Which TDS rate applies to law student and lawyer consultants: 10% or 2% under Section 194J?

Income Tax Act
1

Hello ,

I work with an NGO registered in Madhya Pradesh, India, where we primarily engage law students and legal professionals as consultants.

Currently, we deduct 10% TDS on consultant payments and Rs.208/month as Madhya Pradesh Professional Tax, where applicable.

Could you please confirm whether this treatment is correct and whether 10% TDS and Professional Tax are mandatory for such consultants?

Also, during FY 2025–26, some consultants provided technical services. What TDS rate should have been applicable- 2% under Section 194J or 10%?

Would appreciate guidance on the correct TDS and Professional Tax treatment.

Thank you

2

Thanks for your query.

Legal services is specifically covered under definition of professional services attracting TDS @10% beyond permissible threshold. See below:

“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 44AA or of this section;

Two points:

  1. PT for consultants should not be deducted. As service providers, they need to get registered for PT and pay PT directly. PT applies to employees in an organization.
  2. Legal students are generally not consultants because they do not possess the requisite minimum qualification as legal consultant. Better consider them as interns or trainees on a stipend.

CS Sharad Bhargava