Under the Income-tax Act, 2025, effective from April 1, 2026, the provisions for Tax Deducted at Source (TDS) on payments to professionals and technical service providers have been consolidated under Section 393(1). This replaces the erstwhile Sections 194J and 194M of the old Act. [ Refer Section 393 Income Tax Act 2025 Tax to be deducted at source.]

Video Explantion of  TDS on Professionals w.e.f 01.4.2026 as per New Income Tax Rules 2026

Here are the complete provisions for deducting TDS on professional and technical services:

1. General TDS on Professional and Technical Services

When a “specified person” makes a payment to a resident by way of fees for professional services, fees for technical services, or remuneration/commission to a director (other than salary), tax must be deducted under Section 393(1) [Table: Sl. No. 6(iii)].

Refer Meanining of specified person for TDS under Section 393 Income tax Act 2025

• Applicable Rates:
  • 2% for fees for technical services (provided they are not professional services).
  • 2% if the payee is engaged exclusively in the business of operation of call centers.
  • 10% for fees for professional services and other cases (including remuneration to directors).
• Threshold Limits:
  • TDS is required to be deducted if the sum or aggregate of sums credited or paid during the tax year exceeds ₹50,000 for professional or technical services.
  • For remuneration, fees, or commission paid to a company director, there is no threshold limit (TDS applies from the first rupee).

2. TDS by Individuals/HUFs Not Covered Above (The ₹50 Lakh Rule)

If an Individual or Hindu Undivided Family (HUF) is not required to deduct tax under the general provision above (typically because their business turnover does not subject them to tax audit requirements), they are still liable to deduct TDS if they make substantial payments to professionals under Section 393(1) [Table: Sl. No. 6(ii)].

• Applicable Rate: 2%.
• Threshold Limit: TDS is required if the aggregate of such fees for professional services paid or credited to a resident exceeds ₹50,00,000 in a tax year.
• Compliance (Form 141): These deductors are not required to obtain a TAN. They must report and deposit the deducted tax using Schedule C of the new Challan-cum-Statement Form No. 141. The form must be filed and tax paid electronically within 30 days from the end of the month in which the deduction was made.

3. Definitions

• Professional Services: Professional Services The term “professional services” is explicitly defined in Section 402(28) of the Act. This definition is also cross-referenced in Section 66(21).  Defination  as per Section 402(28) of the Actis as follow :-

• Fees for Technical Services: The term “fees for technical services” is defined in Section 9(7)(b) of the Act. This definition is subsequently cross-referenced in Section 66(5) and Section 402(15).  

• Section 9(7)(b) of the Act. is as follow
  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—

  (i)

  for any construction, assembly, mining or like project undertaken by the recipient; or

  (ii)

  which would be income of the recipient chargeable under the head “Salaries”.

Thus Fees for Technical Services refers to any consideration for rendering managerial, technical, or consultancy services (including the provision of technical or other personnel). It does not include payments for construction, assembly, mining, or any payment that would be chargeable under the head “Salaries” for the recipient.

4. Exemption for Personal Purposes

No TDS is required to be deducted on fees for professional or technical services if the sum is credited or paid by an Individual or HUF exclusively for the personal purposes of such individual or any member of the HUF.

5. Transition Rules (March-April 2026)

The governing Act depends on the earlier of the event of credit or payment.

• If the professional fees are credited or paid on or before March 31, 2026, the TDS obligation falls under Section 194J (or 194M) of the old Income-tax Act, 1961.
• If the earlier event of credit or payment occurs on or after April 1, 2026, the deductor must apply the new Act and quote the correct new section references (e.g., Section 393(1) [Table: Sl. No. 6(iii)]) in their TDS returns to avoid system-level validation errors.

6 .How to calculate tds on professional fees Rs 100000

how to calculate tds on professional fees Rs 100000 during the tax year 2026-27

Under the new Income-tax Act, 2025 (applicable for payments made on or after April 1, 2026), the calculation of Tax Deducted at Source (TDS) on professional fees depends on the type of payer.

Here is how to calculate the TDS on a professional fee of ₹1,00,000:

Scenario 1: The Payer is a “Specified Person” (e.g., Company, Firm, or Audited Individual/HUF)

For standard businesses and entities, TDS on professional fees is governed by Section 393(1) [Table: Sl. No. 6(iii)].

• Threshold Check: TDS must be deducted if the aggregate payment during the tax year exceeds ₹50,000. Since ₹1,00,000 is greater than ₹50,000, TDS is applicable on the entire amount.
• Determine the Rate: The standard TDS rate for professional services is 10%. (Note: If the payee is engaged exclusively in operating a call centre, the rate is reduced to 2%).
• Calculation:
  • Total Professional Fee: ₹1,00,000
  • TDS Amount (10% of ₹1,00,000): ₹10,000
  • Net Payment to Professional: ₹1,00,000 – ₹10,000 = ₹90,000.

Scenario 2: The Payer is an Individual or HUF (Not liable for tax audit)

If the payer is an Individual or HUF who is not required to deduct tax under the general provision above, they are governed by a different rule under Section 393(1) [Table: Sl. No. 6(ii)].

• Threshold Check: Such individuals/HUFs are only required to deduct TDS (at a rate of 2%) if the aggregate payments to the professional exceed ₹50,00,000 in a tax year.
• Calculation: Because your payment is only ₹1,00,000 (which is well below the ₹50 lakh threshold), no TDS is required to be deducted. You will pay the full ₹1,00,000 to the professional.

Exemption for Personal Use:

Regardless of the amount, if the ₹1,00,000 is paid by an Individual or HUF exclusively for personal purposes, no TDS is required to be deducted.

Related Post

TCS Rates FY 2026 27 under Income Tax Act 2025 from 1st April 2026

TDS Rates FY 2026 27 under Income Tax Act 2025 from 1st April 2026

TDS on Rent w.e.f 01.4.2026 as per New Income Tax Rules 2026

TDS on Commission w.e.f 01.4.2026 as per New Income Tax Rules 2026

TDS on Contractors w.e.f 01.4.2026 as per New Income Tax Rules 2026

New Change for TDS on Property purchased from NRI from 1st April 2026

TDS payment due date for march 2026

video HOW TO PAY TDS ON PROPERTY PURCHASE FROM 1ST APRIL 2026 I HOW TO FILE FORM141 INCOME TAX RULES 2026

Whether Section 395(1) applicable : Meaning under income tax Act 2025 for TDS

TDS on Fixed Deposits from 1st April 2026 : How to Save Tax on FD Interest

Section 393 Income Tax Act 2025 Tax to be deducted at source.

Section 394 Income Tax Act 2025 Collection of tax at source.

Section 393(1) Table Sr no 6 Income Tax Act 2025 Payments to contractors, fees for professional and technical services, etc

For more Visit Income Taxindia.gov.in Click here

Your Queries Solved

tds on professional fees,
tds on professional fees limit,
tds on professional services,
tds on professional fees section,
tds on professional fees for fy 2026-27,
tds on professional and technical services,
tds on professional fees new income tax act 2025,

tds on professional fees new income tax act 2026,
tds on professional fees rate,
tds on professional fees threshold limit,
tds on professional section,
tds on professionals,

Section 393 tds rate limit for professional,
new section of income tax act 2025 to replace section 194j income tax act 1961,
professional fees tds limit,
tds on professionals example,
technical services tds rate,
list of technical services under section 393,
how to calculate tds on professional fees.