Glossary
Professional Fees
Meaning & Definition
Professional Fees refer to the amount paid to the professional/ expert for providing special services to the organization. It may involve payment made to the consultant, lawyer, accountant, doctor, architect, or any other independent professional. Professional fees are usually kept separate from the salary of the employees for the purpose of payroll and taxes.
Important Features of Professional Fees
- Ensure that the special services provided by professionals get paid appropriately.
- Supports organizations in properly managing their expenditure on consultants and professionals.
- Helps in proper accounting and financial recording.
- Helps the HR and Finance department in distinguishing between professional fees and employee salary.
Legal Considerations
Under Section 194J of the Income Tax Act, 1961, all payments towards professional/ technical services are subject to the deduction of Tax Deducted at Source (TDS) at the prescribed rate and terms.
