Difference between Tax Deducted at Source (TDS) and Tax Collected at Source(TCS)

Last Updated On: Feb. 28, 2022, 11:18 a.m.
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TAX DEDUCTED AT SOURCE Vs TAX COLLECTED AT SOURCE 

SECTION 194Q:

Any person, being a buyer who is responsible for paying any sum to any resident (hereafter in this section referred to as the seller) for purchase of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, shall, at the time of credit of such sum to the account of the seller or at the time of payment thereof by any mode, whichever is earlier, deduct an amount equal to 0.1 percent. of such sum exceeding fifty lakh rupees as income tax.

Who is a Buyer?

“Buyer” means a person whose total sales, gross receipts, or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the purchase of goods is carried out, not being a person, as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.

 

Applicability of Section 194Q:

  •  Applicable on ‘BUYER’ ;
  • On Domestic Transactions i.e. Payment to resident-only;
  • On purchase of goods;
  • Aggregate Purchase value exceeding Rs. 50 Lac;
  • On amount exceeding Rs. 50 Lac;
  • Buyers means whose total receipt exceeds Rs. 10 Crore during the previous year;
  • TDS deductible even if amount transferred to suspense account;
  • In the previous year;
  • At the time of credit or payment;
  • TCS @ 0.1 % deductible.

 

 

SECTION 206C (1H):

Every person, being a seller, who receives any amount as consideration for the sale of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, other than the goods being exported out of India or goods covered in sub-section (1) or sub-section (1F) or sub-section (1G) shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 0.1 percent. of the sale consideration exceeding fifty lakh rupees as income tax.

 

Who is a Buyer?

“Buyer” means a person who purchases any goods but does not include, 

(A) the Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or

(B) a local authority as defined in the Explanation to clause (20) of section 10; or

(C) a person importing goods into India or any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.

 

 

Who is a Seller?

“Seller” means a person whose total sales, gross receipts, or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the sale of goods is carried out, not being a person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.

 

Applicability of section 206C (1H):

  • Applicable on ‘SELLER’ ;
  • On Sale of goods; 
  • Aggregate Sale value exceeding Rs. 50 Lac;
  • Seller means whose total receipt exceeds Rs. 10 Crore during the previous year; 
  • ‘Buyer’ does not include Central, State Government, Local Authority, Importer;
  • In the previous year; 
  • On Domestic Transaction i.e. Receipt from resident only;
  • Not applicable if TDS deducted under section (1) ; (1F) or (1G)
  • At the time of receipt of amount; 8. TCS @ 0.1 % deductible.
  • On amount exceeding Rs. 50 Lac;  

 

Consequences of Non-Compliances:

Fees for default in furnishing statement:

Quarterly Statement of TDS / TCS is required to be filed under sections 200 (3) and 206 C (3) of Income Tax Act, 1961 by the 15th after the end of the quarter. As per Section 234 E, a fee of Rupees Two Hundred per day during which the failure continues shall not exceed the amount tax deductible or collectible.

 

Interest for late payment of TDS / TCS:

As per section 206 C (7), interest @ 1% per month or part of the month is required to be paid along with TCS from the date on which such tax was collectible to the date on which the tax was actually paid.

As per section 201 (1A), interest on late payment of TDS is as follows: –

  • @1% for the month or part of a month on tax from the date when it was deductible to the actual date of deduction.
  • @1.5%  for the month or part of a month on tax from the date when it was deducted to the actual date of payment to the Government.

 

Penalty for failure to deduct/collect:

TDS / TCS: As per section 271C, if a person fails to deduct TDS then such person shall be liable to pay by way of penalty a sum equal to the amount of tax which such person failed to deduct. As per section 271CA, if a person fails to collect TCS then such person shall be liable to pay by way of penalty a sum equal to the amount of tax which such person failed to collect.

 

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