Why did my client pay less than the invoice amount?

They deducted TDS and paid it to the government against your PAN. It is a prepayment of your income tax, which you claim as credit when you file your return, not a deduction from your fee.

Is TDS calculated on the invoice total or before GST?

On the value of the service before GST, provided GST is shown separately on the invoice. Deducting on the GST-inclusive total is a common client error.

What is the TDS rate under Section 194J?

10% for professional services and 2% for technical services, with a threshold of ₹50,000 per payer per financial year. Where no PAN is furnished the rate is 20%.

How do I claim TDS back?

Claim it as credit in your income tax return. Check Form 26AS or your Annual Information Statement first, because you can only claim what your client actually deposited against your PAN.

What if TDS is missing from my Form 26AS?

Your client has to correct their TDS return. Raise it with them as early as you can; corrections get harder as quarters close.

TDS on your invoices

Why your client pays less than you invoiced, the Section 194J rates and threshold, and how to reconcile the deduction against Form 26AS.

You invoice ₹1,00,000 and ₹90,000 arrives. Nothing has gone wrong. Your client has deducted tax at source and paid it to the government against your PAN, and you claim it back when you file your return. TDS is a prepayment of your income tax, not a fee.

The rates that apply to freelance work

Section	Applies to	Rate	Threshold
194J	Professional services: design, consulting, legal, medical, technical writing	10%	₹50,000 a year
194J	Technical services, and call-centre operators	2%	₹50,000 a year
194C	Contract work, including many production and fabrication arrangements	1% or 2%	Per contract limits
194J	Where no PAN is furnished	20%	₹50,000 a year

The threshold is per payer per financial year, not per invoice. Once your total billing to one client crosses it, TDS applies, and in practice most clients deduct from the first invoice rather than tracking the crossing point.

Deducted on the taxable value, not the total

This is the detail that causes most disputes. TDS is computed on the value of the service before GST, provided the GST is shown separately on the invoice. On ₹1,00,000 plus 18% GST, the client pays ₹1,18,000 less ₹10,000 of TDS, which is ₹1,08,000. Deducting 10% of ₹1,18,000 is a common client error, and it is easier to prevent with a clearly split invoice than to unwind afterwards.

Reconciling with Form 26AS

What your client deducted and what they actually deposited against your PAN are two different facts, and only the second one you can claim. Check Form 26AS, or the Annual Information Statement, before you file. If a deduction is missing, the fix is with your client, who has to correct their TDS return, and the sooner you notice the easier that is.

Retainer records the section and rate on each invoice and keeps a running TDS ledger across clients and quarters, so at filing time you have your own record to check the statement against rather than reconstructing it from bank credits.

Rates and thresholds change with each Finance Act. Confirm against the Income Tax Department, or your CA, before relying on a number here.

Frequently asked

Why did my client pay less than the invoice amount?: They deducted TDS and paid it to the government against your PAN. It is a prepayment of your income tax, which you claim as credit when you file your return, not a deduction from your fee.
Is TDS calculated on the invoice total or before GST?: On the value of the service before GST, provided GST is shown separately on the invoice. Deducting on the GST-inclusive total is a common client error.
What is the TDS rate under Section 194J?: 10% for professional services and 2% for technical services, with a threshold of ₹50,000 per payer per financial year. Where no PAN is furnished the rate is 20%.
How do I claim TDS back?: Claim it as credit in your income tax return. Check Form 26AS or your Annual Information Statement first, because you can only claim what your client actually deposited against your PAN.
What if TDS is missing from my Form 26AS?: Your client has to correct their TDS return. Raise it with them as early as you can; corrections get harder as quarters close.

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