Tax Deducted at Source (TDS) is a system under the Income Tax Act, 1961, where tax is deducted at the source of income by the person making the payment. The deducted tax is then remitted to the government within the prescribed time. Here is all the important information related to TDS in India:

1. Applicability of TDS:

• TDS is applicable on various types of payments such as salary, rent, interest, commission, professional fees, contract payments, etc.

• TDS is applicable if the payment exceeds a certain threshold limit, which varies depending on the nature of the payment and the status of the recipient.

• TDS is applicable on both resident and non-resident taxpayers.

2. TDS sections and their applicability:

• There are various sections under the Income Tax Act that specify the rate and threshold for TDS. Some of the popular TDS sections are:

Section 192: TDS on salary payments

Section 194A: TDS on interest payments

Section 194C: TDS on contract payments

Section 194H: TDS on commission payments

Section 194I: TDS on rent payments

Section 194J: TDS on professional or technical service payments

3. Rate of TDS:

• The rate of TDS varies depending on the nature of the payment and the status of the recipient.

• The rate of TDS can range from 1% to 30%.

• In case the recipient does not provide their PAN number, the TDS rate can be as high as 20%.

4. TDS returns and due dates:

• The person responsible for deducting TDS is required to file a TDS return on a quarterly basis.

• The due dates for filing the TDS returns are as follows:

  • 31st July for the quarter ending on 30th June

  • 31st October for the quarter ending on 30th September

  • 31st January for the quarter ending on 31st December

  • 31st May for the quarter ending on 31st March

• The TDS return can be filed online on the TRACES (TDS Reconciliation Analysis and Correction Enabling System) website.

5. Penalty for non-compliance:

• Non-compliance with the TDS provisions can attract a penalty.

• Failure to deduct TDS can attract a penalty equal to the amount of tax that should have been deducted.

• Failure to remit TDS to the government can attract a penalty of 1.5% per month (or part of the month) on the amount of TDS that was not remitted.

6. TDS certificates:

• The person responsible for deducting TDS is required to issue a TDS certificate to the recipient of the payment.

• The TDS certificate contains details such as the amount of TDS deducted, the rate of TDS, and the PAN number of the person responsible for deducting TDS.

• The TDS certificate should be issued within a specified time limit, which varies depending on the nature of the payment.

Tax Collected at Source (TCS) is a system under the Income Tax Act, 1961, where tax is collected by the seller of certain goods from the buyer at the time of sale. The collected tax is then remitted to the government within the prescribed time. Here is all the important information related to TCS in India:

1. Applicability of TCS:

• TCS is applicable on the sale of certain goods such as alcoholic liquor, scrap, forest produce, minerals, etc.

• TCS is applicable if the sale exceeds a certain threshold limit, which varies depending on the nature of the goods and the status of the buyer.

2. TCS sections and their applicability:

• There are various sections under the Income Tax Act that specify the rate and threshold for TCS. Some of the popular TCS sections are:

Section 206C(1): TCS on the sale of alcoholic liquor for human consumption

Section 206C(1C): TCS on the sale of goods exceeding Rs. 50 lakh by an e-commerce operator

Section 206C(1G): TCS on the sale of goods exceeding Rs. 50 lakh by a seller whose turnover exceeds Rs. 10 crore

3. Rate of TCS:

• The rate of TCS varies depending on the nature of the goods and the status of the buyer.

• The rate of TCS can range from 0.1% to 5%.

4. TCS returns and due dates:

• The person responsible for collecting TCS is required to file a TCS return on a quarterly basis.

• The due dates for filing the TCS returns are the same as those for filing the TDS returns.

5. Penalty for non-compliance:

• Non-compliance with the TCS provisions can attract a penalty.

• Failure to collect TCS can attract a penalty equal to the amount of tax that should have been collected.

• Failure to remit TCS to the government can attract a penalty of 1.5% per month (or part of the month) on the amount of TCS that was not remitted.

6. TCS certificates:

• The person responsible for collecting TCS is required to issue a TCS certificate to the buyer of the goods.

• The TCS certificate contains details such as the amount of TCS collected, the rate of TCS, and the PAN number of the person responsible for collecting TCS.

• The TCS certificate should be issued within a specified time limit, which varies depending on the nature of the goods.