TDS vs TCS
Difference between TDS and TCS: – You have landed at the right place to learn about TDS and TCS, especially what is the difference between TDS and TCS? A lot of people around, when saw us using such terms in business life. Ask about them freely what is TDS? Or what is meant by TCS. Let’s discuss both of them in detail below.
Difference between TDS and TCS
The main difference between TDS and TCS is that TDS is an indirect tax taken off from one’s income, whereas TCS is a type of indirect tax accumulated at the time when a sale is made at the point of sale for certain given items.
TDS (Tax Deducted at Source) is an indirect tax deducted from the income earned by the worker community. TDS is governed by the Indian Income Taxes Act of 1961. It is managed by the Central Board for Immediate Taxes (CBDT) and is part of the Office of Revenue managed by Indian Revenue Service (IRS). They have an increased relevance while conducting tax audits. The permissible TDS ratio typically varies from 1% to 10%.
TDS is payable from various sources. The primary objective of TDS is to ensure that tax is paid on incomes earned every month. TDS from salaries are among the highest contributions to the earnings of the government since this is collected throughout the year. TDS on dividends and TDS on immovable property are two other types of TDS.
TCS (Tax Collected at Source) is a form of tax collected by the retailer from the buyer at the point of sales of certain specified items. TCS is governed by the section 206C of Income Tax Act 61. TCS is charged by the seller from the customer at the time of purchase of the selected items at an approved rate.
Central governments, express governments, private sector firms, partnership businesses and cooperative societies are classified as sellers for tax accumulated at the source end. Goods on which TCS should be charged are given under the Income Duty Act, 1961. These products include alcoholic liquor for human consumption, toll sites, timber obtained from woods and minerals being coal or lignite. The seller has to acquire tax at specified rates from the payer, who have purchased these items. The seller also has to issue a TCS certificate to the buyer after collecting the tax, so that the buyer is aware of how much tax this individual has paid. Tax collected then should be submitted to the government by the seller.
Major Differences between Both TDS and TCS
- TDS is an indirect tax deducted from the incomes when the income is received.
- TCS is a form of income tax collected by the seller from the customer at the point of sale for certain specific items.
- TDS is taken off from the worker community.
- TCS is collected by the retailer.
- TDS is collected on income, dividends and steadfast property.
- TCS is gathered on Alcoholic liquor for human consumption, building, and toll plaza, and so forth.
Now after reading these major differences you should not have any issue between TDS and TCS. Both are business terms, which are used at the time of tax collection by the government or at the time of tax payment, you need to know them both very well as a business entrepreneur.