TDS & TCS Returns

WHAT IS TDS/ TCS?

 Tax Deducted at Source (TDS) is income tax reduced/deducted  from the amount paid/payable at the time of making (or making provisions) of specified payments such as Interest, commission, brokerage, rent etc. The person making payment is required to deduct tax at source at prescribed rate.  Payer is known as deductor and the payee, who receives the net payment is called the deductee.

 TCS is Tax Collected at Source by seller from buyers at the time of selling some prescribed goods. Seller is called ‘collector’ and the buyer is called ‘collectee’.

The Government decides the TDS rates and thresholds for different types of goods and services for a particular financial year. 

The services include the following:

• Royalty
• Technical services
• Legal fees
• Consulting
• Rent, etc. 

Is TCS applicable if TDS is deducted?

During a transaction, if a buyer deducts TDS based on the provisions in the Income Tax Act, then, in this case, TCS is not applicable.  

What is TDS and TCS amount?

TDS amount is the tax deducted by an individual or company while making a payment. In comparison, TCS amount is the tax collected by the seller during the time of sale. 

Who will deduct TDS and TCS?

In the event of a transaction, the individual making the payment will deduct TDS. In contrast, the seller deducts the TCS during the sale of goods or services. 

What is the difference between TDS and TCS in GST?

TDS under GST is tax-deductible by a buyer of goods and services while making payments under a business contract. 

Whereas TCS under GST is the tax that an e-commerce business collects when merchants sell goods or services via its website, and the e-commerce platform takes payments on their behalf.   

As a tax-paying individual or business, you must file TDS returns on time in order to get the refunds. Conversely, if you collect TCS, you have to deposit it with the respective authorities within the stipulated time. 

FAQs

What happens when individuals fail to deposit or collect tax?

In case individuals fail to deposit or collect tax, they can face numerous legal consequences like interest, penalty, and imprisonment. It may include 3 to 7 years of imprisonment and a fine of up to Rs.1,00,000.

Can I collect TCS if TDS is already deducted?

No, according to Section 206 C (1H) of the Income Tax Act, you cannot collect TCS if a buyer is under the liability to pay TDS. Moreover, you also have to determine if the buyer deducts TDS when he/she makes the final payment.

What is the time limit for a TDS refund?

A TDS refund takes approximately 3 to 6 months in order to reflect in your bank account. In addition, it also depends on whether you have completed the e-verification. You can check the status of the TDS refund or Tax refund here.

What is TDS on salary?

TDS on salary is the tax deducted by the employer while depositing salary to an employee’s account.