TCS & TDS

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Steps involved in TCS and TDS

  1. Fill the query form
  2. Provide the details required
  3. Preparation of return as per details provided
  4. Pre-filing verification
  5. Filing
  6. Acknowledgment in your inbox

Tax collected at source (TCS) is the tax payable by a seller which he collects from the buyer at the time of sale. Section 206C of the Income-tax act governs the goods on which the seller has to collect tax from the purchasers.

TDS stands for tax deducted at source. As per the Income Tax Act, any company or person making a payment is required to deduct tax at source if the payment exceeds certain threshold limits. TDS has to be deducted at the rates prescribed by the tax department.

Comparison of TDS and TCS

SubjectTDSTCS
DefinitionTax deducted on payments made by companies and individuals if the payment exceeds a threshold.Tax collected by a seller when selling goods to a buyer
What does it applyTDS deductions are made on payments including salary, rent, brokerage, professional fees, commission, interest etc.TCS deductions are made on the sale of goods such as scrap, timber, mineral wood, etc.
When does it applyOn payments above a specified limitOn the sale of certain goods (barring those used for manufacturing or production)
Who does it applyA person making a specified payment over and above a certain limit can deduct TDS according to the Income Tax Act 1961A person selling specific goods can collect TCS according to the Income Tax Act, 1961

 Different Items where TCS is applicable

Type of Goods
Liquor of alcoholic nature, made for consumption by humans
Timber wood under a forest leased
Tendu leaves
Timber wood by any other mode than forest leased
A forest produce other than Tendu leaves and timber
Scrap
Minerals like lignite, coal and iron ore
Bullion that exceeds over Rs. 2 lakhs/ Jewellery that exceeds over Rs. 5 lakhs
Purchase of Motor vehicle exceeding Rs. 10 Lakhs
Parking lot, Toll Plaza and Mining and Quarrying

Important Dates for TCS

SubjectDue Date
Date for TCS Payment7th of the following month of transection
Date for Quarterly Return15th of the month following the quarter

Important Dates for TDS

SubjectDue Date
Date for TDS payment7th of the following month of transection, For the month of March due date is 30th April.
Date for Quarterly Return31st of the month following the quarter

Non filing or late filing 

In case you have not deposited TDS/TCS by the correct date, the following penalties are applicable:

  • Late filing fee (if you do not file returns by the deadline)
  • Interest (if you do not deposit the TDS/TCS amount in time)
  • Penalty (if TDS/TCS is not filed within one year of the due date)

The Income Tax gives exemption from TDS in the following cases

  • For those who are not required to file the return of Income Under Section 139
  • For those assesse who give a declaration under Section 15G/15H at the beginning of the Financial year and verified by the deductor according to the rules laid down in this regard.
  • For those cases which are specifically exempted under sub section 3 of Section 194A of the Income  Tax Act.
  • For those cases who obtain certificate under Section 197 of the Income Tax Act from the assessing officer. This certificate instructs the deductor not to deduct tax on that specified assessee or to deduct tax at a lower rate or as per the conditions laid down in the certificate. The validity of the certificate will also be specified by the Income Tax Officer

The Income Tax gives exemption from TCS in the following cases

  1. When the eligible goods are used for personal consumption
  2. The purchaser buys the goods for manufacturing, processing or production and not for the purpose of trading of those goods.

Certificates

TDS / TCS certificates have to be issued by a person deducting TDS / TCS.

Contents of the Certificates

The TDS certificate to be issued by the deductor/collector contains the following details:

  • PAN of the deductee
  • TAN of the deductor/collector 
  • Challan Identification Number (CIN)
  • Receipt number of the relevant quarterly statement of TDS

TCS certificate contains the following details

  • Name of the Seller and Buyer
  • TAN of the seller
  • PAN of both seller and buyer
  • Total tax collected by the seller
  • Date of collection
  • The rate of Tax applied

Dates for TDS Certificates

SubjectDate for generating certificate
In case of SalaryBy 31st  day of May  of the financial year immediately  following the financial year  in which the income was paid  and tax deducted
In any other caseWithin 15 days from the due date  for furnishing the  statement /return of tax deducted at source

Dates for TCS Certificates

Quarter EndingDate for generating certificate
For the quarter ending on 30th June30th July
For the quarter ending on 30th September30th October
For the quarter ending on 31st December30th January
For the quarter ending on 31st March30th May

Details Required for TCS/TDS

  1. PAN Cards
  2. TAN No.
  3. Transection details
  4. Tax Challan (if paid)
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