What is TDS - and how is it different from TCS?

1. TDS = Tax Deducted at Source - someone paying you holds back a slice of the payment as tax. TCS is collected on what you sell; TDS is deducted from what you're paid.

2. Kind 1 - GST TDS (Section 51): government departments and PSUs deduct 2% when paying suppliers on contracts above ₹2.5 lakh. Most marketplace sellers never see this one.

3. Kind 2 - Income-tax TDS (Section 194-O): e-commerce operators also deduct 0.1% of your gross sales as income-tax TDS (it was 1% before October 2024). This is separate from GST entirely.

4. So a marketplace seller's settlement has two small deductions: 0.5% GST-TCS and 0.1% income-tax TDS. Different laws, different recovery routes.

5. Recovering each: GST-TDS/TCS - accept in the TDS and TCS credit received statement → cash ledger → offsets GSTR-3B. Income-tax TDS - appears in your Form 26AS/AIS and adjusts against your income tax when you file your ITR.

💡 Quick memory hook: TCS = collected on your Collections (sales). TDS = deducted from your Dues (payments to you). Both are advances of YOUR tax, never an extra cost.