Mon Feb 03 04:02:29 UTC 2025: ## Indian Government Uses TDS and TCS to Boost Tax Collection
**NEW DELHI** – The Indian government employs various methods to collect taxes, with Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) playing crucial roles. These mechanisms ensure timely tax collection and reduce tax evasion. Both TDS and TCS contribute significantly to government revenue.
TDS involves deducting tax from payments made to individuals. This applies to salaries, rent, brokerage, commissions, professional fees, and other payments. The payer deducts the tax and remits it directly to the government. The rates and limits for TDS are determined annually by the government and are based on the Income Tax Act, 1961. This method ensures upfront tax payment and discourages evasion.
Conversely, TCS involves the seller collecting tax from the buyer at the time of a transaction. This primarily applies to the sale of specific goods like wood, scrap, and mineral wood (excluding manufactured goods). The seller collects a percentage of the sale price as tax and remits it to the government.
Both TDS and TCS are vital components of the Indian tax system. They encourage tax compliance, minimize evasion, and facilitate smoother tax collection for the government.
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