TDS Calculation Wrong in Purchase Invoice BC 27 & 28 Version

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Posted on by Mansi Soni

10,171 Super User 2026 Season 1

Hello Community!

In Business Central versions 27 and 28, the system is currently calculating TDS based on the TDS Base Amount rather than the Total Invoice Amount. On the TDS rates page, the Threshold boolean is enabled. For the first invoice after crossing ₹50,00,000, the system correctly calculated the TDS value. However, for the subsequent invoice, the calculation is being performed on the TDS Base Amount, which is incorrect. The expectation is that TDS should be calculated on the Total Invoice Amount once the threshold has been crossed.

Has this issue already been reviewed? If so, what are the possible scenarios or workarounds to resolve it? Alternatively, can we expect Microsoft to address this in an upcoming minor update?

Thanks in Advance!

Regards,
Mansi Soni

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Dynamics 365 Business Central

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OussamaSabbouh 17,460 Super User 2026 Season 1 on at

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Hello Mansi,

For TDS 194Q, Microsoft’s documented behavior is that TDS is calculated only on the amount over and above the ₹50,00,000 threshold, not automatically on the full invoice value after the threshold is crossed; so if BC is using TDS Base Amount = invoice/cumulative amount exceeding threshold, that looks aligned with the current standard design. For normal TDS threshold scenarios, BC can calculate on cumulative amounts once the threshold is crossed, but 194Q is documented differently. I would first recheck the TDS Rates setup, especially any “calculate over and above threshold” style setup, then validate with a simple test vendor in sandbox. If your tax/legal team expects TDS on the full invoice after crossing the threshold, this is not something I’d treat as a setup fix only — better raise it with Microsoft Support with exact section, screenshots, and sample entries; only Microsoft can confirm if they plan to change it in a minor update.

Regards,
Oussama Sabbouh

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Mansi Soni 10,171 Super User 2026 Season 1 on at

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We have resolved it with the alternative way of updating TDS Base Amount by generating entry through 194Q Opening. By this way we have only updated TDS Base Amount and there is no impact on TDS Taxable Amount.

Regards,
Mansi Soni

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