Regarding TDS under Section 194J, which services are covered under Professional or Technical Services and clarification regarding accommodation hire for long-term and short-term — under which section it falls? I wanted to understand the new fcra amendment regarding the carry forward of administration expenses
The definition of Fee for Professional Services and Fee for Technical Services as per 194J
(a)“professional services” means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44-AA or of this section;
Some services notified by CBDT are film artist, Company Secretary, Information Technology etc and additions maybe checked from time tot time.
(b) “Fees for technical services” shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9;]
*Explanation 2.—*For the purposes of this clause, “fees for technical services” means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head “Salaries”;
In the above, managerial services may mean running or management of business, technical services may mean technical expertise and consultancy services may mean advisory services as per our understanding.
To summarize, while professional services are well defined in a above, a service would be covered under b above if a person uses his/her technical skill or expertise to provide services.
The guiding rule maybe that if there is greyness in the matter deduct under FPS since that is higher rate of TDS and is just a withholding tax for the payee.
Hope it clarifies.
CS Sharad Bhargava
Accommodation hiring will fall under Section 194-I of Income Tax Act based on applicable threshold. If accommodation and services (eg. hotel) are to be charged separately under 19$-I and 194-C, invoicing has to be done separately.
Official Gazette No. G.S.R. 790(E) dated 31.12.2024 effective 1st Jan 2025 has permitted carry forward of unutilised part of allowable Administrative Expenditure to succeeding financial year. This is to overcome the difficulty faced due to FC funds received very late in a year which are not possible to spend in which case the admin expenditure remained unutilised and was not available in subsequent year to fulfil the 20% threshold reequipment for admin expenditure based on receipts. Necessary change has been made through clause 4(iv) in FC 4 Annual Return Form for applicability for FY 24-25.
CS Sharad Bhargava