Diffrence between TDS and TCS: Practical Guide to Key Tax Differences

What is the meaning of Tax Collected at Source (TCS)?

TCS, or Tax Collected at Source, refers to the tax that sellers are mandated to collect from buyers during transactions involving specified goods, products, or services. This tax is then remitted directly to the government, ensuring transparency and accountability in commercial exchanges.

TCS Overview & General Information

Difference Between TDS and TCS

TCS (Tax Collected at Source) and TDS (Tax Deducted at Source) are very important parts of the Indian GST taxation system.

Parameters	TDS	TCS
Applicability	TDS is deducted from payments made for goods and services.	TCS is collected by the seller at the time of sale of specified goods.
Transactions Under	Interest, rent, salaries, etc.	Sale of goods from nature like, minerals, and forest produce, tendu leaves.
Due Dates	TDS must be deducted and paid quarterly by 7th of the next month. Except for March month it is the 30th of April of the next Financial Year.	With TCS monthly deposits must be made within seven days of the end of the month and quarterly filing.
Responsible Party	The payer making the payment is responsible for deducting TDS.	The seller is responsible for collecting TCS.
Limit	Applicable on transactions exceeding ₹50 lakhs under Section 194Q.	Levied on sales exceeding ₹50 lakhs under Section 206C (1H).

How to add TCS and TDS Taxes in Sleek Bill?

You can add TDS and TCS in sleek bill by following way

Step 1. – Login in Sleek Bill.
Step 2. – Click on invoices.
Step 3. – Click on new invoices.
Step 4. – Select client, products and other necessary details.
Step 5. – Click on +TDS/TCS
Step 6. – Select taxable value from dropdown list and enter tax name enter tax percentage
Step 7. – Preview and Save

Examples of TCS Application

TCS applies to various goods and services, including:

Items	Tax %
Alcoholic liquor for human consumption	1%
Scrap	1%
Minerals (coal, lignite, iron ore)	1%
Sale of motor vehicles exceeding ₹10 lakh	1%
Overseas tour program package	5%

TCS Under Income Tax Act & GST

TCS Under Section 206CA of Income Tax Act

Under Income Tax Act Section 206C, certain sellers are has to collect tax at the time of sale. The tax collected should be deposited with the government.

TCS Under GST

As per GST rules, e-commerce shop owners and operators have need to collect 1% TCS at the rate (0.5% CGST + 0.5% SGST) on payments received on behalf of electronic goods suppliers.

TCS on E-Commerce Transactions

E-commerce platforms like Mesho, Amazon and Flipkart collect TCS from sellers on their platform and send it with the government. The TCS collected can be credit claimed as an input tax credit (ITC) by sellers.

TCS Apply on Foreign Remittance & Forex Transactions

As day by day cross-border(import-export) transactions are increasing, hence Indian government has introduced TCS on foreign remittances to track money leaving India.

Applicable TCS on Foreign Remittances

Transaction Type	TCS Rate
Foreign tour packages	5%
Foreign remittance exceeding ₹7 lakh under LRS (excluding education/medical expenses)	5%
Foreign remittance for education (if education loan is availed)	0.5 %

TCS on Forex Transactions

If an individual makes a foreign exchange transaction exceeding ₹7 lakh in a financial year, TCS is applicable at 5% on the excess amount.

TCS Calculation & Refund

How is TCS Calculated?

Formula: TCS Amount = (Transaction Value × TCS Rate)/100

Is TCS Refundable?

Yes, if the total tax liability of the taxpayer is less than the TCS collected, the excess amount can be claimed as credit for refund while filing Income Tax Return (ITR).

Conclusion

Tax Collected at Source (TCS) is a very important part of India's tax system, make sure rules are follow and smooth revenue collection. Whether for business transactions, foreign remittances, or e-commerce sales, understanding TCS rules helps businesses and people avoid penalties and ensure proper tax filing.