What is Section Code 194JA and Section Code 194JB?
While downloading the form No. 26A, there is a mention of section 194JA and 194JB. It may be noted that Section 194JA and Section 194JB are not the there in the Income Tax Act, 1961.
Section 194J of the Act provides that any person, not being an individual or a HUF, who is responsible for paying to a resident any sum by way of fees for professional services, or fees for technical services, or any remuneration or fees or commission by whatever name called (other than those on which tax is deductible under section 192 of the Act, to a director), or royalty or any sum referred to in clause (va) of section 28, shall, at the time of payment or credit of such sum to the account of the payee, deduct an amount equal to ten per cent as income-tax.
Section 194J of the Act originally provided for deduction of income tax from the payments made towards fees for professional or technical services at the rate of 10%. A new category was added wherein TDS @ 2% was provided by Finance Act 2020. The amendment has reduced the rate of TDS for payments made towards ‘fees for technical services’ to 2%.
These two sections 194JA and 194JB are just the display parts (segregated section codes) of section 194J of the Act for the purpose of filing e-TDS returns to distinguish deduction of tax (TDS) under section 194J either at 2% or 10%.
The intention of the legislature to reduce the rate of TDS in section 194J is to bring it at par with section 194C for technical fees. Since in many cases fees for technical services may be classified under section 194C or section 194J, and the difference in rates of TDS of this two sections were inviting litigation. To reduce litigation, reduced rate for TDS in case of fees for technical services (other than professional services) to two per cent from existing ten per cent provided to align the same with the rate of TDS on works contract under section 194C.
In short, Section 194J provides for two types of payments which are liable for TDS either at the rate of 10% or 2%.
2% is attracted for following services:
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Fees for technical services (not being in the nature of professional services).
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Royalty where such royalty is in the nature of consideration for sale, distribution or exhibition of cinematographic films.
For others, the 10 per cent rate of TDS shall continue to apply.
What is Section Code 194JA and Section Code 194JB?
After the introduction of above two rates in section 194J i.e., TDS @ 10% and TDS @ 2%, it became necessary for the e-TDS return utility to segregate the transactions of tax deduction under section 194J in two parts for 10% and 2% separately. In order to identify the TDS transactions which were deducted @ 2% or 10% section 194J is classified into two section codes – 94JA and 94JB.
As per the utility of e-TDS provided, section code 194JA is assigned to denote deduction of tax under section 194J @ 2% whereas section code 194JB is assigned to denote deduction of tax under section 194J @ 10%.
In the e-TDS return utility RPU version 3.5, the following section codes are used to distinguish TDS u/s 194J:
Summary of Section Code in e-TDS return Utility for Section 194J
In NSDL RPU 3.5, one needs to select the following section codes for section 194J |
Rate of TDS |
Remarks |
4JA |
2% |
194J(a)- Fees for Technical Services (not being professional services), royalty for sale, distribution or exhibition of cinematographic films and call centre (@2%) |
4JB |
10% |
194J(b)- Fee for professional service or royalty etc. (@10%) |
