09 October 2013
TDS is actually a deduction while TCS is a collection of tax at source, meaning thereby, if X makes payment of Rs. 100 to Y and such payment is covered under the provisions of tds, then X will have to deduct tds say Rs. 10 and then will make payment of Rs. 90 to Y. While, if X sells goods worth Rs. 100 to Y and such goods are covered under the provisions of tcs, then X will collect Rs. 10 more from Y and hence the sale will be for Rs. 110. WHERE AS TDS is Tax Deducted at Source. Logically, it means that tax has to be deducted at source when income arises. TDS mainly applies on incomes like salary, rental income, professional fees, commission or brokerage, dividend, interest etc.
TDS has to be deducted in order to comply with provision of Income Tax Act. Non deduction or deducted but not paid or non payment within time by a person is treated as assessee in default and he is liable to face prosecution.
Also, non deduction of TDS would disallow the expense while computing income tax liability, i.e. tax will be levied on expense on which TDS is not done. In both the cases Rs. 10 will be deposited to govt. account. Hope it will clarify the provision a little clear.
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