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?

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.