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TDS on consultancy charges

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February 11, 2022

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2 mins read

TDS on consultancy charges is required to be deducted under Section 194J of Income Tax Act 1961.

Rate and Amount for deduction of  TDS

The rate of  TDS  is as under : –

  • TDS shall be deducted @ 10%.
  • No Surcharge and Higher Education Cess (“HEC”)  shall be added to the 10% rate.
  •  TDS @ 20% shall be deducted where the recipient does not provide the  PAN number to the deductor.

TDS on consultancy charges shall be deducted on invoice value, excluding the value of GST (if such value is mentioned separately in the invoice) –  Circular No. 23/ 2017. However,   TDS shall be deducted on whole of the invoice value (if value of GST is not mentioned separately in the invoice) –  Circular No. 23/ 2017

Time of deducting TDS on consultancy charges

The time when TDS is required to be deducted is earlier of the following two events –

  • Credit of consultancy charges to the account of payee; or
  •  Payment of consultancy charges in cash or by way of issue of cheque/ draft/ any other mode.

Illustrations : – 

For Full text of Section 194J, please refer this link 

Explore our Full detailed Article on TDS.

TDS on consultancy charges is required to be deducted under Section 194J of Income Tax Act 1961 at the rate of 10% for payments to residents.

Arinjay Jain

Bio of author

Arinjay is a Chartered Accountant with more than 20 years of post-qualification experience. He worked as Director, in the M&A Tax Division at KPMG in India. Presently, he is advising several MNCs in UAE on Economic Substance Regulations and impact of the UAE Corporate Tax Law on their business and clients across globe on International Tax issues . He is a well recognised Trainer of International Tax and UAE Corporate Tax. The areas of service include the following : - Advise and Compliance relating to International Tax Issues; Advise relating to UAE Corporate Tax Issues; Advise and Compliance relating to UAE Economic Substance Regulations; Advise and Compliance relating to Indian Income Tax Issues; Other connected matters from a Regulatory perspective.

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