What do you mean by Tax Collected at Source (TCS)?

In India, on the sale of certain items, a tax is collected by seller or company at prescribed rates from the payer or buyer of the specified category of items, called as Tax collected at source or TCS. The seller then transfers the tax collected from the purchaser to the government and issue a TCS certificate, for which the buyer of such goods will get credit. Tax collected at source (TCS) is the tax payable by a seller which he collects from the buyer at the time of sale.

Section 206C of the Income-tax act deals with the goods on which the seller has to collect tax from the purchaser.

Difference between Tax Deducted at Source and Tax Collected at Source

• Meaning

TDS implies the amount deducted from the recipient’s income in the form of tax.

TCS refers to an amount accumulated by the seller or company as tax.

• Nature

TDS is an expense.

TCS is an income.

• Imposition

TDS is imposed when specified expenses crosses the prescribed limit.

TCS is earned when sale of specified items is made.

• Responsible Person

TDS is deducted by payer or buyer.

TCS is collected by payee or seller.

• Occurrence

TDS is reflected by crediting the account of the payee or during payment, whichever is earlier.

TCS is reflected by debiting the account of the buyer or during receipt, whichever is earlier.

Tax deduction at source (TDS) occurs at the time of making payment, i.e. it is a deduction from the income of the recipient. On the other hand, Tax collection at source is absolutely opposite of TDS.