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TDS Calculation under Lower deduction certificate threshold

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Posted on by DP-21070618-0

Hi All,

In scenario, a vendor has submitted a Lower Deduction Certificate (With a specified turnover threshold), after which TDS should be deducted at the lower rate.

I have configured the certificate and threshold as follows:

Navigation:
Tax > Indirect taxes > Withholding tax > Withholding tax codes > Threshold references > Threshold designer > Concession certificate > Turnover threshold

Despite configuring the turnover threshold, when i test a scenario, the system does not calculate TDS based on the defined threshold.

It appears that the turnover threshold value is being ignored.

Please help me understand:

Is there any additional configuration required for the Turnover threshold to work?
Does the threshold work only under specific conditions or posting scenarios?
Am I misunderstanding the intended functionality or configuring it incorrectly?

Any guidance or insights would be greatly appreciated.

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Dynamics 365 Finance

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Giorgio Bonacorsi 3,553 Super User 2026 Season 2 on at

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Hello,

I'm not familiar with the Indian localization, but you can find here the official documentation: https://learn.microsoft.com/en-us/dynamics365/finance/localizations/india/apac-ind-tds-threshold-limit-and-exception-threshold-limit
From what I read, you have to flag overlook threshold.

Thank you,
Giorgio
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vishalsahijwani 392 on at

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Hi ,
There can be multiple reasons to why its not considering the threshold. Please check if checkbox “Apply threshold” is enabled for your respective TDS code. Also please check and remove if you have entered any rate from Withholding tax values form for your TDS Code.
After applying these above mentioned actions remove your threshold settings and try to apply a fresh threshold and check if its working.
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Deepak Agarwal 9,306 Super User 2026 Season 2 on at

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Based on the Microsoft documentation, the concession certificate is primarily used to apply a lower TDS rate during the certificate validity period. I couldn't find any indication that the turnover threshold automatically controls when the concessional rate starts or stops applying.
I would recommend verifying that the threshold definition is correctly assigned to the withholding tax code and that the correct withholding tax code/group is being used during posting.
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CA Neeraj Kumar 5,288 Super User 2026 Season 1 on at

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Hi,
The turnover limit that you have specified is just for information purpose. In case you want to define Rs. 500000, then the withholding tax designer needs to be defined in that way.
It needs to be defined per vendor-wise.
Regards,
Neeraj
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Aayush Tiwari 384 on at

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Hello @DP-21070618-0

As @CA Neeraj Mentioned that, Turnover threshold that you have marked in your screenshot is just a informative field under withholding tax concessions. For the threshold functionality for the cases of vendor's lower rate certificates to work seamlessly you have to design thresholds with Upper limit and new threshold line with lower limit amount field with amount as per vendor's lower rate certificate.

Regards
Aayush Tiwari