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Difference-between-TDS-and-TCS

 

Difference between TDS and TCS

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Difference between Tax Deducted at Source (TDS) and Tax Collection at Source (TCS)-

Description

Meaning

It means Tax Deducted at Source

It means Tax Collected at Source

Nature

It is nature of Expense

It is nature of Income

By whom it's deducted

TDS deducted by payer or buyer.

TCS collected by payee or seller.

Imposition

Specified expenses cross the threshold limit.

Sale of specified items is made.

To whom it's deducted

TDS to be deducted on payments including Salary, Contracts, Rent, Brokerage, Professional/Technical fees, Commission, Interest etc.
TCS to be deducted on sale of goods such as scrap, timber, mineral wood, tendu leaves etc. Section 206C(1H) has also introduced w.e.f 01.10.2020.

TDS should be deducted at the specified rates by the government.

TCS also should be deducted at the specified rates by the government.

It is to be deducted at the time of crediting the account of payee or make payment, whichever is earlier.

Tax payable is collected by the seller at the point of sale.

The deductor issues a TDS certificate (i.e. Form 16, 16A or 16B as the case may be) to the deductee.

Tax collector issues a TCS certificate (Form No. 27D) under section 206C to the Buyer/lessee/licensee)

Form of Return under TDS is 24Q/26Q/27Q as the case may be

Form of Return under TCS is 27EQ.

Example

M/s ABC & Co. makes payment to M/s Ram & Company (Chartered Accountant) for Rs. 100,000, if the rate of TDS is @ 5%. So, M/s. ABC & Co. has to pay Rs. 95,000 to from M/s Ram & Company (i.e. Rs. 1,00,000 after deducting TDS of Rs. 5,000), Deducted amount of TDS should be deposited with in the time framed or under proper section with the government account.

M/s ABC & Co. sold specified goods to Mr. Ram for Rs. 1,00,000, if the rate of TCS is @ 1%. So, M/s. ABC & Co. has to charged Rs. 1,01,000 from Mr. Ram (i.e. Rs. 1,00,000 on account of sale or Rs. 1,000 on account of TCS), Deducted amount of TCS should be deposited with in the time framed or under proper section with the government account.

 
See the related posts : TCS on Sale of Motor Vehicle
 



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