Payments received and TDS

Record every payment your clients make — link it to the invoice so it flips to paid automatically. Capture TDS your client deducted at source, reconcile against Form 26AS at year-end.

Every payment your clients make lands here. This article covers linking a payment to an invoice (so it flips to paid automatically) and capturing TDS your client deducted at source under Indian income-tax rules.

Record a payment

Tap the + button anywhere and pick Add payment, or press P from any screen. Pick the client. If the client has any unpaid invoices, the Against invoice (optional) picker lists them; picking one pre-fills the amount to the invoice total.

Amount — the gross amount your client owes for this invoice. Even if they only paid you the net after TDS, enter the gross here.
Currency — defaults to INR. Finocket converts to your home currency using the FX rate effective on the payment date.
Mode — Cash / UPI / Bank Transfer / Cheque.
Against invoice — pick to link to an unpaid invoice; leave on "Ad-hoc payment (not linked)" for retainers or advance payments.

How invoice status changes

When you save a payment linked to an invoice, the mark_invoice_paid trigger fires. It checks whether the sum of all payments for that invoice equals or exceeds the invoice total. If yes, the invoice status flips from sent to paid and your outstanding drops by the gross amount.

Ad-hoc payments (not linked to any invoice) count in your income and Day Book, but don't affect any invoice status.

TDS your client deducted

Every Indian consultant / freelancer runs into this: you raise a ₹1,00,000 invoice for professional services, your client pays you ₹90,000 net, and deposits the ₹10,000 as TDS with the government. Your income is still ₹1,00,000 — the ₹10,000 is a tax pre-payment you'll offset against your income tax at year-end.

On the Add Payment form, turn on Client deducted TDS? A section picker appears with every Indian TDS section:

194J — professional / technical fees. Default 10%.
194C — contract / subcontract. 2%.
194H — commission / brokerage. 5%.
194I — rent. 10%.
194A — interest (non-securities). 10%.
194O — e-commerce operator. 1%.
194Q — purchase of goods. 0.1%.
195 — payment to non-resident (varies; enter manually).
Other — anything else. Enter both the section and amount.

Finocket auto-suggests the standard rate. Save, and the payment row carries both the gross amount and the TDS amount. The invoice still marks fully paid; your outstanding drops by the gross ₹1,00,000; the TDS is captured for reconciliation.

Reconcile TDS at year-end

Open Reports → TDS summary and pick a financial year. Finocket groups every TDS-tagged payment by client × section and shows total gross, total TDS, and total net received.

Sign in to the Income Tax e-filing portal, download your Form 26AS, and compare. The total TDS Finocket shows should match what the government has credited to your PAN. If there's a mismatch, either your client hasn't filed their TDS return yet or you missed a payment entry — the report is your single point of truth.