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Difference Between TDS and TCS?

Difference Between TDS and TCS

In this blog, We shall examine difference between TDS and TCS and identify their primary distinctions. Every government collects two types of taxes: direct taxes and indirect taxes. TDS and TCS are two types of indirect taxes that the government enforces. So this is the meaning of both taxes. TDS and TCS differ from one another.

Direct Taxes

Direct taxes are those paid by every person receiving income from the government.

Indirect Taxes

while indirect taxes are those produced by the seller to the government.

Meaning of TDS

TDS, which stands for tax deducted at source, is the most typical type of tax. For instance: If the type of payment is a professional fee and the prescribed rate is 10%, and A wants to pay B Rs. 50000 for a professional service, A will deduct 10% TDS, which equals 5000 rs. The government will directly deduct 5000 rupees as a form of TDS. B person will receive a net payment of 45000. The government uses TDS as a method to collect taxes in order to prevent tax theft, which is the most alarming aspect. Due to the non-applicability of TDS, they choose to deduct tax upfront rather than after. According to income tax, different payment categories have different TDS tax

Who are Deductor and Deductee

  • Deductor – A person (deductor) who owes a specific amount to another person (deductee) is required to withhold tax at source and repay it to the Central Government.
  • Deductee – Deductee is the term used to describe the individual who would get payment after specific deductions, such as interest, rent, etc.

After then, anyone can check what TDS was taken from their payment using Form 26AS. TDS will only function if a corporation or individual deducts TDS at the time of payment and returns the remaining funds to the recipient.

As evidence of the TDS charge, the recipient receives a TDS certificate from the deductor. Once the government has received the TDS fee from the deductor, form 26AS can be used to view the deposit amount for each individual deductee. It is additionally connected to the income tax division’s E-filing website. The deductee may then request a refund for the same financial year following that. This is only applicable if that person’s TOTAL TAX LIABILITY is less than TDS DEDUCTED; in that case, they may be allowed to deduct TDS return.

For example, if your total income is not subject to income tax but your bank has deducted tax on the interest on your fixed deposit, there are two ways you can return the tax:

1. The income tax department will automatically calculate the refund and credit it to your bank account after you disclose it on your IT return form.

2. The second option is to complete Form 15G and submit it to your bank, explaining that your salary is below the tax threshold and that no tax should be withheld as a result.

The most important item to remember is that TDS only applies above a threshold level. This distinct threshold level by the income tax department in different payments (i.e. salary, commission, professional fee, interest, etc.) is specified for these all if payment value is less than TDS will not be deducted.

For example, if the total interest earned on FD/FDs from a single bank is less than 10,000 in a calendar year, no TDS will be applied to that amount.

After that, the term “TAN” (Tax Deduction Account Number) appears. This is a 10-digit alphanumeric number for the deductor who is deducting TDS. According to Section 2023 of the Income Tax Act of 1961, each TDS return must have a TAN, or Tax Deduction Account Number, which is provided by the Income Tax Department.

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TAN application procedures – Filling out form 49B online is the only step in the straightforward TAN application process.

Principal Disparities Between TDS & TCS

1.Meaning The amount deducted from the recipient’s income in the form of TDS is known as TDS.Amount accumulated by the vendor is referred to as TAN by TCS.
2.NatureIt is expenseIt is income
3.Responsible persondeducts by payer or purchasercollect by payee or seller
4.Deducted fromAmount paid Amount received
5.Amounts TransactedCommissions, Brokerage, Wages, Interest, Professional Fees.Alcoholic Beverages, Minerals, Timber, Scrap Metal, Automobiles
6.Tax Collection Period or Deduction PeriodNo matter when payment becomes due, TDS is deducted at the time of payment.TCS is gathered by the seller at the point of sale.
7.When to deposit/collectThe due date for depositing TDS is the 7th of every month.The seventh of every month is the deadline for TDS deposits.
8.Collecting TaxesQuarterly
Form 26Q – Other than Salary
Form 27EQ
Principal Disparities Between TDS & TCS

You can watch this video to know deeply about TDS and TCS…


Understanding the distinction between TDS and TCS and ensuring that any TDS or TCS you have collected is paid to the government’s credit is crucial for maintaining the smooth operation of your firm. Additionally, be sure to submit your tax returns on time if taxes are withheld from your pay.

Disclaimer:  The materials and information on this website have been prepared or assembled by the Firm and are intended for informational purposes only. Some of the information may be dated and may not reflect the most current legal developments. Any opinions expressed on or through this website are the opinions of the individual author and may not reflect the opinions of the Firm or any other individual attorney.

By Anchal

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