What is Section 194JA of Income Tax Act?
Section 194JA of the Income Tax Act mandates the deduction of tax at source (TDS) on fees for technical services provided to residents. The TDS rate under this section is 2%, and it applies to payments exceeding ₹30,000 in a financial year. This provision ensures that taxes are collected at the source of income, promoting compliance and transparency in financial transactions.
Applicability of Section 194JA of Income Tax Act
Section 194JA applies to anyone responsible for paying remuneration to directors, producers, or others involved in movie or television serial production. This includes producers, studios, broadcasters, distributors, and any entity engaged in this type of production. However, Section 194JA does not apply to payments made to actors, singers, musicians, or other performers not involved in the production process itself; these payments are covered under other sections of the Income Tax Act.
Rate of TDS under Section 194JA
Under Section 194JA, TDS is deducted at a rate of 10%. Therefore, anyone paying remuneration to a director, producer, or other individual involved in movie or television serial production must deduct 10% of the payment as tax and remit the remaining balance.
For example, if a producer pays a director ₹10 lakh, they must deduct ₹1 lakh (10% of ₹10 lakh) as TDS and pay the director ₹9 lakh.
However, no TDS is required if the total remuneration paid or payable during the financial year is less than ₹2.5 lakh. This exemption simplifies compliance for smaller producers or entities involved in movie or television serial production.
Due Dates for TDS Payment and Return Filing
TDS deducted under Section 194JA must be deposited by the 7th of the month following the deduction. For example, TDS deducted on June 15th is due by July 7th.
Additionally, a quarterly TDS return in Form 26Q must be filed by the following due dates:
- Q1 (April 1st to June 30th): July 31st
- Q2 (July 1st to September 30th): October 31st
- Q3 (October 1st to December 31st): January 31st
- Q4 (January 1st to March 31st): May 31st
Penalties for Non-Compliance under Section 194JA
Failure to comply with Section 194JA can result in penalties and interest charges under the Income Tax Act. Specifically, failing to deduct TDS or deposit the deducted TDS with the government by the due date may incur interest at a rate of 1.5% per month, or part of a month, for the duration of the delay.
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