TDS RETURN Q1 FY.2020-21 Default in 194J
This query is : Resolved
31 July 2020
Sir
I have filed TDS Return for Q1 ended June 2020. I have paid TDS according to 194J Technical services at the rate of 2%.
Now there is a demand showing short deduction under 194J. The software is taking 194J at the rate of 10% only. Is there any updation of the same and I have selected only 194J. Is there any sub classification under 194J as A and B
Please resolve
I have filed TDS Return for Q1 ended June 2020. I have paid TDS according to 194J Technical services at the rate of 2%.
Now there is a demand showing short deduction under 194J. The software is taking 194J at the rate of 10% only. Is there any updation of the same and I have selected only 194J. Is there any sub classification under 194J as A and B
Please resolve
09 August 2020
Has the issue been resolved till now ?
10 August 2020
@ Asha kanta Sharma
No not yet resolved
No not yet resolved
28 July 2025
Yes, your observation is correct, and the issue relates to **Section 194J** and the **revised TDS rates applicable from FY 2020-21**. Here's a detailed explanation and solution:
---
### ✅ **Background: Section 194J – TDS Rates from FY 2020-21 (w\.e.f. 01.04.2020)**
The Finance Act 2020 introduced **two different rates** under Section 194J:
| Nature of Payment | TDS Rate |
| ------------------------------------------------------------- | -------- |
| Fees for professional services | 10% |
| Fees for technical services (not being professional services) | **2%** |
---
### 🔍 **Your Case:**
* You deducted TDS at **2%** on payments under **194J – Technical Services**, which is correct **as per law**.
* But the **RPU/FVU utility** or the TRACES system may be **treating all 194J entries as 10%**, causing a **short deduction default**.
---
### 🔧 **Solution / Resolution:**
1. ✅ **RPU Version Update:**
* Ensure you are using the **latest version** of **RPU (Return Preparation Utility)** and **FVU (File Validation Utility)**.
* The latest versions support the **bifurcation of 194J** into:
* **"194J(a)"** – Fees for Technical Services (TDS @ 2%)
* **"194J(b)"** – Other Professional Services (TDS @ 10%)
2. ✅ **Correct Code Selection in Return:**
* While preparing the TDS return, **select the correct sub-code** under **194J**:
* **“194J(a)”** for **Technical Services** (2%)
* **“194J(b)”** for **Professional Services / Royalty / Non-compete fees** (10%)
* This is critical. If you just select "194J" generically, the system defaults to 10%.
3. 🛠️ **Correction Statement Filing:**
* You need to file a **correction return**:
* Download **conso file** from TRACES
* Update the **section code** from “194J” to **“194J(a)”**
* Validate using FVU
* Upload corrected return
4. 💰 **Don't Pay the Demand Yet:**
* If you correct the return properly, the **short deduction demand will be removed**.
* Pay only if there was an actual short deduction (which seems not the case here).
---
### 📌 **Important Note:**
* This problem was **common in Q1 FY 2020-21**, especially if RPU v3.1 or older was used.
* The **CBDT and TRACES** later updated utilities to allow **correct classification under 194J**.
---
Let me know if you’d like help preparing the correction return or using the latest RPU/FVU versions.
---
### ✅ **Background: Section 194J – TDS Rates from FY 2020-21 (w\.e.f. 01.04.2020)**
The Finance Act 2020 introduced **two different rates** under Section 194J:
| Nature of Payment | TDS Rate |
| ------------------------------------------------------------- | -------- |
| Fees for professional services | 10% |
| Fees for technical services (not being professional services) | **2%** |
---
### 🔍 **Your Case:**
* You deducted TDS at **2%** on payments under **194J – Technical Services**, which is correct **as per law**.
* But the **RPU/FVU utility** or the TRACES system may be **treating all 194J entries as 10%**, causing a **short deduction default**.
---
### 🔧 **Solution / Resolution:**
1. ✅ **RPU Version Update:**
* Ensure you are using the **latest version** of **RPU (Return Preparation Utility)** and **FVU (File Validation Utility)**.
* The latest versions support the **bifurcation of 194J** into:
* **"194J(a)"** – Fees for Technical Services (TDS @ 2%)
* **"194J(b)"** – Other Professional Services (TDS @ 10%)
2. ✅ **Correct Code Selection in Return:**
* While preparing the TDS return, **select the correct sub-code** under **194J**:
* **“194J(a)”** for **Technical Services** (2%)
* **“194J(b)”** for **Professional Services / Royalty / Non-compete fees** (10%)
* This is critical. If you just select "194J" generically, the system defaults to 10%.
3. 🛠️ **Correction Statement Filing:**
* You need to file a **correction return**:
* Download **conso file** from TRACES
* Update the **section code** from “194J” to **“194J(a)”**
* Validate using FVU
* Upload corrected return
4. 💰 **Don't Pay the Demand Yet:**
* If you correct the return properly, the **short deduction demand will be removed**.
* Pay only if there was an actual short deduction (which seems not the case here).
---
### 📌 **Important Note:**
* This problem was **common in Q1 FY 2020-21**, especially if RPU v3.1 or older was used.
* The **CBDT and TRACES** later updated utilities to allow **correct classification under 194J**.
---
Let me know if you’d like help preparing the correction return or using the latest RPU/FVU versions.
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