In both TDS and TCS arrangements, the tax is already deducted, along with the tax revenue. The government has implemented this system so that it continues to receive tax on time from the right income people and there is no possibility of tax evasion on such income. Both types of taxes (TDS and TCS) are levied only on payments above a certain level. For example, in GST, at present, there is a rule to deduct TDS or TCS on payment of 2.5 lakh rupees. To understand these two more thoroughly, the following paragraphs will be useful-
TDS has a full form – TDS refers to Tax Deducted at Source, which means ‘Tax Deducted at Source’. Source here means source of income. This source of income relates to the immediate income (SOURCE OF CURRENT INCOME) TDS is deducted by the person or institution who is paying. She later deposits this deducted TDS with the government.
For example, companies or institutions deduct the TDS from the salary of their employees and give the remaining money to them. If the salary is more than the basic income of tax exemption. Similarly, banks also deduct TDS on payment of interest in excess of a certain amount on one’s deposit. Similarly, there is a provision for deducting TDS on payment of more than a certain amount on purchase of immovable properties like house, land, shop.
Let us illustrate this with another example – let’s say a company is X. It takes an accounting service from a CA firm Y. He has to pay more than 2.5 lakh rupees to firm Y in return for service. In such a case, Company X will deduct 2 percent of that entire payment as TDS and keep it first. The remaining amount will be transferred to firm Y. In this way tax from the earnings of firm Y, already. At the time of payment itself. Will be cut.
The full form of TCS is “Tax Collected at Source”. It means to collect tax at source, or to collect tax at source. Like TDS here, source also means source of income. However, the source here is related to future potential earnings (SOURCE OF FUTURE INCOME). TCS is levied by the person who is taking payment – RECEIVER or PAYEE or SELLER. Actually, TCS is charged by adding some extra (in percentage) to the amount of that payment.
For example, a firm X sells gold bullion to another firm Y. In this deal, firm X, who sells Gold bullion, will have to take the price of that gold bullion from the buying firm Y, plus 2 percent tax separately .TCS. Will also charge. Just like the previous sales tax. Firm X will also deposit this collected tax with the government later.
TDS and TCS mentioned in return
As we have informed in the previous paragraphs whether TDS or TCS, both are submitted to the Income Tax Department in your name. The details of these are also recorded in your Form 26AS. Whose TDS or TCS is deducted, they also get a certificate or receipt. He can adjust it in his tax liability while filing the returns after the completion of the financial year. If his annual income is not so much that his tax should have been deducted, then he can also claim the refund to get back that much tax.
TCS and TDS in GST in India
TDS in GST is a buyer end activity: that is, to cut it and submit it to the government. Is responsible for. This buyer can be any person or company. Shopping can also be any form of service to an item or person. The buyer. The person who pays for any work or service or item for any of his work, and if he is worth shopping, tax deducting (if the amount of payment is more than 2.5 lakhs), then deduct tax on him. And then it has to be submitted to the government.
Who is required to deduct TDS?
Any government department or department, whether it is of Central Government or of State Government
Local authority: A locally established legal institution, or authority, such as a municipal corporation, university, college, etc.
Such person or institutions placed in the category of persons, who are notified by the Central or State Government on the approval of GST Council. Notified. Be done.
When is The Need to Deduct TDS in GST?
If a contract. But the price of the goods being supplied is more than 2.5 lakh rupees, then the supplier of that taxable goods or services has the right to deduct TDS. Such supplies exceeded Rs.2.5 lakhs. But TDS will be deducted at 2 percent of the total cost of goods.
This rate (2%), in fact, is also divided into two parts. This includes 1% Central GST (CSGT) and 1% State GST .SGST. Is charged as Thus it becomes 2 percent of the total. If the same TCS is charged as IGST in case of interstate trade, then 2% of the value of the entire consignment will be taken together.
It is also worth noting here that the person or institution, who is a TDS deductor, must be registered in GST. No matter how low or high his turnover is.