TDS Deduction on a Service Invoice: How to Claim It Back

TDS deduction on a service invoice is why you invoiced ₹1,00,000 and only ₹90,000 hit your bank. The client did not short-pay you. A company paying for professional services has to hold back 10% once it pays you more than ₹50,000 in a year, and deposit it against your PAN. So that ₹10,000 is not gone, it is tax you have already paid. Whether it comes back as a refund depends entirely on what you do next: check the credit, keep the certificate, and claim it when you file.

You check the invoice again. The amount is right. You check the email thread. Nobody mentioned a discount. You are three messages into drafting something polite but pointed when the client's accounts person replies with two words that stop you: "TDS deducted."

Nobody warns you about this the first time. One month you are a freelancer with an invoice and a number, and the next month a company has quietly kept 10% of your money and you have no idea whether you just lost it.

You did not. But what happens next is entirely on you, and this is where a lot of Indian freelancers leave money behind.

What actually happened

Your client did not take that ₹10,000. They deposited it with the income tax department against your PAN.

A company paying you for professional services has to deduct 10% at source once it pays you more than ₹50,000 in a financial year. It is not optional for them and it is not a judgment on you. Technical services are deducted at 2%. If you had not given them your PAN, the rate would have been 20%, which is the real reason to always put your PAN on the invoice.

You will still hear this called TDS under section 194J. That was its number under the Income-tax Act, 1961. From 1 April 2026 the same rule sits in section 393 of the Income-tax Act, 2025, at the same 10% and the same ₹50,000 threshold. Nothing about what reaches your account changes. The number only matters when your client files, because the old one now trips a validation error at their end.

So the ₹10,000 is sitting with the government, tagged to you, as tax you have already paid. A clean 10 percent gap is the tell. When the shortfall is some other number, TDS is probably not the explanation, and a client paying less than the invoice has three other causes worth ruling out first.

That is the part that matters and the part nobody says out loud: TDS is not a cost. It is a prepayment. Whether it becomes a cost depends entirely on whether you claim it.

Where to check that it actually reached you

Do not take the client's word for it. Deducting the money and actually depositing it against your PAN are two different steps, and the second one does fail.

Log in to the income tax portal and open your annual tax statement. It is the consolidated view of what has been credited against your PAN: every deduction appears there with the deductor's name and the quarter, alongside the wider record the department keeps on you.

Do not go hunting for a particular form number. The department renamed and merged these statements for tax years from April 2026, so the name you find in an older guide may not be the name on your screen. Whatever the portal shows under your PAN is the one you want.

If the deduction is not there, message the client. Usually it is a timing issue, because TDS is filed quarterly and there is a lag of a few weeks after the quarter closes. Occasionally it is a wrong PAN. Very occasionally the deposit never happened, in which case you want to know in July rather than in March.

Ask your client for the deduction certificate as well. It confirms the amount and the quarter, and they are obliged to give it to you.

How to claim TDS back when you file

You claim it when you file your return.

Your total tax for the year is calculated on your total income. Everything already deducted at source is credited against that. If the TDS deducted across all your clients is more than you actually owe, the difference comes back as a refund.

For a lot of freelancers it does come back, and this is why. TDS is deducted at a flat 10% on the gross invoice amount, with no regard for your expenses, your deductions, or the fact that a chunk of your income may sit below the taxable slab. If you file under the presumptive scheme in Section 44ADA and declare 50% of your receipts as income, the tax you actually owe is often well below the 10% that has been taken across the year.

The deadline is 31 August 2026 if you file ITR-3 or ITR-4 without an audit, which covers most freelancers, a month later than the 31 July date that applies only to salaried ITR-1 and ITR-2 filers. Miss it and you can still file a belated return, but the refund is slower and a late fee and interest apply. The full walkthrough of forms and records is in ITR filing for freelancers in India.

The three things worth changing on your side

Put your PAN on every invoice. Not in a follow-up email. On the document, alongside everything else a freelance invoice needs. It is the difference between 10% and 20%.

Track gross, not net. If you record ₹90,000 because that is what hit your account, your books will not match your annual tax statement and reconciling in July becomes genuinely painful. Record the invoice at ₹1,00,000 and log the ₹10,000 as tax deducted. Same for chasing payments: a client who has paid ₹90,000 against a ₹1,00,000 invoice has paid in full, and it is worth knowing that before you send a reminder that makes you look like you are not tracking properly.

Ask about TDS before the first invoice, not after. One line during onboarding: "Will you be deducting TDS?" It costs nothing to ask and it means the first payment is not a surprise. It also tells you something useful about the client, because a company that deducts TDS properly is a company with a real finance process, which usually means they pay on time. Their payment terms are worth settling in the same conversation.

Since tracking gross is the part I kept getting wrong, it is the part I built into Riffit. You declare the deduction on the invoice itself: pick the kind of work, and the invoice shows both the deduction and the net your client should transfer, worked out on your fee before GST, which is the base they should be using. The UPI QR asks for that same net, so the QR and the printed line agree and nobody has to email you asking which number to pay. When the money lands you record what was actually withheld, which is not always what you declared, and the invoice closes as settled in full instead of sitting in your list looking short-paid. Your dashboard totals what was withheld across the financial year, which is the figure you want in front of you at filing time.

To be straight about what it is not doing: it applies a rate you pick and stores the figures you give it. It does not work out what you owe, it does not know whether a particular client is obliged to deduct anything, and it does not watch thresholds for you. Confirm the numbers with a CA.

None of this is a reason to price differently. TDS is not a discount and you should not gross up your rate to absorb it. It is your own tax, paid early, in instalments, by someone else. Whether it comes back to you depends on one thing: filing.

Worth saying plainly, since this is tax and not design: I am not a CA. If your income is substantial, or you have income from multiple sources, or something in your annual tax statement does not reconcile, pay an accountant a few thousand rupees to look at it once. It pays for itself the first time.

The first time it happens it feels like the client short-paid you. The tenth time you barely notice, because you invoiced the gross, logged the deduction, and know it is coming back in August. That shift takes one tax cycle. The freelancers who never make it are the ones who quietly write off 10% of their income every year and never find out they did not have to.

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