GST vs TDS – Difference and Comparison

What is GST?

A value-added tax known as the Goods and Services Tax (GST) is imposed on the delivery of goods and services in India. It is a comprehensive, destination-based tax levied on every value addition. A single tax on the provision of goods and services is known as the GST from the manufacturer to the consumer.

India implemented GST on July 1st, 2017, and replaced several indirect taxes the central and state governments levied. An indirect tax is imposed on the supply of goods and services. GST is levied at every stage of the supply chain, with the final consumer bearing the tax.

A joint forum of the GST Council and the central and state governments administers GST. The GST Council recommends GST rates, exemptions, and other GST-related issues. GST has helped simplify India‘s tax system and made it easier for businesses to comply with tax laws.

What is TDS?

Tax Deducted at Source (TDS) is a system of tax collection in India whereby the tax is deducted at the source of income. TDS applies to various sources of income, such as salary, commission, rent, and interest income. The idea behind TDS is to collect tax from the source of income rather than requiring the taxpayer to pay the tax at the time of filing their tax return.

TDS is governed by the Income Tax Act of 1961 and is administered by the Central Board of Direct Taxes (CBDT). The CBDT sets the TDS rates and issues notifications on TDS-related matters. TDS is collected by the deductor, who is responsible for deducting tax at the prescribed rate and depositing it with the government.

TDS helps to ensure that taxpayers pay their taxes on time and helps to reduce the burden of compliance on taxpayers. TDS also helps to increase the government’s tax collections, as it ensures that tax is paid when the income is earned rather than when the tax return is filed.

Difference Between GST and TDS

  1. GST is an indirect tax, whereas TDS is a direct tax.
  2. Goods and services supplies are subjected to GST, whereas TDS is levied on various sources of income.
  3. GST is levied at a uniform rate across the country, whereas TDS rates may vary depending on the type of income and the taxpayer’s tax slab.
  4. GST is administered by the GST Council, a joint forum of the central and state governments, whereas TDS is governed by the Income Tax Act of 1961 and is administered under the Central Board of Direct Taxes (CBDT).
  5. GST requires businesses to register for GST and file GST returns, whereas TDS requires the deductor to deduct tax at the prescribed rate and deposit it with the government.

Comparison Between GST and TDS

Parameters of ComparisonGSTTDS
Nature of TaxIndirect TaxDirect Tax
Tax BaseOn the Supply of Goods and ServicesOn Various Sources of Income
Rate of TaxA Uniform RateVary with the Type of Income and the Taxpayer’s Tax slab  
AdministrationGST CouncilCentral Board of Direct Taxes (CBDT)  
ComplianceBusinesses to Register for GSTDeduction of the Fixed Rate and Deposit to the Government