Freelancers & Creators
TDS on freelance payments and how to claim it back
Why clients deduct 10% or 1% from your invoices, how to check it was deposited, and how to recover it.
By Pooja Agarwal4 min read
You raise an invoice for ₹1,00,000 and ₹90,000 lands in your account. The missing ₹10,000 is not lost. It is tax deducted at source (TDS), paid to the government in your name, and it counts towards your income tax for the year. The trick is making sure it actually reaches your tax record and then claiming it properly. Figures below are for FY 2025-26 (AY 2026-27); section numbers are from the Income-tax Act, 1961, which the new Income-tax Act, 2025 renumbers from 1 April 2026.
Which section, which rate
The rate depends on what the client thinks they are paying for:
| Section | Typical use | Rate | Threshold per year |
|---|---|---|---|
| 194J | professional fees | 10% | ₹50,000 |
| 194J | technical services | 2% | ₹50,000 |
| 194C | contract work, including content production and advertising | 1% (individual), 2% (others) | ₹30,000 single, ₹1,00,000 total |
| 194H | commission | 2% | ₹20,000 |
The 194J threshold went up from ₹30,000 to ₹50,000 from FY 2025-26, so a client who pays you less than ₹50,000 in fees over the year should not deduct under that section. If you have not given the client your PAN, they must deduct at 20% instead, so always share it at onboarding.
Clients sometimes pick a section you disagree with. A developer may see 10% under 194J where 2% for technical services or 1% under 194C could arguably apply. You can raise it, but the classification is the payer’s call. Either way the money is credited to you, so the bigger issue is cash flow, not loss.
Check that it reached your PAN
Deduction is only half the job. The client must also deposit the tax and file a quarterly TDS return. Only then does it show up against your PAN in Form 26AS and in the Annual Information Statement (AIS) on the income-tax portal. Your return is matched against these records, so credit that is missing there is very hard to claim.
Each quarter, ask clients for Form 16A, the certificate for non-salary TDS, and compare it with 26AS. If an amount is missing or wrong, ask the client to correct their TDS return. A polite email in the same quarter works far better than a scramble in July.
Claiming it in your return
When you file, two things must line up:
- Income at gross. Show the full invoice value as your receipts, not the amount that hit your bank. If you show ₹90,000 but claim ₹10,000 of TDS, the numbers will not reconcile.
- Credit in the TDS schedule. Enter the TDS from 26AS against each deductor. The portal usually prefills this; check it rather than trusting it.
TDS credit is set against your total tax. If the TDS is more than your tax, the excess comes back as a refund once the return is processed. If it is less, you pay the balance, and if that balance is ₹10,000 or more for the year, advance tax rules apply during the year.
A worked example
Ananya, a content strategist, bills three Indian clients ₹3,00,000 each in FY 2025-26, all under 194J at 10%.
- Gross receipts: ₹9,00,000
- TDS deducted: 10% of ₹9,00,000 = ₹90,000
- Cash actually received: ₹8,10,000
Suppose her tax for the year, after working out her income and regime, comes to ₹35,000. Her TDS of ₹90,000 already covers it, so she is due a refund of ₹90,000 − ₹35,000 = ₹55,000. If she had not filed a return, that ₹55,000 would simply sit with the government. Many freelancers with modest incomes are in exactly this position, which is a strong reason to file even when you think you owe nothing.
Now flip it. If her tax were ₹1,10,000, she would owe ₹1,10,000 − ₹90,000 = ₹20,000. Because that is above ₹10,000, she should have paid it as advance tax in instalments, or face interest.
When TDS keeps eating your cash flow
If TDS regularly exceeds your likely tax, you can apply to the department for a lower or nil deduction certificate, which you then share with clients. It takes some paperwork and is worth it mainly when the gap is large and recurring; a CA can tell you whether your case qualifies.
Monthly habits
- Record every invoice at gross, with a separate column for TDS deducted.
- Each quarter, download 26AS and the AIS and tick off each client.
- Chase missing Form 16A or 26AS entries in the same quarter.
- Report gross receipts and claim matching credit when you file.
General information, not tax advice. Rules change, so check the latest rules or speak to a CA before you act.