Based upon which factors, the professional service can be differentiated from Technical Service

This query is : Resolved

Marimuthu (Querist)
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21 December 2023 Dear Experts,

01. A company remitted the amount of Rs 150000.00 to its service provider towards getting the SSL certificate (Secure Sockets Layer) for the period of one year.

02.At this scenario, whether the company does need to deduct the TDS either under Technical Fees @2 % or under professional service @ 10%.

03. Please clarify.

04.Further request to clarify that on based upon which factors, the professional service can be differentiated from Technical Service.

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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20 January 2024 It should come under 2% TDS

The main difference between technical service and professional service is the nature of the service provided. While professional services are based on the knowledge and expertise of the professional, technical services are based on technical expertise and skill. For example, a lawyer provides professional services, while an engineer provides technical services.

However, it is important to note that there can be instances where a service can be both technical and professional in nature. For example, an architect may provide technical services related to designing and engineering structures, but their services may also involve professional expertise in areas such as project management and cost estimation.

Under Section 194J, the TDS rate for fees paid for technical services is 2% of the payment, while the TDS rate for fees paid for professional services is 10% of the payment. This difference in TDS rates reflects the difference in the nature of the services provided.

However, determining whether a service is technical or professional can be challenging, as there are no clear guidelines or definitions provided by the Income Tax Act, 1961. In such cases, it is advisable to seek the opinion of a tax expert or consultant to avoid any potential tax liabilities.