TDS and reverse charge

Deduct TDS on supplier bills by section, record TDS your customers deducted, and book GST under reverse charge.

Three things change what you actually pay or receive on a GST document: TDS you deduct when paying a supplier, TDS your customer deducts when paying you, and GST you pay yourself under reverse charge. AxisIQ works each one out, posts it to the right account and keeps the amount due correct.

Before you start: TDS on bills and reverse charge are set on purchase bills, so you need the Purchase bill document type — see Supplier bills and payables. Recording a customer's TDS needs Issue documents under Invoices & quotes.

AxisIQ applies the rates and thresholds you set. It does not decide whether TDS applies to a supplier — check with your tax adviser.

The TDS table

Invoice settings → Tax rates has a TDS on supplier bills card. It starts with the rates and thresholds for FY 2026-27 ("preset for FY 2026-27 — check them each year"):

If you manage invoicing you can Add section or edit any row: Section, Rate %, Name, Deduct when one bill is over (₹) and …or the year's total is over (₹). Leave both thresholds blank to deduct on every bill. Once you edit the table, it is your workspace's own and no longer follows the presets.

Deduct TDS on a supplier bill

1. In a purchase bill draft, pick the section in TDS to deduct (or leave No TDS).
2. The totals card shows the deduction as you type: TDS u/s 194I (10%) and Payable to supplier.
3. Issue the bill.

TDS is worked out on the taxable value, never on the GST. For example, office rent of ₹60,000 + 18% GST (₹10,800) under 194I at 10%:

The year's total is counted per supplier and section from April to March. When a bill is below the threshold the totals card says so — "below the 194C threshold — no TDS on this bill (this year so far: ₹…)". When a bill takes the supplier over the yearly threshold, TDS is deducted on that bill; earlier bills are not re-worked.

On issue, the supplier is credited only the payable amount and the TDS goes to a TDS Payable account (created for you if you don't have one). Payments and the amount due on the bill already leave the TDS out.

Reverse charge on a purchase bill

For supplies where you, not the supplier, pay the GST — for example legal services from an advocate, or goods transport from a GTA — turn on Reverse charge in the bill draft: "The supplier charges no GST — you pay it to the government and claim it back as input credit."

The GST lines stay on the bill. The totals card shows GST on reverse charge (you pay it to the government), and the supplier is owed only the taxable value. On issue, input credit is booked as usual and the GST is credited to GST Payable (Reverse Charge) instead of the supplier. The bill counts in GSTR-3B table 3.1(d) and in input credit.

Record TDS your customer deducted

Customers who deduct TDS pay you less than the invoice. Record the TDS so the invoice settles.

1. Open the issued invoice. The TDS deducted by customer panel says "Customer paid less because they deducted TDS? Record it so the invoice settles."
2. Click Record TDS and fill in TDS amount, Deducted on, Section (194J by default) and, when you have it, the Form 16A certificate no..
3. Click Record TDS.

For example, an invoice of ₹1,18,000 (₹1,00,000 + ₹18,000 GST) to a client who deducts 10% under 194J: record the payment of ₹1,08,000 and TDS of ₹10,000, and the invoice is paid. The TDS is posted to TDS Receivable, to claim against Form 26AS. On the Overview, Collected counts only the money received, not the TDS.

To undo, click the × beside the entry and confirm Remove this TDS?. Its posting is reversed.

Registers

Accounting › Reports › TDS lists Deducted on bills and Deducted by customers for any dates, summed by month and section, with a CSV download. See Reports.

Not covered yet

• TCS, the higher rate for suppliers without a PAN, and 26Q or Form 16A files.
• Reverse charge on your own sales.

Related

• GST and tax on documents
• GST returns
• Supplier bills and payables