What is 194JB of the Income Tax Act?

194JB of the Income Tax Act is the TDS section code used for payments made towards professional services. It applies when businesses pay resident professionals for services like legal, medical, accounting, engineering, consultancy, or advertising work. The deductor reports these payments under 194JB while filing Form 26Q returns.

What is the 194JB TDS rate for professional fees?

The 194JB TDS rate is 10% on professional fees paid or credited to a resident professional. The deductor must deduct TDS at the applicable rate before making payment. If the professional does not provide a valid PAN, the deductor applies a higher TDS rate under Section 206AA.

What is the 194JB TDS limit or threshold amount?

The 194JB TDS limit is ₹30,000 per financial year for payments made to a single payee. The deductor calculates this limit by considering the total professional fees paid during the year. If the payment exceeds the limit, TDS applies to the applicable amount under Section 194JB.

What is the difference between 194JA and 194JB?

The difference between 194JA and 194JB depends on the nature of the services provided. Section 194JA applies to technical services and royalty payments with a 2% TDS rate. Section 194JB applies to professional services with a 10% TDS rate under the Income Tax Act.

Who needs to deduct TDS under Section 194JB of the Income Tax Act?

Companies, firms, LLPs, and individuals or HUFs subject to tax audit generally need to deduct TDS under Section 194JB for eligible professional payments. Non-audit individuals and HUFs follow separate provisions under applicable sections.

What payments are covered under 194JB professional fees?

194JB professional fees include payments made for legal, medical, engineering, architectural, accounting, consultancy, and advertising services. The section also covers certain director payments, excluding salary. The deductor must identify whether the payment qualifies as a professional service before applying the correct TDS provision.

What is the 194JB section code used for?

The 194JB section code identifies professional service payments while filing quarterly TDS returns. Deductors enter this code in Form 26Q to report applicable transactions. Using the correct section code ensures that the deducted TDS appears properly in the payee’s Form 26AS.

How is 194JB reported in Form 26Q?

194JB in Form 26Q is reported by selecting the correct section code for professional payments. The deductor enters the payee details, payment amount, TDS deducted, and challan information. Accurate reporting helps avoid mismatches between TDS records, Form 26AS, and income tax return claims.

Does 194JB apply to director fees?

194JB applies to certain director fees that are not treated as salary payments. TDS must be deducted from the first payment made to a director because no threshold limit applies. Sitting fees, commission, and similar non-salary payments require deduction under the applicable provisions.

When does TDS under 194JB not apply?

TDS under 194JB does not apply when payments remain below the prescribed threshold limit. It also does not apply to payments made to non-residents, as Section 195 generally covers such transactions. Certain individuals and HUFs without tax audit requirements may also have different obligations.

What happens if a deductor selects 194JA instead of 194JB?

Selecting 194JA instead of 194JB can create incorrect TDS reporting because both sections have different rates and service categories. The mistake may cause differences in Form 26AS records. The deductor may receive compliance notices, or the payee may face issues while claiming TDS credit.

What are the consequences of not deducting TDS under 194JB?

Failure to deduct TDS under 194JB can result in interest, penalties, and expense disallowance under tax provisions. The deductor may pay interest for delayed deduction or deposit. Additionally, a portion of professional expenses may become disallowed while calculating taxable business income.

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Income Tax Taxation

Section 194JB of Income Tax Act,1961 – TDS Rate, Threshold Limit, and Applicability

Joel Dsouza

Updated:Jul 31, 2026

10 min read

Section 194JB of the Income Tax Act, 1961, refers to the sub-code under Section 194J used to classify TDS deducted on fees for professional services. When a deductor files the quarterly TDS return in Form 26Q, they must specify whether the payment falls under 194JA (technical services at 2%) or 194JB (professional fees at 10%). Understanding Section 194JB correctly prevents misclassification in TDS returns, which is a common reason for TDS mismatch notices from the Income Tax Department.

This guide explains the complete applicability of 194JB of the Income Tax Act and the services covered under professional fees. It also covers the TDS rate, threshold limit, reporting of 194JB in Form 26Q, and the comparison between 194JA and 194JB.

Key Takeaways

Section 194JB of the Income Tax Act applies to TDS deductions on fees paid for professional services, including legal, accounting, and advertising services.
Deductors must apply a 10% TDS rate on eligible professional fees under 194JB when the payment exceeds the applicable threshold limit.
The ₹30,000 threshold limit applies to professional fees paid to a single payee in a financial year, while director fees covered under 194JB have no threshold limit.
The Finance Act 2020 split Section 194J into 194JA for technical services (2% TDS) and 194JB for professional services (10% TDS).
Payments to non-residents, payments below the threshold limit, and certain exempt cases do not fall under 194JB and may require different tax treatment.

How Section 194J Was Split Into 194JA and 194JB

Section 194J of the Income Tax Act originally applied a single TDS rate of 10% on all payments for fees for professional services, fees for technical services, royalties, and non-compete fees. The Finance Act 2020, effective from April 1, 2020, amended Section 194J to differentiate between two types of payments:

194JA – Fees for technical services and royalty: TDS rate reduced to 2% from April 1, 2020.
194JB – Fees for professional services, director’s fee (non-salary), and royalty for films: TDS rate retained at 10%.

This bifurcation was introduced to reduce the compliance burden on technology service providers and call centers. The 194JB code at 10% continues to apply to traditional professional fees.

What is Section 194JB of the Income Tax Act?

Section 194JB of the Income Tax Act is the sub-classification that covers TDS on fees for professional services under Section 194J(b). It applies when a person (deductor) pays fees to a resident professional for rendering professional services. The 194JB TDS rate is 10% on the gross amount paid or credited, whichever is earlier.

Professional Services Covered Under Section 194JB

The term ‘professional services‘ for the purpose of 194JB includes services rendered by individuals or entities in the following occupations:

Legal services: Advocates, solicitors, and legal consultants who provide legal opinions, drafting, or representation.
Medical services: Doctors, pathologists, radiologists, and other medical professionals providing consultation or diagnostic reports.
Engineering services: Engineers and technical consultants providing design, supervision, or advisory services under a professional contract.
Architectural services: Architects and interior designers providing professional design services.
Accountancy services: Chartered accountants, cost accountants, and financial consultants.
Technical consultancy: Management consultants and information technology consultants providing expert professional opinions.
Advertising services: Agencies and professionals engaged in advertising production and creative services.
Director’s remuneration: Fees paid to a director of a company, other than salary, such as sitting fees and commission.

194JB TDS Rate and Threshold Limit

The key parameters for TDS under 194JB of the Income Tax Act are as follows:

Parameter	Details
Section code	194JB
Nature of payment	Fees for professional services; director’s remuneration (non-salary)
Applicable to	All persons who are required to deduct TDS, companies, firms, LLPs, and individuals / HUFs are subject to tax audit
TDS rate (valid PAN provided)	10% on the gross payment amount
TDS rate (PAN not provided)	20% under Section 206AA
Threshold limit	₹30,000 per financial year per payee, applied separately to each category of payment under Section 194J
Threshold for the director’s fee	No threshold; TDS deducted from the first rupee of payment to a director
When to deduct	At the time of credit to the payee’s account in books or at the time of actual payment, whichever is earlier
Due date for TDS deposit	7th of the following month; 30 April for March payments
TDS return form	Form 26Q (quarterly)
TDS certificate to the payee	Form 16A

The ₹30,000 threshold under Section 194J applies on an aggregate basis for all payments made to the same payee during the financial year. Once the cumulative payment to a single professional exceeds ₹30,000, TDS at 10% applies to the entire amount, including amounts paid before the threshold was crossed.

Differences between 194JA vs 194JB

The most important distinction in Section 194J, after the Finance Act 2020 amendment, is between Sections 194JA and 194JB. Many deductors misclassify payments, resulting in incorrect TDS rates and mismatch notices.

The table below covers the complete difference between 194JA and 194JB:

Factor	194JA	194JB
Nature of payment	Fees for technical services and royalties (not copyright)	Fees for professional services, director’s fee (non-salary), royalty for films
TDS rate	2% on fees for technical services and royalty in the nature of consideration for the sale, distribution, or exhibition of cinematographic films	10% on professional fees and other royalty payments covered under Section 194J
Effective from	April 1, 2020	April 1, 2020
Threshold limit	₹30,000 per year per payee	₹30,000 per year per payee (no threshold for director’s fees)
Common examples	Software development services, call center services, IT-enabled services, BPO, back-office processing	Advocate fees, doctor consultation fees, CA and CS fees, management consultancy, architectural fees, director sitting fees
PAN not provided rate	20% under Section 206AA	20% under Section 206AA
Form 26Q section code	194JA	194JB

How to Use 194JB in Form 26Q TDS Return?

When filing the quarterly TDS return in Form 26Q, the deductor must enter the section code to classify each payment. Selecting the correct code (194JA or 194JB) determines the TDS rate applied and ensures that the TDS credit reaches the payee’s Form 26AS correctly.

Steps to Report 194JB in Form 26Q

The process for correctly reporting 194JB professional fees in the TDS return is as follows:

Open the TDS return utility (RPU) or the deductor’s TDS software and select Form 26Q for the relevant quarter.
For each professional payment, enter the payee’s PAN, name, address, and the gross payment amount made during the quarter.
In the ‘Nature of Payment’ or ‘Section Code’ field, select ‘194JB’ for fees for professional services, CA and legal fees, doctor’s consultation fees, or director’s non-salary remuneration.
Enter the TDS amount deducted at 10% of the gross payment. If the payee did not provide a PAN, enter 20% under Section 206AA.
Verify that the challan details (BSR code, challan serial number, deposit date, and amount) match the TDS deposited for the relevant month. Submit the Form 26Q return by the quarterly due date.

Filing Form 26Q with an incorrect section code, for example, selecting 194JA instead of 194JB for a professional payment, results in TDS being shown against the wrong section in the payee’s Form 26AS. This causes a mismatch when the professional files their income tax return and claims TDS credit, often leading to a Section 143(1) demand notice.

When TDS Under 194JB Does not Apply?

TDS under 194JB of the Income Tax Act is not required in the following cases:

Payments to non-residents: Section 194J covers only payments to resident payees. Payments to non-resident professionals are covered under Section 195, not 194JB.
Payments below the threshold: If the total professional fees paid to a single payee in the entire financial year do not exceed ₹30,000, no TDS is required under 194JB.
Payments by individuals and HUFs not subject to tax audit: Individuals and HUFs not subject to tax audit under Section 44AB are exempt from deducting TDS under Section 194J. However, they are covered under Section 194M for such payments above ₹50 lakh per year.
Nil deduction certificate: If the professional holds a valid certificate from the Assessing Officer under Section 197 authorizing nil or lower deduction of TDS, the deductor must apply the approved rate instead of 10%.

Consequences of Non-Compliance with Section 194JB

Failure to deduct or deposit TDS under Section 194JB results in the following consequences:

Interest under Section 201(1A): The deductor pays interest at 1% per month for non-deduction of TDS (from the due date of deduction until the actual deduction) and 1.5% per month for non-deposit of TDS (from the date of deduction until the date of deposit).
Penalty under Section 271C: The Assessing Officer may impose a penalty equal to the amount of TDS that the deductor failed to deduct.
Disallowance under Section 40(a)(ia): The deductor faces a disallowance of 30% of the professional fee amount as a business expense if the deductor fails to deduct TDS on payments made to a resident professional.

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Joel Dsouza

Joel Dsouza is a Chartered Accountant (CA) and compliance expert with over 7 years of hands-on experience in company registration, tax structuring, GST, ROC filings, and MCA compliance. As a qualified member of the Institute of Chartered Accountants of India (ICAI) and Co-Founder at RegisterKaro, he has personally advised more than 1,000 startups and SMEs across India, helping founders navigate incorporation, regulatory frameworks, and financial planning from Day 1. With deep expertise across all three levels of Finance and Portfolio Management, Joel is committed to promoting financial literacy and simplifying India's startup ecosystem through clear, actionable guidance that entrepreneurs can act on immediately.