What is the threshold for TDS on professional fees?

₹50,000 in a financial year for each payee, for each type of fee. Director's remuneration has no threshold.

Which section covers TDS on professional fees from April 2026?

Section 393(1), Table Sl. No. 6(iii), of the Income-tax Act, 2025. In the quarterly return, use payment code 1027 for professional fees, 1026 for technical fees and 1028 for directors.

Is TDS deducted on the GST part of professional fees?

No, when the GST is shown separately on the invoice. TDS is deducted on the fee excluding GST.

Does an individual have to deduct TDS on professional fees?

Only if the individual is under tax audit. Individuals and HUFs not under audit deduct 2% when the total paid in the year for contract or professional work exceeds ₹50 lakh, and report it in Form 141 rather than a quarterly return.

What is the TDS rate if the professional has no PAN?

20%, or the normal rate if that is higher.

TDS on Professional Fees: Rate, Limit & Section (2026-27)

TDS on professional fees under section 393 of the Income-tax Act 2025: rates and threshold

Quick answer

From tax year 2026-27, TDS on fees for professional services is deducted under section 393(1) of the Income-tax Act, 2025 (Table Sl. No. 6(iii), formerly section 194J). The rate is 10% for professional fees and 2% for fees for technical services, call centres and film royalties. TDS applies once payments to a payee cross ₹50,000 in a financial year. Remuneration, fees or commission paid to a director (other than salary) attracts 10% with no threshold.

Old section vs new section

The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. Section 194J no longer exists as a separate section. Its provisions now sit in the TDS table in section 393(1), and each payment type has its own payment code in the quarterly return.

Payment	Old section	New provision	Payment code	Rate	Threshold (per year)
Fees for professional services	194J(b)	393(1), Table Sl. No. 6(iii)	1027	10%	₹50,000
Fees for technical services, film royalty, call centre	194J(a)	393(1), Table Sl. No. 6(iii)	1026	2%	₹50,000
Director's remuneration, fees or commission (not salary)	194J(b)	393(1), Table Sl. No. 6(iii)	1028	10%	None
Professional or contract fees paid by an individual or HUF not under tax audit	194M	393(1), Table Sl. No. 6(ii)	via Form 141	2%	₹50 lakh

The ₹50,000 limit applies separately to each type of payment. For example, professional fees and technical fees paid to the same person are each checked against their own ₹50,000. [VERIFY: that the separate-limit treatment carries over under section 393]

What counts as professional services?

Professional services are services provided by a person carrying on a profession that is notified for TDS purposes, such as:

legal services from advocates and law firms
medical services
engineering and architectural services
accountancy, audit and tax advisory services, including CA and CS firms
technical consultancy and interior decoration
advertising
other professions notified by the CBDT, such as company secretaries, authorised representatives, film artists and sports persons [VERIFY: notified list under the 2025 Act]

Fees for technical services cover managerial, technical or consultancy services. Routine services such as housekeeping or printing are usually contract work, where TDS is at 1% or 2% (codes 1023 and 1024, formerly 194C). Getting this classification right matters, because a 2% deduction on what is really a 10% professional fee is a short deduction that shows up as a TRACES default.

Worked example

A company pays a CA firm ₹30,000 in June and ₹40,000 in October for advisory work in tax year 2026-27.

June: total paid so far ₹30,000, which is below ₹50,000, so no TDS.
October: the total reaches ₹70,000 and crosses the limit. Deduct 10% on the full ₹70,000, which is ₹7,000, from the October payment.

If the company expects to cross ₹50,000 during the year (for example, a retainer agreement), it can deduct from the first payment.

GST on professional fees

Deduct TDS on the fee excluding GST when the GST is shown separately on the invoice. If the invoice does not show GST separately, deduct TDS on the full amount. [VERIFY: CBDT circular position carried over under the 2025 Act]

If the payee has no PAN

When the payee does not provide a valid PAN, TDS is deducted at the higher of the normal rate and 20%. [VERIFY: corresponding section of the Income-tax Act, 2025] Ask for the PAN at onboarding, and check that it is operative (linked to Aadhaar). An inoperative PAN is treated like no PAN.

Due dates and filing

Step	Due date
Deposit TDS	7th of the next month (30 April for deductions made in March)
File quarterly return (Form 140, formerly 26Q)	31 July, 31 October, 31 January, 31 May
Issue TDS certificate (Form 131, formerly 16A)	Within 15 days of the return due date

Late deposit attracts interest, late filing attracts a fee for each day of delay, and failure to deduct can make the expense disallowable when computing business income. [VERIFY: current interest rates, late fee and disallowance provisions under the 2025 Act]

Common mistakes

Mistake	What goes wrong	What to do
Treating consultancy as contract work	2% deducted instead of 10%: short deduction default	Classify by the nature of the service, not the invoice wording
Using old section 194J in the return	Wrong payment code, so the return is rejected or a default is raised	Use payment codes 1026, 1027 and 1028 from tax year 2026-27
Not tracking the yearly total per vendor	TDS missed when the ₹50,000 limit is crossed mid-year	Track payments for each vendor for each type
Director's sitting fees under the threshold	No TDS deducted	Director fees have no threshold: deduct 10% from the first rupee

Managing TDS on professional fees at scale

For a business with hundreds of vendors, keeping track of the limits, payment codes and PAN status by hand leads to defaults. TaxCPC (formerly TDSCPC) validates each record before filing, maps the old sections to the new payment codes, generates Form 140 and the FVU file, and issues Form 131 certificates in bulk. To work out the deduction for a single payment, use the free TDS calculator.

Frequently Asked Questions

10% on fees for professional services, and 2% on fees for technical services, call centres and film royalties, under section 393(1) of the Income-tax Act, 2025 (formerly section 194J).