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Tax collected early: the payer holds back TDS, the seller adds TCS.
| Compared on | TDS | TCS |
|---|---|---|
| Who acts | The payer, when paying salary, contractor or professional fees, rent, interest and similar | The seller, on specified goods and transactions |
| How | Deducts tax from the payment and pays the rest | Collects tax on top of the sale amount |
| Deposit | To the government by the due date, usually the 7th of the next month | Same pattern as TDS |
| Quarterly statement | Form 24Q (salary), 26Q (other payments to residents), 27Q (non-residents) | Form 27EQ |
| Certificate to the other party | Form 16 or 16A | Form 27D |
| Where the other party sees it | Form 26AS and the Annual Information Statement | Form 26AS and the Annual Information Statement |
Form names above are those of the Income-tax Act, 1961. From 1 April 2026 the Income-tax Act, 2025 applies and renumbers these sections and forms; transactions up to 31 March 2026 stay under the 1961 Act forms. Check the Income Tax Department for the current form for each period.
TDS deducted from your invoice is tax paid for you, credited only if deposited against your PAN. TCS you collect is a liability. Keep a register.
TDS a customer deducts from your invoice is not an expense and not a discount. It is tax paid on your behalf, and you get credit for it only if the customer deposits it and files their quarterly statement with your PAN. Many businesses find, at year end, that a customer deducted TDS on paper and never deposited it, or quoted the wrong PAN.
TCS works the other way round. If you collect TCS from buyers, that money is a liability you must deposit, not income, and it does not belong in your GST return.
So both need a register: a list of every deduction or collection by party, section and quarter, held against Form 26AS. Our product Fint keeps TDS and TCS registers for exactly this check.
Government departments and notified bodies deduct GST TDS from supplier payments above a threshold.
Section 51 of the CGST Act requires government departments and certain notified bodies to deduct GST TDS from payments to suppliers above a threshold. The supplier claims it in the electronic cash ledger.
E-commerce operators collect GST TCS on marketplace sales, under Section 52.
Section 52 requires e-commerce operators to collect TCS on sales made through their platform by other sellers. Sellers on marketplaces see it in their GST credit and should reconcile it monthly.
GST TDS and TCS are separate from income tax TDS and TCS, with their own returns.
GST TDS and TCS are separate from income tax TDS and TCS. They are reported on different portals and in different returns.
The checks are mechanical: match short-paid receipts to TDS entries, compare the register with Form 26AS each quarter, and list missing deductions.
The checks are mechanical: match each receipt short-paid by a round percentage to a TDS entry, compare the register with Form 26AS each quarter, and list the customers whose deductions are missing. We build this for CA firms and finance teams in our GST and accounting automation service, and describe the wider practice work on our accounting and CA firms page.
No. Advance tax is paid by you on your own estimated income. TDS is deducted by someone paying you and credited to you when they deposit it.
Ask the deductor to check the PAN they used and whether they filed their quarterly statement. Credit appears only after they correct and file it.
It depends on the payment type, the amount and, for some sections, the business's turnover or audit status. Check the thresholds for each section with your accountant.
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