GST and TDS on professional fees — what most software gets wrong

An architecture firm's invoice looks like a normal GST invoice at a glance — a taxable value, 18% GST, a total. The trouble starts once you look closer at how that invoice actually gets paid, and most billing software isn't built to handle the specifics of professional fee income.

TDS under Section 194J isn't optional to track

When a client (typically a company or another entity required to deduct tax at source) pays a professional fee, they're required to deduct TDS under Section 194J before releasing payment — commonly 10% on the fee component, though the applicable rate depends on the payee's status and the nature of the engagement. That means the amount you actually receive is less than the invoice total, and the difference isn't a discrepancy to chase down — it's a credit you claim against your own tax liability, provided the TDS is correctly reflected in your Form 26AS.

Generic invoicing software treats "amount received" as a single number you reconcile by hand. That works until you have a dozen clients deducting TDS at slightly different rates for different reasons, and reconciling which invoice's TDS credit actually landed in your 26AS becomes a monthly chore instead of something the system already knows.

GST on an advance isn't the same as GST on a final invoice

Architecture billing runs on phase-wise gates — a percentage of the fee against concept design, another against working drawings, and so on. When a client pays an advance ahead of a phase being complete, GST treatment on that advance differs from a straightforward invoice against completed, delivered work. Handle it wrong and you're either over-reporting liability early or under-reporting it later — neither is a place you want your books to be casually approximate.

Retention, debit notes, and scope changes

Real practice billing isn't just "invoice, get paid." A client may retain a percentage against a phase pending a deliverable review. A scope change mid-project might need a debit note against an earlier invoice rather than a fresh one. None of this is unusual — it's ordinary practice — but it's exactly the kind of detail that generic invoicing tools weren't built to represent cleanly, because they were built for a simpler transaction shape.

The fix isn't more spreadsheets

The actual fix isn't hiring more bookkeeping hours to reconcile TDS credits and GST timing by hand every month — it's software that understands professional-fee billing as its native model, not a generic invoice template stretched to almost fit. GST-compliant invoicing, TDS tracking, and the phase-wise billing structure underneath it all need to be the same system, referencing the same numbers, not three separate records someone has to keep aligned manually.

AORMS invoicing is built for exactly this — GST, TDS on professional fees, phase-wise billing gates, and reconciliation, native to the model. See how it works →