TCS and TDS are the two most commonly used words when we talk about taxation. In the tax domain, TDS stands for Tax Deducted at Source while TCS stands for Tax Collected at Source. While they seem almost the same, you might be wondering how they really differ. Also, when the government works on the self-assessment model of tax, why do TDS and TCS come into play?
TDS or Tax Deducted at Source may be a certain amount that is reduced on a particular payment like salary, commission, rent, interest, professional fee, etc. The person making the payment deducts the tax at the source, while the person making the payment/income is susceptible to paying the tax. It reduces evasion of tax as tax is going to be collected at the time of creating or crediting of payment
Tax collected at source (TCS) is the tax collected by the seller from the buyer on the sale so that it can be deposited with the tax authorities. Section 206C of the Income Tax Act governs the goods on which the seller has to collect tax from the buyers.
Each e-TDS/TCS return saved in CD/Pen Drive is to be submitted alongside a marked duplicate of Control Chart (Form 27A).
The tax collected at the source has to be deposited to the credit of the Central Government within seven days from the last day of the month in which the tax is collected.
For example: If a seller collects tax from a buyer in July 2022, he has to deposit such tax to the government on or before August 7, 2022.
Taxes shall be deducted at the rates laid out in the relevant provisions of the Act or within the First Schedule to the Finance Act. However, just in case of payments to non-resident individuals, the withholding rates specified under the Double Taxation Avoidance Agreement shall even be considered.
The tax deducted or collected at source shall be credited to the account of the Central Government within the following manner:
On salary, TDS is deducted and supports the tax slab applicable to you. Just in case of other income types, TDS rates are fixed and vary between 10% and 20%. Tax rates don't support your total income. Hence, in some cases you'll need to face TDS on your receipts. Separately, you want to calculate your annual income by adding up the income from all sources.
Your actual liabilities are going to be calculated on the entire taxable income. From the taxes computed, you'll claim credit for the TDS deducted on your various receipts. Deduct the tax deducted at source from your actual liabilities to understand the balance to be paid to the tax Department. You’ll even have a refund. In both the cases, you'll need to file a tax return and pay the tax due or claim a refund.
In order to file your TDS return, you would like to make sure of a couple of things. They’re as follows:
There are two sorts of TDS certificates, Form 16 and Form 16A. Under section 203 of the tax Act, 1961, a certificate must be provided to the deductor showing the quantity deducted as tax. The deductor is susceptible to providing this type to the deductor.
For salaried class: just in case of salaried employees, employers are required to supply them with Form 16 mentioning the quantity deducted as TDS. Form 16 contains many details like computation of tax, deduction of tax and payment of TDS. Employers will need to issue this type to their employees before May 31 of the subsequent fiscal year .
For non-salaried class: The deductor provides Form 16A to the deducted, and it contains all the small print regarding computation of tax, deduction and payment of TDS.
Some of the benefits of TDS are:
Every person liable to complete the TDS return filing process in India or the TCS return filing process in India must comply with all the provisions of TDS and TCS quarterly return filing as if he fails to file TDS return filing, he will be liable for a penalty of an amount have to give. Two hundred rupees for every day during which the default continues.
However, such fee cannot exceed the amount of TDS or TCS, as the case may be, for which the return is being furnished.
Therefore, taxpayers should ensure that they comply with all the provisions of TCS and TDS filing, such as furnishing Form 26Q TDS or Form 27Q TDS or Form 27EQ before applicable TDS and return filing of any TCS/TDS late. Last Dates of TCS Return to Avoid Penalty.
If you are wondering how to file a TDS return online or check TDS return filing status on the new income tax website, or if you are wondering about TCS on TDS Return Filing or TDS Return Filing Utility, or TCS Return Filing on Sale of Goods Want to know more, you can feel free to contact us at [email protected] We will be happy to assist you with your quarterly TDS return filing or GST TCS return filing and ensure that you do not miss any TDS quarterly return due dates or TCS payment and return filing due dates.