TDS on translation services, Income Tax

[Ramanathan Seshan]

Dear Experts,

I would like to know whether TDS need to be deducted under section 194J or 194C on the amount paid to language translators in the following two situations -
a. Separate contract with each individual translator specifying the rate for each word translated? b. Hire the service from a translating company which provide the said service?

Will the translation fall within the definition of fee for technical service as defined in explanation 2 to section 9(1)(vii)?

If yes, is there any case law or circular or notification to this effect?

Regards,

S Ram
 

Posts / Replies

[YAGAY andSUN]

Great question — this is a classic TDS classification issue involving the grey zone between Section 194C (contractual payments) and Section 194J (professional or technical services), especially for language translation services.

Let’s break this down step by step:

🔍 1. Is TDS applicable on payments to language translators?

Yes, TDS is applicable, but the correct section — 194C or 194J — depends on who is providing the service and the nature of the work.

🧾 Scenario-wise Analysis:

a. Individual translators engaged under specific word-rate contracts

• This is more like a work-for-hire/contractual assignment.
• The translator typically follows instructions, and the job is not of a professional advisory nature, nor does it involve technical services.

✅ TDS Section: Section 194C (TDS on contracts)

• Rate of TDS:
  • 1% if individual/HUF
  • 2% if other (firm/company)

📌 Why not 194J? Because the translation does not require professional qualifications or technical knowledge as per the meaning under Section 194J. Courts have held this kind of task to be routine execution of work — not consultancy or technical service.

b. Translation company (agency) engaged

• This is again a contract for work, even though managed by a company.
• The individual translators may work under the agency, but your contract is with the company, not with professionals individually.

✅ TDS Section: Section 194C

• Rate of TDS: 2% (as it’s a company/firm)

✅ Summary Table:

Scenario	Nature of Service	Applicable Section	TDS Rate
Individual translators hired word-wise	Contractual work	Section 194C	1% (individual)
Agency/company engaged for translation services	Works contract (not professional)	Section 194C	2% (firm/company)

 

🚫 Does translation fall under "Fee for Technical Services" – Explanation 2 to Sec 9(1)(vii)?

No, translation work does not qualify as a "fee for technical services" unless specialized technical knowledge is applied (e.g., medical/legal/scientific translation involving interpretation).

📜 Explanation 2 to Section 9(1)(vii) defines:

"Fee for technical services means consideration for rendering managerial, technical or consultancy services..."

Translation is generally not managerial, not consultancy, and unless it involves deep domain-specific expertise (e.g., legal/technical translations with opinion), it's not technical.

⚖️ Supporting Case Law & Circulars:

✅ CBDT Circular No. 715 dated 8.8.1995 – Q.No. 2:

Translation work is to be covered under Section 194C, not 194J, unless professional skill is involved.

✅ Delhi ITAT – ACIT v. Shri Rakesh Kumar (ITA No. 2005/Del/2010):

Payments to translators, even if per-word or per-page, are contractual in nature and do not attract Section 194J.

✅ Bangalore ITAT – Manipal Media Network Ltd v. ITO [2012] 23 taxmann.com 321 (Bang.):

Payments made for translation and typing services are works contracts, and Section 194C applies.

✅ Final Conclusion:

Question	Answer
Is TDS applicable on translator payments?	✅ Yes
Individual translators (word-rate)?	🔹 Section 194C – 1% (contractual)
Translation company engaged?	🔹 Section 194C – 2%
Does this fall under “technical services”?	❌ Generally, No
Any CBDT/case law support?	✅ CBDT Circular 715, Delhi ITAT, Bangalore ITAT rulings

 Disclaimer: This discussion is not a Legal Opinion.