Difference between TDS and TCS
Category: TDS/TCS, Posted on: 20/03/2023 , Posted By: Webtel
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TDS and TCS are advanced tax mechanisms introduced by the Government to avoid the concealment of income tax and delay in tax payment. Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) are often confused by individuals and used interchangeably.

This blog gives a clear difference between TDS and TCS with their respective rates of deduction/ collection and due dates.

What is TDS?

Tax Deducted at Source (TDS) is deducted on payments related to salary, commission, professional fees, interest, and so on, by the deductor.

TDS was introduced to collect tax at the very source of income. When a deductor makes payment of a specified nature to the deductee, tax shall be deducted at the source and remitted into the account of the Central Government.

To know more about TDS, visit: Tax Deducted At Source (TDS)

To know about the applicable TDS Deduction rate and threshold limit, visit: TDS Rates

What is 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.

TCS is the extra amount collected as tax collected by a seller of specified goods from the buyer at the time of sale over and above the sale amount and is remitted to the government account to curb tax evasion and money laundering.

What is the difference between TDS and TCS?

Now that we understand what TDS and TCS are, let us overview the difference between TDS and TCS.





Tax Deducted at Source (TDS) is the tax that will be deducted by the company or individual while making a payment. 

Tax Collected at Source (TCS) is collected at source by the seller at the time of sale. 


TDS is deducted by the person making the payments. 

TCS is collected by the person making the sale of specified goods. 


TDS is applicable on the payments like interest, rent, commission, professional services, or technical services. 

TCS is applicable to the sale of timber, tendu leaves, alcoholic liquor, forest products, and so on 

Threshold Limits 

Different sections have different threshold limits. For example, the 194 Dividend threshold limit is Rs.5000. 

Under TCS there are no such threshold limits but for the few sections, there are threshold limits defined as per the sections. 

Time of Deduction/Collection 

TDS is deducted whenever a payment is due or made, whichever is earlier. 

TCS is collected by the seller at the time of sale. 

Due Dates of Filing Return 

TDS Returns (Form 24Q,26Q, 27Q) are filed quarterly on the 31st after the end of the quarter.  

TCS return (Form 27EQ) is filed quarterly on the 15th after the end of the quarter. 

Also Read,

Practical Cases on TCS on Sale of Goods u/s 206C(1H)

What is TDS?

Top 5 TDS Software in India

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