Tax collected at source

This query is : Resolved

ramidi santhosh (Querist)
Follow

01 September 2013 DEAR SIR/FRIENDS,
Please anyone help me in understanding the Tax Collected At Source in detail and what is the difference between TDS & TCS
If we purchase gold then whether the buyer collects TCS from us? please share your views in common language with practical examples
Thanks,

Harsha.H

Harsha.H (Expert)
Follow

02 September 2013 Tax collected at source (TCS) is a Direct Tax, applicable on sale of Few listed Materials including Sale of Scrap, Sale of Coal & Gold.
The seller has to collect this tax from the buyer. I.e The buyer will have to pay extra 1% of total value of the material to buy it.
TDS is a tax deducted at source, i.e. Before you get the payment/compensation for your work, the Payer will have to Deduct the tax.

ramidi santhosh

ramidi santhosh (Querist)
Follow

02 September 2013 Thank you Harsha

ramidi santhosh

ramidi santhosh (Querist)
Follow

02 September 2013 can u give much more explanation i.e.,
for example if joyalukkas sells gold to the customer then it has to collect the tcs from the customer then joyalukkas pays the tcs to whom i know that tcs is tax collected at source at the time of purchase of gold itself joyalukkas has paid the tcs to seller
but, who who can collect the tcs

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
Follow

26 July 2025 Sure! Let me break it down in simple terms with examples:

---

### What is **TCS (Tax Collected at Source)?**

* TCS is **tax collected by the seller from the buyer** at the time of sale of certain specified goods (like gold, scrap, timber, etc.).
* The seller **collects an extra percentage** (say 1%) on the sale price from the buyer and **deposits this amount with the government**.
* This is like a **tax collection mechanism at the point of sale**.

---

### What is **TDS (Tax Deducted at Source)?**

* TDS is **tax deducted by the payer from the payment to the recipient**.
* For example, if you pay a contractor, you deduct a certain percentage of tax from the payment and deposit it to the government.
* This ensures tax collection before the money reaches the recipient.

---

### Key Differences:

| Aspect | TDS | TCS |
| --------------------- | -------------------------------------- | ----------------------------------- |
| Who deducts/collects? | Payer (buyer or person making payment) | Seller (collector of tax) |
| When? | At the time of payment | At the time of sale |
| On whom? | Recipient of income | Buyer of specified goods |
| Purpose | Advance tax collection on income | Tax collection on sale transactions |
| Deposit to Govt | By payer | By seller |

---

### Practical Example (Gold Purchase):

* Suppose **Joyalukkas** sells gold to you worth Rs. 1,00,000.
* As per TCS rule, Joyalukkas will collect **1% TCS = Rs. 1,000** from you at the time of sale.
* So, you pay Rs. 1,01,000 to Joyalukkas.
* Joyalukkas then **deposits Rs. 1,000 as TCS to the government**.
* This Rs. 1,000 is your advance tax paid and can be adjusted against your total tax liability when you file your Income Tax Return.

---

### Who collects TCS?

* **Only the seller of specified goods/services collects TCS.**
* So in your example, **Joyalukkas (seller) collects TCS from the customer (buyer).**

---

### Summary

* If you are buying gold, **the seller collects TCS from you and deposits it to the government**.
* TCS is **collected by the seller**, while TDS is **deducted by the payer** when making certain payments.

---

If you want, I can also share details about the **rates applicable** and **when TCS is applicable or exempted**. Would you like that?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now