January 25, 2023
Shreeja Ray

Difference between TDS & TCS under GST

Income tax, direct taxes, and indirect taxes are all types of taxes that the government collects. Direct taxes are paid to the government by the person receiving the income. Indirect taxes, on the other hand, must be deposited with the government by the seller.

Government-imposed indirect taxes include Tax Deducted at Source (TDS) and Tax Collected at Source (TCS). These words may be used interchangeably by some. However, TDS and TCS differ in the following ways.

What is TDS?

A sort of indirect tax known as tax deducted at source, or TDS, sees revenue immediately collected at the point when the recipient's income is received. Pay as you go and collect when it's due are concepts used by TDS.

Any payment covered by TDS must be made after a particular percentage has been deducted, according the Income Tax Act. According to Section 194Q, a business or an individual is required to deduct tax at the source when making payments for goods and services totaling more than $50,000. This can cover costs for things like housing, technological support, and legal fees.

What is TCS?

The tax on goods that is imposed by the sellers and collected from the purchasers at the point of sale is known as "Tax Collected at Source," or TCS. This tax collected is subsequently transferred from the vendor to the government.

Section 206C of the Income Tax Act, 1961 lists the things that are subject to TCS. Some of these goods include timber wood, liquor, minerals like lignite and coal, parking lots, toll plazas etc. TCS is only allowed to sell items up to a maximum of Rs. 50 lacs.

Difference Between TDS and TCS

The site of origin of the payment is where TDS and TCS are assessed. However, there are a few key characteristics that set the two tax systems apart:


Any person or business making a payment must deduct tax from it at the source if the amount exceeds a set limit. TCS, on the other hand, refers to the tax that the seller collects from the buyer at the time of the transaction.

Amounts Transacted

TDS is imposed on the sale of goods such as lumber, minerals, liquor, toll plazas, and expenses such as interest, salaries, brokerage, commission, and rent.


TDS is levied on the purchase of goods under Section 194Q if the purchase price exceeds Rs. 50 lacs. TCS is applicable on the sale of goods if the price exceeds Rs. 50 lacs in accordance with Section 206C (1H).


For purchases of goods and services, the tax deduction rate for TDS is 0.1% of the amount exceeding Rs. 50 lacs. For the sale of products, the tax collection rate for TCS is 0.1% of the selling amount over Rs. 50 lacs.

Date and Time of Collection

TCS is gathered by the seller at the moment of sale, whereas TDS is subtracted when a payment is made.

Person in Charge

TCS is collected by the person or business selling the products, whereas TDS is deducted by the person or business making a payment.

Due Dates

The seventh of every month is the deadline for TDS deposits. TCS, on the other hand, is put to the government's credit within ten days at the end of the month.


1. If no TDS was taken during the tax period, do I still need to file GSTR 7?

In this situation, filing a nil return is not required.

2. Should I still submit GSTR 8 even if no tax was gathered during the tax period?

GSTR 8 filing is not required for each tax period. The GSTR 8 form must be submitted by every ECO (electronic Commerce Operator) for the tax period in which TCS 3 was collected.

3.What occurs in the event that the deductor fails to provide the TDS certificate?

The deductor is responsible for paying the stipulated late charge if the certificate of deduction and remittance is not provided within 5 days of the remittance.

4. What occurs if the deductor fails to submit the TDS?

The deductor is responsible for paying criminal interest under Section 50 at a rate of 18% per annum if the TDS amount was not remitted to the government within the allotted time.

5.Can the deductor or deductee request a refund for excessive TDS deductions?

A reimbursement for an excessive or incorrect deduction may be requested by either the deductor or the deductee. Refund-related requirements from section 54 will be in effect. The deducted amount, however, cannot be reimbursed if it has already been credited to the supplier's electronic cash ledger.

6. Is the supplier eligible to receive TCS Credits Collected by the E-Commerce Operator?

In his electronic cash ledger, the supplier may, in fact, claim the credit of the TCS amount. The monthly statement submitted by ECO should include this sum.


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