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TDS & TCS

TDS (Tax Deducted at Source) is a tax mechanism where a percentage of income is deducted at the source and paid to the government, applicable to salaries, interest, and other income types. TCS (Tax Collected at Source) involves the seller collecting tax from the buyer at the time of sale for specific goods and depositing it with the government. Understanding both TDS and TCS is crucial for compliance and avoiding penalties in India.

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393 views15 pages

TDS & TCS

TDS (Tax Deducted at Source) is a tax mechanism where a percentage of income is deducted at the source and paid to the government, applicable to salaries, interest, and other income types. TCS (Tax Collected at Source) involves the seller collecting tax from the buyer at the time of sale for specific goods and depositing it with the government. Understanding both TDS and TCS is crucial for compliance and avoiding penalties in India.

Uploaded by

nbista154
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Diff erenc

e
between

TDS &
TDS (Tax Deducted at Source) is a tax
provision where a certain percentage of money
is deducted at the source of income, and paid
to the government. This is typically applied to
salaries, interest on bank deposits, dividends,
and other types of income.
The objective of tax deduction at source is to avoid the
time gap in deriving the income and payment of tax. This
ensures regular flow of tax to the government.
CONCEPT o f TDS
INVOICE
AMOUNT - TDS

Government
Goods/Services

Deductor Deducte
(Payer) e
(payee)
Common TDS Applicability: Compliance:
Salary Payer issues TDS
Interest on deposits (bank, post certifi cate (Form 16/16A)
offi ce) Rent (above to recipient Payer files
₹50,000/month) Commission quarterly TDS returns
Professional fees (Form 24Q, 26Q, 27Q)
Contractual Recipient claims credit in
payments
Dividend income tax return
distribution TDS Rates:
Salary: 10% to 30%
Interest on deposits:
10% Rent:10%
Commission: 5%
Professional fees: 10%
Dividend: 10%
TCS
Tax Collection at Source (TCS) is a
tax mechanism in India where a
seller collects tax from the buyer
of specified goods at the time of
sale and deposits it with the
government.
CONCEPT o f
TCS INVOIVE
AMOUNT + TCS

Government
GOODS
Buyer Seller
Key Features: Common TCS applicability:
Applicable on specific goods and Sale of scrap
services Seller collects tax from buyer Tenders
Tax rate varies (typically 0.5% to 5%) Lottery
Collected amount deposited with tickets
government Travel tickets (air, rail, etc.)
Buyer gets credit for tax paid
Sale of minerals
Sale of motor vehicles
Compliance:

Seller issues TCS certificate to


buyer Seller files quarterly TCS
returns
Buyer claims credit in income tax
return
KEY DIFFERENCE BETWEEN TDS &
TCS
Feature TDS TCS
Seller
Payer
Deductor/Collector
(employer,
bank)

Deduction/Collection At the time At the


Time of time of
payment Sale

Salary, rent, interest Goods from online


Applicabl
dividend, fees, platform, real
e
ACCOUNTING
ENTRIES
TDS
BOOKS OF SELLER
TCSA/c
Salary/Creditor Dr Cash/Bank/Debtor A/c Dr
BOOKS OFToDEDUCTOR/EMPLOYER
Cash/ A/c To Sales A/c
BANK
To TSD Payable A/c To TCS Payable
(Being tds deduct on payment) A/c
(Being tcs collected on sale)
BOOKS OF DEDUCTEE/EMPLOYEE
BOOKS OF BUYER
Cash/Bank A/c Dr
TDS Receivable A/c Purchase A/c Dr

Dr TCS Receivable A/c Dr


To Income/Debtor A/c To Cash/Bank/
(Being amount received after tds Creditor A/c
Conclusion:
Key Takeaways and Thanks

Understanding TDS and TCS is


essential for individuals and
businesses operating in India. By
adhering to regulations, you can ensure
smooth tax compliance and avoid
penalties.

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