Understanding TDS and TCS Return Filling


Welcome to our guide on Understanding TDS and TCS Return Filling. In this article, we’ll explain what TDS and TCS are, why they matter, how they work, and what happens if you don’t follow the rules. Whether you earn money or run a business, knowing about TDS and TCS helps you stay on the right side of the law with your taxes. Let’s dive in and learn together.

Understanding TDS (Tax Deducted at Source):

TDS is a method used by the government to collect taxes from different sources of income. Here is what you need to know:

  • TDS means taking some of your money for taxes before you get it.
  • It is applicable when you receive payments like salary, interest, rent, or fees
  • The person who pays you does TDS before giving you the rest.
  • It is important because it helps the government collect taxes properly.
  • It prevents people from avoiding paying the taxes they owe.
  • It makes sure everyone pays taxes and follows tax rules.

Understanding TCS (Tax Collected at Source):

TCS is another method used to collect taxes directly during transactions. Here is a closer look:

  • In TCS, the seller, known as the collector, collects tax from the buyer. The buyer is known as the collectee. It happens when some make a purchase.
  • This is added to the selling price of goods or services. It included goods like scrap, liquor, minerals, and mother vehicles.
  • It helps track transactions. It also gives more money to the government and stops illegal cash deals.

Differences Between TDS and TCS

AspectTDS (Tax Deducted at Source)TCS (Tax Collected at Source)
Deduction/CollectionDeducted by the payer (person making the payment).Collected by the seller (person receiving the payment).
PurposeEnsures tax withholding at the source itself.Directly collects tax during the sale transaction.
ApplicabilityVarious payments like salaries, interest, rent, etc.Specific goods and services like scrap, liquor, etc.
RatesMr. B sells a luxury car worth ₹20 lakhs. The car dealer collects TCS at the rate of 1% (as per the applicable TCS rate for motor vehicles). The car dealer (seller) collects TCS from the buyer during the sale transaction.Fixed rates for specific categories of goods/services.
ExampleMr. A receives a monthly salary of ₹50,000. His employer deducts TDS from his salary before payment. This deducted TDS amount is then deposited with the government. Here, TDS is deducted by the employer (payer) from the employee’s salary.Mr. B sells a luxury car worth ₹20 lakhs. The car dealer collects TCS at the rate of 1% (as per applicable TCS rate for motor vehicles). The car dealer (seller) collects TCS from the buyer during the sale transaction.

Consequences of Failing to Deposit TDS and TCS Return Filling

1. Facing TDS Non-Compliance


If you forget to deduct TDS and delay depositing it. Then you may get fined up to 1% per month on the rest amount. This fine starts from the due date until you finally deposit the TDS


You should deposit TDS before the due date otherwise you have to pay interest up to 1.5%. So it is essential to avoid any interest.


There are high possibilities to land you in the court also leading to jail time ranging from 3 months to 7 years. It is essential to avoid non-compliance.

2. Dealing with TCS Non-Compliance


Same as TDS, not collecting TCS or delaying its deposit can result in penalties. To avoid it, you should do it before the due date and also consider the transaction type.


Like TDS, a late TCS deposit leads you to get interest of up to 1% per month.

3. Why Timely Deposit Matters

  • Financial Impact: If you don’t follow the rules, you’ll end up paying more money because of fines and interest.
  • Legal Consequences: Not depositing on time could lead to legal trouble, making people think badly about how you pay taxes.
  • Business Continuity: Making sure you pay on time keeps your business going well. Make sure you’re doing everything right with taxes.

TDS Rate Chart for FY 2023-24

Here’s a detailed table showing the TDS rates for different types of transactions during the financial year 2023-24.

SectionTransaction TypeThreshold Limit (Rs)TDS Rate
192Salary PaymentBasic exemption limitApply slab rates
192AEPF Withdrawal₹50,00010% (if PAN is provided)
193Securities Interest₹2,50010%
194Dividend Distribution₹5,00010%
194ABank/Post Office Deposit Interest₹40,000 (Others), ₹50,000 (Senior Citizens)10%
194BLottery Winnings, etc.₹10,000 (Aggregate)30%
194BAOnline Gaming IncomeNil30%
194BBHorse Race Winnings₹10,00030%
194CContractor/Sub-contractor Payments₹30,000 (Single Transaction), ₹1,00,000 (Aggregate)1% (HUF/Individuals), 2% (Others)
194DInsurance Commission₹15,0005% (Individuals), 10% (Companies)
194DALife Insurance Maturity₹1,00,0005%
194ENon-resident Sports PaymentsNo specified limit20%
194EENational Savings Scheme Payment₹2,50010%
194FMutual Fund Unit RepurchaseNo specified limit20%
194GLottery Ticket Commission₹15,0005%
194IRent (Land/Building/Furniture)₹2,40,00010%
194IAImmovable Property Transfer (Excluding Agricultural Land)₹50,00,0001%
194IBRent Payment by Individual/HUF not Covered Under Section 194I₹50,000 per month5%
194ICJoint Development Agreement PaymentsNo specified limit10%
194JProfessional or Technical Services Fees₹30,00010%
194KMutual Fund Dividend IncomeNo specified limit10%
194LAImmovable Property Compensation₹2,50,00010%
194LBInfrastructure Bonds Interest (Non-Resident)No specified limit5%
194LBA(1)Business Trust Income DistributionNo specified limit10%
194LDRupee-denominated Bonds InterestNo specified limit5%
194MContract, Brokerage, etc. Payments₹50,00,0005%
194NBank Cash Withdrawal₹1,00,00,000 (Exceeding), ₹20,00,000 (Aggregate)2% (Exceeding), 2% (Aggregate 20 lakhs), 5% (Aggregate 1 crore)
194OE-commerce Payments₹5,00,0001% (with PAN), 5% (without PAN)
194PTDS for Senior CitizensBasic exemption limitApply normal tax rates
194QGoods Purchase Payments₹50,00,0000.10%
194RBenefit or Perquisite TDS₹20,00010%
194SVirtual Digital Asset TDS₹50,000 (Specified Persons), ₹10,000 (Others)1%
195NRI Investment IncomeNo specified limit20%
196BOffshore Fund IncomeNo specified limit10%
196CForeign Currency Bonds IncomeNo specified limit10%
196DFII Income (Except Dividend and Capital Gain)No specified limit20%
206ABNon-filers TDSNo specified limitApply a higher of 5% or twice the rate mentioned in the Income Tax Act
206AAPAN Not Available TDSNo specified limitApply specified rates or 20%, whichever is higher

Tax Collected at Source (TCS) Rates for FY 2023-2024

Below is a summary of the TCS rates applicable for different goods during the financial year 2023-2024:

SectionNature of GoodsTCS Rate
206C(1)Alcoholic beverages1%
206C(1)Tendu leaves5%
206C(1)Timber from forest lease2.5%
206C(1)Timber from other sources2.5%
206C(1)Forest produce (excluding timber and tendu leaves)2.5%
206C(1)Minerals (coal, lignite, iron ore)1%
206C(1C)Parking lot lease/license2%
206C(1C)Toll plaza lease/license2%
206C(1C)Mining and quarrying lease/license2%
206C(1F)Motor vehicles (value > INR 10 Lakhs)1%
206C(1G)Foreign remittance (Liberalised Remittance Scheme)5% (20% from July 2023)
206C(1G)Foreign remittance for education/medical treatment (< INR 7 Lakhs)NIL
206C(1G)Foreign remittance for education/medical treatment (> INR 7 Lakhs)5%
206C(1G)Non-PAN furnishing by collectie0.5%
206C(1G)Overseas tour program package5% (20% from July 2023)
206C(1H)Goods sale (> INR 50 Lakhs, Seller turnover > INR 10 Crores)0.1%
206CC(1)Non-PAN furnishing by collectieHigher of 2 times prescribed rates or 5%
206CCA(1)Non-ITR furnishing with TCS/TDS > INR 50,000Higher of 2 times prescribed rates or 5%

Please note that the maximum TCS rate should not exceed 20%. Understanding these rates is crucial for individuals and businesses to avoid penalties and ensure tax compliance. Always consult with a tax advisor

In summary, It is important to have enough understanding of TDS and TCS Return Filling. If you don’t follow the rules, you could get penalties, interest, and legal trouble. At Indiataxfile, we are here to help. Our consultation service can guide you to stay informed and avoid these issues. It is important to deposit TDS and TCS Return Filling on time. Let’s work together to make sure your tax journey is smooth and trouble-free.

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