TDS on professional / technical fees

TDS applies at 2% on fees for technical services (not being professional services), on royalty for the sale, distribution or exhibition of films, and on payments to a payee running only a call centre, and at 10% on other professional fees, royalty and non-compete fees, once the payment to a payee in the FY exceeds ₹50,000 for each category (₹30,000 before 1-Apr-2025). Director remuneration has no threshold.

Key points

• The deductor is any person other than an individual or HUF;
• an individual or HUF deducts under this section only if it crossed the §44AB tax-audit limit in the preceding FY.
• The rate is 2% for fees for technical services (not being professional services), royalty in the nature of consideration for the sale, distribution or exhibition of cinematographic films, and payees engaged only in the business of operating a call centre, and 10% for fees for professional services, other royalty, non-compete fees and remuneration, fees or commission to a director (other than salary).
• The threshold is ₹50,000 per payee per FY for each of professional fees, technical-service fees, royalty and non-compete fees — raised from ₹30,000 by section 65 of the Finance Act 2025 with effect from 1-Apr-2025 — and there is NO threshold for director remuneration, so TDS applies from the first rupee.
• The no-PAN rate steps up to 20%.

Reference: §194J, ITA 1961 (threshold as amended by Finance Act 2025) — under ITA 2025 (FY 26-27 onwards), this is §393(1) Sl.6(iii)