194J TDS: Updated Guide on Applicability, Rates & Compliance

Key Insights 

• The annual 194J TDS limit FY 2025 26 stands at ₹50,000 per category, which is a big jump from the previous ₹30,000 from April 1, 2025.
   
• You must apply a 2% rate for technical services or certain royalties and a 10% rate for professional services and non-compete fees.
   
• You do not get any exemption limit for payments made to company directors. You must deduct TDS even if the payment is only ₹1,000.

The 194j TDS limit has finally changed, and it is going to save you a lot of paperwork! If you are a professional or a business owner in India, you know that keeping up with tax updates is like trying to catch a moving train.

Section 194J of the Income Tax Act requires you to deduct tax on specific payments. This applies when you pay a resident for professional or technical services. You must deduct this tax at the time of credit or payment. The government recently introduced a significant Section 194J TDS limit increase to simplify things for small taxpayers like you.

Suppose I hire an architect for my office. If I pay them ₹45,000 in July 2025, I do not need to deduct any TDS because it is below the new ₹50,000 limit. However, if I pay them another ₹10,000 in December, the total becomes ₹55,000. I must then deduct 10% TDS on the entire ₹55,000.

New Limits for Section 194J

The 194j tds limit refers to the maximum amount you can pay a professional in a single financial year without having to deduct tax. For a long time, you were likely working with a ₹30,000 limit, but the Finance Act 2025 has finally provided you with relief. This change is very helpful for your business if you frequently engage consultants for short-term projects.
 

You must note that these limits apply to each category separately. If you pay a professional ₹40,000 for technical work and ₹20,000 for a royalty, you still do not hit the ₹50,000 194j tds limit for either category.

Updated TDS Rates: 194JA and 194JB

The government has simplified your filing process by categorizing services into two distinct parts. You might often wonder about the 194JA 194JB TDS rate difference. 194J(a) or 194JA usually covers technical services and call center operations, while 194J(b) or 194jb tds section covers professional services.
 

You should always double-check the official TDS rate chart before you make a payment. If your recipient does not provide a PAN, your deduction rate jumps to a whopping 20% instantly.

Services that Require TDS

You must understand exactly which services trigger these tax rules to avoid missed deductions. The Income Tax Department defines specific categories of “fees” and “services” that fall under this category.
 

This table helps you quickly identify if your vendor's invoice falls under 194JB TDS applicability.

Who Needs to Deduct TDS?

The 194JB TDS applicability is crucial for your business compliance. You must always deduct TDS if you run a company or a partnership firm. However, if you are an individual or an HUF, you only need to deduct this tax if your business turnover exceeded ₹1,00,00,000 or your professional receipts exceeded ₹50,00,000 in the previous year.
 

You should ensure you deposit the deducted tax by the 7th of the next month to avoid heavy interest penalties from the Income Tax Department.

Bonus Tip: Do you know? From April 1, 2025, you no longer need to worry about checking if your vendor is a “non-filer” under Section 206AB. The government has omitted this section to reduce your compliance burden, so you don't have to verify their last two years of ITR filings anymore!

Conclusion

You can now manage your professional payments better with the new 194J TDS limit FY 2025 26 of ₹50,000. This guide simplifies the 2% and 10% rate split and clarifies the section 194J TDS limit increase for your business. Stay compliant by tracking aggregate payments per category to avoid penalties and ensure you have your vendor's PAN for the correct deduction.

FAQs on 194J TDS

1. Does Section 194J apply to professional fees paid for capital expenditure? 

Yes, you must deduct TDS under Section 194J even if the payment is for a capital asset or expenditure. The Income Tax Act focuses on the nature of the service (professional or technical) rather than how you account for it in your books. If you pay an architect ₹1,00,000 to design a new office building (a capital asset), you still hit the 194J TDS limit and must deduct tax at 10%.

2. Which ITR should you file if you have both salary income and internship stipend under Section 194J? 

If you have salary income (Section 192) and a professional stipend (Section 194J), you generally cannot use ITR-1. You should file ITR-3 or ITR-4, as the income under Section 194J is typically classified as “Profits and Gains from Business or Profession” in your AIS. Use ITR-4 (Sugam) to choose the presumptive taxation scheme.

3. Why do you have to pay extra tax on a stipend even after 10% TDS? 

You might owe extra tax because TDS is just a “prepaid” part of your tax, not the final liability. When you combine your internship stipend with your full-time salary, your total annual income might move into a higher tax slab (like 20% or 30%). Since the company only deducted 10% as per the 194ja 194jb TDS rate, you must pay the difference plus any applicable interest during your final tax filing. 

4. What is the main difference between Section 192 and Section 194J? 

The difference lies in your relationship with the payer. Section 192 applies to an Employer-Employee relationship where you get a regular salary and benefits. Section 194J applies to an Independent Professional relationship where you provide expert services. Companies often treat interns as “consultants” to avoid long-term benefit liabilities, which is why your stipend appears under the 194JB TDS section instead of salary.

5. Is GST included when calculating the 194J TDS limit for a payment? 

No, you should calculate TDS only on the basic service value. According to the CBDT guidelines, if the GST component is shown separately on the invoice, you do not include it for the 194J TDS limit or the tax deduction. This ensures you aren't paying “tax on tax.”