What is difference between TDS and TCS?

TDS is the tax which is deducted on a payment made by a company to an individual, in case the amount exceeds a certain limit. TCS is the tax which is collected by sellers while selling something to buyers. TDS deduction is applicable on payments such as salaries, rent, professional fee, brokerage, commission, etc.

What is TDS and TCS tax?

Meaning. TDS is tax deducted at source by any company or individual making a payment if the payment exceeds the thresholds mentioned under respective sections. TCS is a tax collected by the seller, at the time of sale.

What is TCS tax with example?

Tax Collected at Source or TCS -Example

If a buyer is purchasing a car that costs Rs 10.01 lakhs then an amount of Rs 10,010 would be payable as TCS. This amount would need to be submitted to a particular branch of the bank which has been given permission by the government for receiving such payments.

Is TCS applicable if TDS is deducted?

As per this clause TCS is not required to be collected if buyer is liable to deduct TDS and deducted TDS.

What is TCS in income tax?

Tax Collected at Source (TCS) is a tax payable by a seller which he collects from the buyer at the time of sale of goods. Section 206 of the Income Tax Act mentions the list of goods on which the seller should collect tax from buyers.

Difference between TDS and TCS

How is TCS calculated?

TCS to be calculated on customer advance payment (through general journal, cash receipt journal)
  1. In this case TCS calculation will be as following: Component. Value. TCS Base Amount. 10000. TCS Amount. 99 (10000x1%/101)
  2. GL Entries will be as following: Particulars. Amount. Bank Account. 10000. TCS Payable Account. -99.

Who will charge TCS?

Tax collected at source (TCS) is the tax collected by the seller from the buyer on 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.

When TDS and TCS both are applicable?

50 Lakhs shall be computed from 01/04/2021 and TCS will be applicable as and when consideration received (including any previous dues / advance payment) crosses Rs. 50 Lakhs limit. TDS shall be deducted at the time of Credit to the account of seller or Payment, whichever is earlier.

What is new rule of TCS?

The government has introduced a new section 206C (1H) through Finance Act 2020 to extend the TCS provisions to the seller of goods. As per this provision, a seller whose turnover is above Rs 10 crore is required to collect tax, when he receives more than Rs 50 lakh from one buyer during a financial year.

Is TCS refundable?

Yes, TCS can be claimed as refund in bank account. In this scenario, in most of the cases, GST liability will always be lower than ITC because the GST on Commission / courier charges of Flipkart, Amazon etc. will be 18%, apart from ITC on purchases, expenses etc.

Is GST applicable on TCS?

The e-commerce operators liable to collect TCS have to compulsorily register under GST and there is no threshold limit exemption for it. Also, the sellers supplying goods through the online portal of e-commerce players are also mandatorily required to get registered under GST except for a few exceptions.

Who will deduct TDS?

Your employer deducts TDS at the income tax slab rates applicable. Banks deduct TDS @10%. Or they may deduct @ 20% if they do not have your PAN information. For most payments rates of TDS are set in the income tax act and TDS is deducted by the payer basis of these specified rates.

Is TDS calculated on GST?

For the purpose of deduction of TDS, the value of supply is to be taken as the amount excluding the tax indicated on the invoice. This means TDS shall not be deducted on the CGST, SGST or IGST component of invoice.

How many types of TDS is there?

TDS Certificates are of two types: Form 16 and Form 16A. Under Section 203 of the Income Tax Act, 1961, a certificate must be provided to the deductee showing the amount that has been subtracted as tax. The deductor is liable to provide this form to the deductee.

Can TDS be refunded?

You can claim a TDS refund at the time of filing your income tax returns (ITR) for the financial year. The TDS refund process is easy and does not take a long time, provided you have the necessary documents.

Who should deduct TCS?

What is Tax Collected at Source? TCS full form is Tax Collected at Source. This TCS tax is payable by the seller who collects in turn from the lessee or buyer. The goods are as specified under section 206C of the Income Tax Act, 1961.

Where is TCS applicable?


2020 Finance amendment act, 2020 brings amendment in section 206C(1H) OF Income tax, 1961, which imposes TCS on seller whose turnover is more than 10 crores in preceding financial year, is liable to collect TCS on the amount exceeding Rs. 50 Lakhs.

What is the turnover limit for TCS?

The Critical threshold criteria to be fulfilled or to be met is the turnover of Rs 10 crores in previous Financial year. In case , where Seller Turnover is less than Rs 10 Crore but receipts from sales of goods to buyers exceed Rs.

How is TDS calculated?

The employer deducts TDS on salary at the employee's 'average rate' of income tax. It will be computed as follows: Average Income tax rate = Income tax payable (calculated through slab rates) divided by employee's estimated income for the financial year.

What is TCS amount in invoice?

It is clarified under law that TCS on sales of goods will be collected when actual payment is received by the seller. However to collect TCS on sale of goods, the seller needs to raise sale invoice including the amount of TCS, account in the books as a TCS liability even in actual sense it is not payable.

What is TDS example?

Let us take an example of TDS assuming the nature of payment is professional fees on which the specified rate is 10%. XYZ Ltd makes a payment of Rs 50,000/- towards professional fees to Mr. ABC, then XYZ Ltd shall deduct a tax of Rs 5,000/- and make a net payment of Rs 45,000/- (50,000/- deducted by Rs 5,000/-) to Mr.

Why is TDS required?

The government uses TDS as a tool to collect tax in order to minimise tax evasion by taxing the income (partially or wholly) at the time it is generated rather than at a later date. TDS is applicable on various incomes such as salaries, interest received, commission received, dividends etc.
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