For tax year 2026-27, a person required to deduct tax at source pays fees for professional services to a resident consultant. The payment exceeds the threshold, the consultant has furnished a valid…
Question and options
For tax year 2026-27, a person required to deduct tax at source pays fees for professional services to a resident consultant. The payment exceeds the threshold, the consultant has furnished a valid PAN and no lower-deduction certificate applies. At what rate must tax be deducted under section 393 of the Income-tax Act, 2025?
10%
5%
1%
2%
Answer and explanation
Section 393(1) of the Income-tax Act, 2025, which carries forward the old section 194J, requires deduction at 10% on fees for professional services paid to a resident. The 2% rate in the same entry applies to fees for technical services (other than professional services), and 1% or 2% are the rates for payments to contractors, so they do not apply to professional fees.
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