Clarification - 'Professional fees', 'Technical fees' & 'HonorariumFees', Income Tax

[DEV KUMAR KOTHARI]

'professional fees', 'technical fees' are different from honorarium. Fees is for services renderd on request and authorization by the client. It is decided mutually. Honorarium is not for any services renderd on request and authorization to do work or as per agreement. In case of work done on honorary basis, the work is generally doen voluntarily and not after negotiation or as per agreement. The honorarium is not mutually decided. Honorarium is not compulsory, it is optional and decided by the person who use the material or service provided by the other person. It is paid as an honor or regard and not as consideration for service or goods, provided voluntarily. Therefore, honorarium to say author of articles, is not in nature of porfessional or technical fees to which provisions of Section 194J apply. However, as usual tax authorites may raise dispute, demand that tax should have been deducted and deposited. If the requirement is not complied with honorairum may be disallowed u/s Sec 40(a)(ia). In case of regular authors, the A.O. can consider that there is some sort of understanding between the publisher, website and author/ contributor. Therefore, to play safe tax may be deducted from honorarium, wherever applicable, considering honorarium as fees for professional or technical services. The deduction may be without prejudice and to avoid disputes, so that the A.O. does not claim that in earelier years tax was not deducted and there was default. Readers and particularly authors who receive honorarium are requested to send their views with other supporting material.

Posts / Replies

[Surender Gupta]

Your views are laudable. I am in full agreement with your submission.