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
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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.