Difference between TDS vs TCS, TDS and TCS are both types of tax collection mechanisms in India, but they differ in their nature, purpose, and applicability.
TDS
TDS (Tax Deducted at Source) is a tax collection mechanism that requires a person to deduct tax at a prescribed rate from the payment made to another person, and deposit the same with the government. It is applicable to various types of payments, such as salary, rent, professional fees, commission, and interest, among others. The objective of TDS is to ensure that the government receives tax revenue in advance, and also to ensure that taxpayers comply with their tax obligations.
TCS
TCS (Tax Collected at Source), on the other hand, is a tax collection mechanism that requires a seller to collect tax at a prescribed rate from the buyer at the time of sale of certain specified goods, such as minerals, timber, liquor, and tendu leaves, among others. The objective of TCS is to track the movement of goods, prevent tax evasion, and improve tax compliance.
In summary, the key differences between TDS and TCS are as follows:
- Nature: TDS is a deduction of tax at the source of income, while TCS is a collection of tax at the source of sale.
- Purpose: TDS is intended to ensure advance tax payment and compliance, while TCS is intended to prevent tax evasion and improve compliance.
- Applicability: TDS is applicable to various types of payments, while TCS is applicable to specified goods only.
- Rate: The rate of TDS and TCS is determine by the government and varies depending on the nature of the transaction.
For more information visit this site: https://www.incometax.gov.in
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