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Tax guide
Many Indian clients deduct TDS when they pay a freelancer. Here is how 194J (section 393 of the Income-tax Act, 2025) works in FY 2026-27 (AY 2027-28, 1 April 2026 to 31 March 2027), what the rate is, and how you claim the credit.
TDS (tax deducted at source) means your client deducts part of your fee and pays it to the government for you. If you invoice ₹1,00,000 and 10% is deducted, you receive ₹90,000 and ₹10,000 goes to your tax account. It is not an extra tax: it is an advance on the tax you owe for the year.
Figures reported for FY 2026-27 (AY 2027-28, 1 April 2026 to 31 March 2027). The Income-tax Act, 2025 moved these payments into the table of section 393. We use the old name so you can find it, and the new number next to it.
| Old section | Payment | Reported rate | Threshold |
|---|---|---|---|
| 194J (section 393) | Professional fees | 10% | ₹50,000 a year per payer |
| 194J (section 393) | Technical services and call centres | 2% | Ask the payer, our sources give it only for professional fees |
| 194J (section 393) | Director fees | 10% | No threshold |
| 194C (section 393) | Contracts | 1% for individuals and HUFs, 2% for others | ₹30,000 per payment or ₹1 lakh a year |
| 194M (section 393) | Payments by individuals and HUFs not under audit | 2% | Sources conflict, check before relying on it |
Whether your payment counts as a technical service (2%) or as a professional fee (10%) depends on the nature of the work. Sources do not settle this for developers and consultants. Ask your client how they classify the payment, and check with a chartered accountant.
If you use 44ADA (section 58 of the Income-tax Act, 2025), TDS still applies when a client deducts it. It reduces what you still have to pay. Our freelance tax calculator helps you see the balance.
Estimate your tax after TDS See freelance jobs, free with an accountValid for FY 2026-27 (AY 2027-28, 1 April 2026 to 31 March 2027), checked on 9 November 2026. General information only, not tax or legal advice. These figures come from secondary sources such as ClearTax, Taxguru and Business Today: official pages could not be opened when we checked. Confirm your situation with a chartered accountant (CA) before you act.
Sources: Taxguru on TDS rates under the 2025 Act, BankBazaar TDS rates chart.
What is TDS under section 194J?
TDS is tax deducted at source. Under 194J (now in the table of section 393 of the Income-tax Act, 2025), a client paying you professional fees above the threshold deducts tax and sends it to the government on your behalf. You receive the amount after deduction.
What is the 194J TDS rate?
Reported rates for FY 2026-27 are 10% on professional fees and 2% on technical services and call centres. The threshold reported for professional fees is ₹50,000 a year per payer.
Is my freelance work 2% or 10%?
For a developer or consultant, it depends on whether the work counts as technical services or professional services. Sources do not settle it. Ask your client how they classify the payment and check with a chartered accountant.
Is TDS my final tax?
No. TDS is an advance on your tax. You work out your actual tax when you file your return and claim the TDS as a credit. If too much was deducted, you claim the difference as a refund.
Do the 194J and 194C numbers still apply?
The Income-tax Act, 2025 moved non-salary TDS to a table in section 393. Sources differ on whether the old numbers are still used in filings, so we write 194J (section 393). Check the current practice with your accountant.
Does TDS change how much tax I owe?
No. It changes when you pay, not the final amount. Our freelance tax calculator shows the balance left after TDS already deducted.
