TRACES offers a detailed overview of electronic Tax Deducted at Source (e-TDS) and Tax Collected at Source (e-TCS), elucidating the intricacies of digital tax filing for enhanced compliance and efficiency.
Overview on TRACES
TDS (Tax Deducted at Source) is a critical tax collection mechanism mandated by the Indian government to ensure timely tax payments. It serves as a significant revenue source and plays a pivotal role in the country’s fiscal management. Know on TRACES – Overview of e-TDS and e-TCS.
In parallel, TDS TRACES, or TDS Reconciliation Analysis and Correction Enabling System, is an online portal operated by the Income Tax Department of India. This platform connects all stakeholders involved in administering Tax Deducted at Source (TDS) and Tax Collected at Source (TCS).
Beyond facilitating TDS correction and verification, TDS TRACES is a central hub for downloading essential tax documents like Form 16, Form 16A, and Form 26AS, making it a go-to resource for taxpayers.
Explore the various facets of TDS TRACES and gain insights into its impact on taxpayers and its integral role in simplifying tax compliance.
TDS
TDS is the acronym for Tax Deducted at Source. It aims to collect tax from the very source of income. A person making a payment of a specific nature (deductor) is liable to charge the tax at source from the deductee or the person being paid. The deductor shall deposit the amount to the Central Government’s account and get Form 26AS or TDS Certificate. The deductee will later get the tax credited to their account if their income tax was deducted at the source. It will be according to the TDS Certificate or Form 26AS issued by the government of India to the deductor.
eTDS is nothing but the electronic filing of Returns of Tax deducted at source scheme, 2003. It allows the filing to be made simple and easy for the deductee. Furthermore, eTDS can be said to be part of automation for the collection, compilation, and processing of the tax Deducted at Source returns. There are several forms you can keep in mind when it comes to TDS:
| Form Number | Significance | Frequency of Submission |
| Form 24Q | Details of TDS deducted from salary | Quarterly |
| Form 26Q | Details of TDS deducted from earnings except salary | Quarterly |
| Form 26QB | TDS deducted on income from the transfer of immovable asset | Within 30 days from the end of the month of deduction |
| Form 26QC | TDS deducted from payment of rent | Within 30 days from the end of the month of deduction |
| Form 27Q | TDS deducted on incomes earned from interest, dividend, or other sum | Quarterly |
TCS
TCS is the acronym for Tax Collected at Source. It applies to specific goods when selling to buyers. Sellers charge this extra amount to submit to the government of od India as per the Income Tax Act 1961. The seller has to deposit the amount to the authorised banks.
eTCS can be filed by the deductors under the Electronic Filing of Returns of Tax collected at source Scheme, 2005 act. It allows the deductors to file TCS returns in electronic form and the previous manual form.
| Nature of goods/transaction | Rate of TCS* |
| Timber wood bought under a forest lease | 2.5% |
| Timber wood obtained from any other source | 2.5% |
| Alcoholic liquor for human consumption | 1% |
| Sale of scrap | 1% |
| Tendu leaves | 5% |
| Forest produce other than Tendu leaves | 2.5% |
| Minerals (lignite/coal/iron ore) | 1% |
| Lease/license of parking lot, toll plaza, mining and quarrying | 2% |
| Sale of any goods where the total value exceeds ₹50 lakhs [applicable only if total sales/turnover of the seller exceeds ₹10 crores during the current FY] | 0.1% |
| Sale of motor vehicles of value exceeding ₹10 lakhs | 1% |
| Transactions involving Bullion that exceed ₹ 2 lakhs/ Sale of Jewelry that goes over ₹ 5 lakhs | 1% |
| Foreign remittance under the Liberalized Remittance Scheme for the purpose of education/medical treatment |
NIL if value is less than ₹7 lakhs 20% if the value exceeds ₹7 lakhs |
| Foreign remittance obtained from an education loan |
NIL up to ₹7 lakhs 0.5% if the value exceeds ₹7 lakhs |
| Foreign remittance for other purposes |
NIL for a value up to ₹7 lakhs 20% if the value exceeds ₹7 lakhs |
| Overseas Tour Package |
5% if value is less than ₹7 lakhs 20% if the total value goes above ₹20 lakhs |
Both TDS and TCS have their share of features and apply to different sellers, buyers, deductors, and deductees. Let’s discuss it in detail.
Features of eTDS and eTCS
Online filing of TDS and TCS returns has many features that provide you with ample benefits. Not to mention that you can conveniently file the returns in the comfort of your own. VakilSearch helps you file online TDS and TCS returns in a very convenient and hassle-free method. Let’s look at the features of the eTDS first.
- eTDS allows you to maintain a very little paperwork with almost everything online
- It helps you to quickly fill out the forms and never miss out on the deadlines due to the rush during manual TDS filing
- Low Human Errors
- eTDS is filed by the deductor and reduces the load on the deductee as they don’t have to file tax once again.
On the other hand, the features of eTCS are:
- Easy monthly TCS filing using Challan 281.
- TCS applies to the seller only if their previous year’s turnover exceeds ₹10 cr. Else the seller is not liable to make TCS under the 206C(1H) section.
- The TCS’s rate is 0.1% of the sale exceeding ₹50 Lakhs.
Where is TDS Applicable And Who Can File an eTDS Return?
The TDS applies on variable grounds to the deductees. Though it may be frustrating to know about it, it is for the sake of the welfare of the government and as well as the deductees too.
The Government of India deducts taxes on salary income based on income brackets, ensuring a hassle-free process at the time of payment. While this covers the majority of your tax liability, you can still file a return considering other investments and schemes.
Additionally, taxes are deducted on interest income, which includes passive earnings from bank deposits. The tax department charges tax on the interest earned, making it essential to factor this into your financial planning.
EPF withdrawals may also be subject to tax deductions in specific cases. If withdrawn before five years or exceeding ₹30,000, taxes are applicable; otherwise, no taxes are imposed.
For property sales over ₹50 lakhs, tax deductions occur either on the total amount or in instalments. Buyers must register and obtain a Tax Deduction Account Number, providing the certificate to the seller. The tax, along with Form 26QB, needs to be deposited within a week from the end of the month when TDS was deducted. This ensures compliance with tax regulations in property transactions.
TDS should be filed by the corporations that are registered for the TDS and have availed of TAN (Tax Deduction or Collection Account Number)
Where is TCS Applicable, and Who Can File an eTCS?
TCS is quite different from the TDS as it applies to the sellers rather than the buyers or the income-based. It is used for the sale of goods mainly. Thus, the rules differ much from the TDS as well.
- TCS applies to the seller while selling goods that fall under the specific categories of goods in India. Some of them are liquor, scrap, minerals like coal, bullion exceeding ₹2 Lakhs, Motor Vehicles over ₹10 Lakhs, Parking lots, toll plazas, timber, tendu leaves, and more.
- The TCS applies to a specific category of goods rather than all goods in the market.
- Applicable only to the seller before selling the goods to the buyer.
eTCS should be filed by the sellers after collecting tax on the goods they will sell in the market. After collecting the tax, it needs to be deposited to the government and filed TCS return. According to the TCS return, the seller will be issued a TCS certificate in Form 27D.
Conclusion
In simple terms, TDS TRACES is a helpful tool for people who deduct or have taxes deducted from their income. It lets them easily check if they are getting the proper credit for these deductions. If you have the right certificates and PAN, you can use this online platform to see the status and take necessary actions.
Think of it as the government’s way of making tax processes easier and more accessible online. You can find more about it on the official website: https://incometaxindia.gov.in/Pages/Deposit_TDS_TCS.aspx. This online system brings convenience and takes away some stress from the people deducting the tax and those having it deducted. It’s like a user-friendly solution that makes dealing with taxes less complicated and more convenient for everyone involved.
Read More:-
- How to File the TDS Return Online?
- Complete details about TDS Deposit rate
- How to make TDS Online Payment?
