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[TDS] Managing TDS For Online Web Hosting Company

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Rajesh

Consultant

21 Points Posted on 14 January 2021

Hello,

I have a question, we are an OnLine web hosting company, our payment system is online using CCAvenue and Paypal

All new accounts are created and delivered via our client portal once payment is completed after client client registration. However recent times we also provided Bank Details for client to pay via NEFT / RTGS / Cheque Deposit. Few customers have deducted TDS while transferring payment to our Bank. While we requested them to complete full payment without which we cannot provide access to their control panel, to which they said their CA has told them to deduct TDS.

What to do about this as we cannot provide control panel access to clients as long as their payments are not completed. Is refusing the sale only option? But in that case we loose sales, please guide and help us.

Thanks

Replies (1)

Aashok Kumar Sharma

Finance/Compliance Consultant

67401 Points Posted on 13 August 2025

Many online service providers in India face the issue of clients deducting TDS on payments made for services like web hosting, citing Income Tax Act provisions. Clients are legally required to deduct 10% TDS before making payment, and asking them to pay full without deducting TDS may put them at compliance risk. To avoid this, providers should accept TDS-deducted payments gracefully, issue full invoices, recognize gross income, update payment terms/policy, track TDS payments using Form 26AS, and consider hiring a TDS consultant or using an automated invoicing system.