Section 194J - Difference between Technical Consultancy (Professional Service) and Technical Services

[DEEPAK J]

Dear All,

With reference to Section 194J, following definition are given in Income Tax Act for Professional Services and Technical Services:-

1) Meaning of 'Professional Services' :- Professional Services means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the CBDT for the purposes of section 44AA or of this section.

Other professions notified for the purposes of section 44AA are as follows:-

a) Profession of 'authorized representatives';

b) Profession of 'film artist'

c) Profession of 'company secretary'

2) Meaning of 'Fees for technical services':-Explanation (b) to section 194J provides that the term 'fees for technical services' shall have the same meaning as in Explanation 2 to section 9(1)(vii). The term 'fees for technical services' as defined in Explanation 2 to section 9(i)(vii) means any consideration (including any lump sum consideration) for rendering of any of the following services:-

(i) Managerial services;

(ii) Technical services;

(iii) Consultancy Services;

(iv) Provision of services of technical or other personnel.

Please share your advice/suggestion on difference between technical consultancy and technical service/consultancy services given in Section 194J of the Income Tax Act.

Also share if any definition is given for technical consultancy in Income Tax Act.

Thanks in advance.

Regards,

Deepak

[YAGAY andSUN]

Understanding the meaning of important terms –

1. Professional Services –

The term ‘Professional Services’ means services rendered by a person carrying on –

Legal;

Medical;

Engineering or architectural profession or accountancy profession;

Technical consultancy or interior decoration or advertising;

or such other profession as notified by Board for the purpose of section 44AA.

2. Fees for technical services –

The meaning of the term ‘Fees for technical services’ is the same as that provided in Explanation 2 to section 9 (1) (vii).

‘Fees for technical services’ means any consideration for the rendering of any managerial, consultancy, or technical services. It includes the provision of services of technical or other personnel. The term ‘Fees for technical services’ doesn’t include consideration for any construction, mining, assembly or like project undertaken by the recipient or consideration chargeable under the head ‘salary’.

AI Summary

Fees for technical services defined as consideration for managerial, technical or consultancy services, excluding construction project consideration. Section 194J treats Professional Services as services from recognised professions (legal, medical, engineering, architectural, accountancy, technical consultancy, etc.). Fees for Technical Services, as per Explanation 2 to section 9(1)(vii), mean consideration for managerial, technical or consultancy services and provision of technical or other personnel, and exclude consideration for construction/mining/assembly projects and amounts chargeable as salary.