Income Tax: What is the difference between TCS and TDS? MintGenie explains

livemint.com:

Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) are both tax-related concepts in India, but they serve distinct roles in the tax collection process. Both TDS and TCS represent vital tax mechanisms in India, contributing to the effective collection of taxes by the government. Businesses and individuals who grasp and adhere to TDS and TCS regulations play a crucial role in facilitating punctual and precise tax payments.

TDS involves the payer of income deducting tax from the payment and forwarding it to the government on behalf of the payee. TDS applies to a wide range of payments, including salaries, interest, rent, and professional fees. TCS is a system in which the seller of goods or services collects tax from the buyer and remits it to the government on the buyer’s behalf.

TCS applies to a limited number of goods and services, such as precious metals, minerals, and e-commerce transactions. The primary distinction between TDS and TCS lies in the process: TDS is deducted from the payment, while TCS is collected from the buyer. Additionally, TDS has a broader scope, covering a wider range of payments compared to TCS.

TDS encompasses a broad spectrum of income types, including salaries, rent, professional fees, brokerage, commission, interest, dividend, lottery winnings, gambling winnings, prize money, insurance commission, and payments to contractors. On the other hand, TCS applies to a specific set of goods and services, such as timber, scrap, mineral ore, e-commerce goods, foreign currency sales, and payments for remittances. Here’s a more comprehensive breakdown of the income and transactions subject to TDS and TCS: Also, the list of goods and services subject to TCS may change over time.