government.

What is limit of TDS on professional?

Key Points in Section 194J on TDS Under Section 194J, Rs. 30,000 is the maximum limit which is applicable to each item or payment independently. TDS under this section is also applicable on commission or remuneration or fees given to a company’s director, even though the amount is not a part of the main salary.

What is TDs and why was it introduced?

It was introduced to collect tax at the source from where an individual’s income is generated. The government uses TDS as a tool to collect tax in order to minimise tax evasion by taxing the income (partially or wholly) at the time it is generated rather than at a later date.

Is TDs applicable on commission paid to a company director?

Here firm XYZ is not liable to deduct TDS from payments made to Mr. Red as ₹ 30,000/- limit is separate for each item, namely fees for technical services and professional charges. TDS under this section is also applicable on commission or remuneration or fees given to a company’s director.

Is TDS deducted from gross or net?

TDS stands for tax deducted at source. The payer of income deducts the tax from the gross payment due and pays the net amount (i.e. net of tax). Is TDS deducted at same rate from all types income which are subject to TDS? No, TDS is not deducted at the same rate from all incomes which are subject to TDS.

How to avoid TDS on income tax returns?

If a person expects that his total income in a financial year will be below the exemption limit, he can ask the payer not to deduct TDS by submitting Form 15G/15H. While receiving payment which is subject to TDS, deductee is required to provide his PAN details to avoid tax deduction at the higher rates.