-
November 22, 2022
All you need to know about the differences between TCS and TDS
Introduction
Income tax, direct taxes, and indirect taxes are all types of taxes that the government collects. Individuals who earn money are required to pay direct taxes to the government. However, it is the seller’s responsibility to deposit indirect taxes to the government. Two examples of indirect taxes imposed by the government are tax deducted at source (TDS) and tax collected at source (TCS). In this article we are are going to discuss the differences between TCS and TDS.
What is Tax Collected at Source (TCS)?
A seller from certain products may collect tax from the buyer in addition to the selling price and return it to the government on their behalf through Tax Collection at Source (TCS). The Income Tax Act states that any payment covered by TDS must be made after a certain percentage has been deducted. In a TDS transaction, the party deducting TDS is referred to as the deductor, and the party receiving the payment is referred to as the deductee. The recipient receives income with tax deducted directly, which charges income tax in advance rather than at a later.
What is Tax Deducted at Source (TDS)?
TDS is Tax Deducted at Source when a payment exceeds a government-determined threshold limit in any business or trade transaction. In general, TDS deductions are seen in salary payments. If the sum exceeds the threshold amount limit, TDS must be deducted when paying salaries to employees or paying for any services such as rent and construction. The TDS return must be filed with the Indian Income Tax Department. Failure to do so will result in fines and legal action being taken against the company’s owner. The TDS return must be submitted before the due date.
What is the difference between TCS and TDS?
|
no. |
particulars |
TCS |
TDS |
|
1. |
Meaning |
TCS is the tax that is gathered from the buyer at the time of the sale by the seller.
|
TDS is Tax Deducted at Source when a payment exceeds a government-determined threshold limit in any business or trade transaction. |
|
2. |
Amounts Transacted |
TCS is applicable on the sale of goods like timber, minerals, liquor, and toll plazas. |
TDS is imposed to the expenses like interest, salaries, brokerage, commission, rent, etc. |
|
3. |
Limits |
TDS is imposed by Section 194Q for purchases of items that cost more than Rs. 50 lacs. |
TCS is applied on the sale of goods if the price exceeds Rs. 50 lacs, under the Section 206C. |
|
4. |
Rates |
For purchases of goods and services, the tax deduction rate for TDS is 0.1% of the amount exceeding Rs. 50 lacs. |
The tax collection rate for TCS, or for the sale of products, is 0.1% of the selling amount over Rs. 50 lacs. |
|
5. |
Time of Deduction |
TDS is deducted when a payment is made. |
TCS is collected by the seller at the moment of transaction. |
|
6. |
Responsible Individual |
TDS is deducted by the person or business making a payment. |
TCS is collected by the person or business who sells the products |
|
7. |
Due Dates |
TDS must be deposited by the 7th of every month. |
The TCS is deposited to the credit of the government within ten days of the end of the month. |
Conclusion
Accounting for all of your taxes is important. If TDS has been deducted from your income, you may be eligible for a refund as long as your tax returns are submitted on time. In order to maintain the efficient and legal operation of your business, you should make it a priority to deposit any TCS that you have collected with the appropriate authorities. You can lower your taxes as an individual by using alternative strategies including tax deductions from investments in life insurance, mutual funds, and other tax-saving instruments.
TDS Returns Filing
Quickly file error-free TDS Returns with EbizFiling. This ensures seamless credit to the deductee.
About Ebizfiling -
Reviews
Aman Singh
08 Sep 2018Easy,fast and reliable service. Would love to highly recommend. Thanks a lot Ishani.
Devang Panchal
09 Sep 2018They helped me with my company’s name change and I was quite satisfied with the way they served me. I am surely coming back to you in case of any compliance problem.
Jayesh Tejani
28 Aug 2017It is a very professional set up and a really dedicated team. You guys did a great job for my Trademark application in a really short time. All the best to you and your team.
September 5, 2025 By Dhruvi
Income Tax Bill 2025: What’s Changed & What It Means for You? Introduction The Income Tax Bill 2025 is set to replace the decades-old 1961 Act, bringing a fresh and simplified framework for taxpayers in India. It introduces new tax […]
August 28, 2025 By Dhruvi
Income-Tax 1961 and 2025: New Income Tax Bill 2025 Highlights Side-by-Side Introduction The Income-Tax Act, 1961, guided India’s taxation for over 60 years but grew complex with time. To simplify and modernize the law, the government introduced the New Income […]
June 16, 2025 By Team Ebizfiling
How Should Freelancers in India File Taxes on Income Earned from Foreign Clients? Introduction Freelancers in India often work with clients based in other countries. While the payments come in foreign currency, the income is fully taxable under Indian tax […]