TDS on Professional Fees (Section 194J)
Section 194J requires clients paying for professional or technical services to deduct TDS (Tax Deducted at Source) before paying a freelancer or consultant, typically at 10% (or 2% for certain technical services).
When a business client pays a freelancer or professional for services above a specified threshold in a financial year, Section 194J generally requires them to deduct TDS before making the payment, and deposit it with the government on the freelancer’s behalf.
This means the amount you actually receive is often less than your invoice total — the difference is the TDS deducted, which should show up as a credit in your Form 26AS and can be claimed back (or adjusted against your tax liability) when you file your income tax return.
It’s worth checking your Form 26AS or AIS periodically to confirm that clients have actually deposited the TDS they deducted — mismatches here are a common source of tax filing headaches.