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Explain the concepts of TDS payable and TDS collected and also How and Why are these set off against each other???

Dear Student,

Firstly, its not TDS payable or TDS collected it is TDS/ TCS i.e. Tax Deducted at source (TDS)  and Tax collected at source (TCS);

So as referred by Sony in the solution above TDS is the amount deducted by the payer from the total expense which he is required to be paid and then liable to pay it to Govt /IT dept; say employer is liable to pay salary to the employee of Rs 10,000, so employer makes payment of Rs 9,000 only to the employee and Rs 1,000 is TDS which is required to be paid to Govt; employee now would not be liable to pay this tax to the Govt as employer had already paid;

TCS i.e. Tax collected at source is the amount collected on income part/sale part as tax and then buyer would no longer be liable to pay it to the Govt. This is specified by law on different rates for different categories of goods/services;

So, ultimately these both are required to be paid against the Tax liability these can be set off from each other & the net amount may be a payable/refundable amount;

Hope this clears your doubt!!!

Regards,





 

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TDS payable means before paying an amount to someone, few % of that sum must be deducted so that later it could be deposited to the Income tax dept. Generally TDS payable is deducted by the payment maker and the payment receiver will have no further burden to pay the tax because it has already been paid on his behalf.

TDS collected means amount collected in the form of tax when the seller sells few selected goods to the payer so that later the payer should not be forced to pay the tax because he has already paid it to the seller.
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