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Tax Deducted at Source (TDS) under Section 194J of the Income Tax Act governs the deduction of tax on professional and technical service fees. Effective 1st April 2025, certain changes have been proposed in the Union Budget 2025, impacting businesses, professionals, and taxpayers. Understanding these modifications will help in maintaining compliance and avoiding penalties.
1. Overview of Section 194J
Section 194J mandates TDS deduction on payments made for:
| Category | Description |
| Professional Services | Legal, medical, engineering, architectural, accounting, consultancy,etc. |
| Technical Services | IT services, management consultancy, technical consultancy, etc. |
| Royalty | Payment for the use of patents, trademarks, copyrights, etc. |
| Non-Compete Fees | Payment to refrain from engaging in competing business activities. |
| Director’s Remuneration | Any payment made to directors, excluding salary. |
2. Key Changes Effective 1st April 2025
The amendments to Section 194J w.e.f. 01st April 2025 include:
Threshold Limit Revision
| Threshold Limit | Before 1st April 2025 | After 1st April 2025 |
| TDS Deduction Threshold | ₹30,000 | ₹50,000 |
3. Who Will Be Affected?
These changes impact:
- Businesses & Corporations – Required to adjust their tax compliance systems.
- Freelancers & Consultants – Must ensure proper deductions.
- Startups & MSMEs – Need to reassess financial strategies to avoid penalties.
- Digital Professionals – Including IT consultants, influencers, and creative professionals.
4. Action Plan for Businesses
To comply with these changes:
- 1. Review Vendor & Service Agreements – Ensure correct TDS deduction.
- 2. Update Accounting Software – Incorporate new rates and limits.
- 3. Train Finance Teams – Educate teams on updated compliance rules.
- 4. Engage Professional Tax Advisors – Seek expert consultation for error-free TDS
filing.
5. Conclusion
The changes in Section 194J w.e.f. 01st April 2025 are aimed at improving tax compliance and adapting to evolving business models. Staying informed and implementing proactive measures will help businesses and professionals remain compliant while optimizing their tax liabilities.
For expert assistance in TDS return filing and compliance, connect with Corporate Genie, your trusted tax and business advisors in Delhi NCR. Call +91-8700202997 or visit our website www.corporategenie.in
