TDS on Professional Fees and Technical Services 2026-27: Rates, Limits and Forms (Income Tax Act 2025)
Under the Income-tax Act, 2025, tax on fees paid to a resident for professional or technical services is deducted under section 393(1), Table Sl. No. 6. For most payers the rate is 10% for professional fees, and 2% for technical fees (other than professional services), with a threshold of Rs 50,000. Directors' fees attract deduction from the first rupee. Individuals and HUFs who are not "specified persons" are covered by a separate row with a 2% rate and a Rs 50 lakh threshold.
This guide explains who deducts, at what rate, when, and how the tax is deposited and reported. Every figure comes from the Act (as amended by the Finance Act, 2026) and the Income-tax Rules, 2026, with the section or rule number beside it. The examples use tax year 2026-27. Last reviewed against that text on 10 November 2026.
Which rows of the Table cover professional fees and technical services?
Section 393(1), Table Sl. No. 6 has three rows. Which one applies depends on who is paying.
| Row | Payer | Payment | Rate | Threshold |
|---|---|---|---|---|
| Sl. No. 6(iii) | A "specified person" | Fees for professional services; fees for technical services; director's remuneration, fees or commission; royalty; sums under section 26(2)(h) | 2% for technical fees (not professional services), film royalty (sale, distribution or exhibition of cinematographic films) and a payee engaged only in the business of operating a call centre; 10% for everything else | Rs 50,000 for professional fees, technical fees, royalty and section 26(2)(h) sums; nil for director's remuneration or fees |
| Sl. No. 6(ii) | An individual or HUF who is not a specified person (and not covered by 6(i), 6(iii) or 1(ii)) | Contract work, fees for professional services, commission or brokerage | 2% | Rs 50 lakh |
| Sl. No. 6(i) | A "designated person" | Contract work (not covered in this guide) | 1% or 2% | Rs 30,000 per sum or Rs 1,00,000 aggregate |
Section 393(1)(a) says that once the amount or the aggregate of amounts exceeds the threshold, tax is deducted on the entire amount, not just the excess. Under section 393(1)(c), tax is deducted at the time of credit to the payee's account or payment, whichever is earlier.
Who is a "specified person" for professional fee TDS?
Section 402(37) defines a specified person as:
- any person who is not an individual or HUF (a company, firm, LLP, trust and so on); or
- an individual or HUF whose total sales, gross receipts or turnover in the immediately preceding tax year exceeded Rs 1 crore for business or Rs 50 lakh for profession.
The test looks at the year before the payment. A small trader who crossed Rs 1 crore last year is a specified person this year.
What counts as professional services and technical services?
Professional services (section 402(28)) means services rendered in the course of carrying on a legal, medical, engineering or architectural profession, the profession of accountancy, technical consultancy, interior decoration or advertising, or any other profession notified by the Board.
Fees for technical services (section 402(15), pointing to section 9(7)(b)) means any consideration, including a lump sum, for managerial, technical or consultancy services, including the provision of technical or other personnel. It does not include consideration for a construction, assembly, mining or like project undertaken by the recipient, or income that is chargeable as salary.
The split matters for the rate. A payment that is a professional service is taxed at 10% in 6(iii). Technical fees that are not professional services are taxed at 2%.
Which route applies to my payment?
An individual or HUF paying fees "exclusively for personal purposes" does not deduct tax under 6(iii). This comes from section 393(4), Table Sl. No. 9, which exempts such payments. Paying a lawyer for a family property matter is an example.
How is TDS on professional fees calculated? Three worked examples
Assumptions for all three: tax year 2026-27, the payee has given a valid PAN, and the amounts are stated net of GST (how GST shown on the invoice is treated is not covered in the Act text used here, so check it separately).
| Case 1: company pays a CA firm | Case 2: LLP pays a company for technical (non-professional) services | Case 3: company pays a director sitting fee | |
|---|---|---|---|
| Row | 6(iii), professional services | 6(iii), technical fees (not professional services) | 6(iii), director's fees |
| Amount | Rs 1,80,000 | Rs 3,00,000 | Rs 40,000 |
| Threshold | Rs 50,000, exceeded | Rs 50,000, exceeded | Nil |
| Rate | 10% | 2% | 10% |
| Tax deducted | 1,80,000 x 10% = Rs 18,000 | 3,00,000 x 2% = Rs 6,000 | 40,000 x 10% = Rs 4,000 |
| Paid to payee | Rs 1,62,000 | Rs 2,94,000 | Rs 36,000 |
Case 3 shows the nil threshold. Tax applies even though Rs 40,000 is below Rs 50,000. Case 2 depends on the services being technical and not professional. If the payee were an engineer or a technical consultancy practice rendering professional services, the 10% rate would apply. Whether a given engagement is professional or technical is a judgment on the facts.
When the Rs 50,000 limit is crossed part way through the year. A company pays a lawyer Rs 30,000 in June and Rs 25,000 in September, with no other payments in 2026-27. The first payment is below the threshold, so nothing is deducted. The aggregate becomes Rs 55,000 in September, which exceeds Rs 50,000. Tax is deducted on the entire Rs 55,000 under section 393(1)(a): 55,000 x 10% = Rs 5,500, deducted from the September payment.
Real-life examples
Meena, salaried, hires a lawyer. Meena pays Rs 2,00,000 to an advocate for a dispute over her own flat. She is an individual and the payment is exclusively for her personal purposes. As an individual with no business turnover mentioned, she is most likely outside Sl. No. 6(iii), and Rs 2,00,000 is far below the Rs 50 lakh limit in Sl. No. 6(ii). Even if she were a specified person, section 393(4), Table Sl. No. 9 exempts a payment made exclusively for personal purposes from 6(iii). She does not deduct tax.
Ravi, small trader, pays consultants. Ravi runs a trading business with turnover of Rs 70 lakh last year, below the Rs 1 crore business limit. He is an individual who is not a specified person, so his payments fall under Sl. No. 6(ii), which has a Rs 50 lakh threshold. In 2026-27 he pays Rs 12 lakh in professional fees in total. That is below Rs 50 lakh, so no deduction is required.
Dr. Sharma, doctor, pays an architect. Dr. Sharma's gross receipts from her practice last year were Rs 60 lakh, which exceeds the Rs 50 lakh limit for a profession. She is a specified person for 2026-27. When she pays an architect Rs 1,20,000 for clinic design, Sl. No. 6(iii) applies, at 10%: Rs 12,000 is deducted. Had the payment been wholly for her personal purposes, such as designing her home, Sl. No. 9 would exempt it.
Does this apply to payments to non-residents, and can a payee get a lower rate?
Section 393(1) applies only where the sum is credited or paid to a resident. Payments to non-residents are dealt with in section 393(2), which is outside this guide. The "sums under section 26(2)(h)" in row 6(iii) are amounts received under an agreement not to carry on a business or profession, or not to share know-how, patents, licences and similar rights, which is why a non-compete payment can attract the same Rs 50,000 threshold.
A payee whose total income justifies a lower deduction can apply to the Assessing Officer under section 395(1)(a). If a certificate is issued, the payer deducts tax at the certificate rate, or nothing, until its validity ends (section 395(1)(c)). Ask the professional for the certificate before the first payment, and keep a copy.
What if the professional does not give a PAN?
Section 397(2) requires the payee to furnish a valid PAN. If not, tax is deducted at the higher of the rate in the relevant provision, the rate or rates in force, or 20% (section 397(2)(b)(i)). In Case 1, with no PAN, the deduction would be 1,80,000 x 20% = Rs 36,000.
How and when is the tax deposited and reported?
| Specified person (Sl. No. 6(iii)) | Non-specified individual or HUF (Sl. No. 6(ii)) | |
|---|---|---|
| Deposit | On or before 7 days from the end of the month of deduction; 30 April for tax on amounts credited or paid in March (rule 218(2)) | Within 30 days from the end of the month of deduction (rule 218(3)(c)) |
| Form | Quarterly statement in Form No. 140 (rule 219(1)) | Challan-cum-statement in Form No. 141 (rule 218(3); rule 219(5)(c)) |
| TAN | Required | Not required (section 397(1)(c)(i)) |
The quarterly statement in Form 140 is due by 31 July, 31 October and 31 January for the quarters ending 30 June, 30 September and 31 December. The March quarter statement is due by 31 May of the following year (rule 219(4)). To estimate tax and interest on a late deposit, use the TDS calculator.
Quick reference
| Item | Position |
|---|---|
| Professional fees, specified person | 10% above Rs 50,000 |
| Technical fees (not professional), specified person | 2% above Rs 50,000 |
| Director's remuneration or fees | 10%, no threshold |
| Professional fees, non-specified individual or HUF | 2% above Rs 50 lakh |
| Personal-purpose payments by individual or HUF | No deduction under 6(iii) |
| No PAN | Higher of the normal rate and 20% |
| Deposit | 7th of next month; 30 April for March |
What are the common mistakes?
- Using 2% for all technical work. The 2% rate is for technical fees that are not professional services. Engineering and technical consultancy fall within professional services, which carry 10%.
- Deducting only on the excess over Rs 50,000. Once the aggregate crosses the limit, the whole amount is subject to tax.
- Missing director's fees. The threshold for director's remuneration or fees is nil.
- Testing the specified-person status on the wrong year. The turnover test uses the preceding tax year.
- Treating a personal payment as business. Check whether an individual's payment is exclusively for personal purposes before deducting.
- Missing the 30 April date. Tax on March payments is due on 30 April.
How do CA firms track this across clients?
The calculation is simple. The work is knowing which clients are specified persons this year, which professional payees cross the limit mid-year, and when each deposit and quarterly statement falls due. Finexo's practice management software tracks these deadlines across a client book and sends reminders. It does not compute TDS or file the forms for you. For another common row of the same Table, see our guide to TDS on rent under the Income Tax Act 2025.
Where this is in the Act
- Section 393(1), Table Sl. No. 6(ii) and 6(iii); section 393(1)(a) and (c)
- Section 393(4), Table Sl. No. 9: personal-purpose exemption
- Section 402(15), 402(28), 402(37): definitions; section 9(7)(b)
- Section 397(1)(c) and 397(2): TAN and PAN; section 395(1): lower-deduction certificate; section 26(2)(h): non-compete sums
- Rule 218(2), 218(3): deposit; rule 219(1), 219(4), 219(5): statements and due dates
This article explains the Income-tax Act, 2025 (as amended by the Finance Act, 2026) and the Income-tax Rules, 2026. It is general information, not tax advice. Confirm the position for a specific case with a qualified chartered accountant.
Frequently Asked Questions
What is the TDS rate on professional fees under the Income Tax Act 2025?
A specified person deducts 10% on fees for professional services under section 393(1), Table Sl. No. 6(iii), when payments exceed Rs 50,000. Fees for technical services that are not professional services attract 2%.
What is the TDS threshold for professional and technical fees?
Rs 50,000 under Sl. No. 6(iii) for professional fees, technical fees, royalty and section 26(2)(h) sums. For director's remuneration or fees the threshold is nil. For non-specified individuals and HUFs under Sl. No. 6(ii), the threshold is Rs 50 lakh.
Does an individual have to deduct TDS on a lawyer's or doctor's fees?
Not if the fees are paid exclusively for the individual's personal purposes (section 393(4), Table Sl. No. 9). Otherwise it depends on whether the individual is a specified person: Sl. No. 6(iii) applies to specified persons and Sl. No. 6(ii) to others.
Is TDS deducted on the full amount or only the excess over Rs 50,000?
On the entire amount. Section 393(1)(a) says tax is deducted on the entire amount where the amount or aggregate of amounts exceeds the threshold.
When must TDS on professional fees be deposited?
A specified person deposits by the 7th of the following month, or 30 April for March (rule 218(2)). A non-specified individual or HUF under Sl. No. 6(ii) deposits within 30 days from the end of the month with Form 141 (rule 218(3)).
Can a professional get TDS deducted at a lower rate?
Yes. The payee can apply to the Assessing Officer under section 395(1)(a). If a certificate is issued, the payer deducts at the certificate rate, or nothing, while it is valid (section 395(1)(c)).
What if the professional has no PAN?
Tax is deducted at the higher of the normal rate, the rate in force, or 20% (section 397(2)(b)(i)).