What is Tax Collected at Source (TCS) and implementation in Tally ERP 9 ?
Tax Collected at Source (TCS) mean of collection of tax at source by the seller (collector) from the buyer (collectee/payee) on trading of the goods specified u/s 206C of the Income Tax Act,
- It is collected when accrued or paid, whichever is earlier.
If purchase value of goods is Rs.10,000/-, the buyer will pay an amount of Rs.10,000/- + A (A
being the value of TCS as prescribed under Income Tax Act, 1961) to the seller. The seller will
deposit the Tax Collected at Source (TCS) at any of the designated branches of the authorized
Scope & Applicability of TCS
Tax has to be collected at source by the seller, while debiting the amount payable by the buyer to
buyer’s account (or) at the time of receipt of such amount from the buyer in cash or by issue of
cheque/draft or by any other mode, whichever is earlier.
TCS Nature of Goods
As per section 206C (1), the list of goods covered under TCS and the Rate of tax is as shown:
|Type of Goods||Rate|
|Liquor of alcoholic nature, made for consumption by humans||1%|
|Timber wood under a forest leased||2.5%|
|Timber wood by any other mode than forest leased||2.5%|
|A forest produce other than Tendu leaves and timber||2.5%|
|Minerals like lignite, coal and iron ore||1%|
|Bullion that exceeds over Rs. 2 lakhs / Jewelry that exceeds over Rs. 5 lakhs||1%|
|Purchase of Motor vehicle exceeding Rs. 10 Lakhs||1%|
|Parking lot, Toll Plaza and Mining and Quarrying
Seller and buyer under TCS
There are some specific people or organizations who have been classified as sellers for tax collected at source. No other seller of goods can collect tax at source from the buyers apart from the following list :
- Central Government
- State Government
- Local Authority
- Statutory Corporation or Authority
- Company registered under Companies Act
- Partnership firms
- Co-operative Society
- Any person or HUF who is subjected to an audit of accounts under Income tax act for a particular financial year.
Similarly, only a few buyers are liable to pay the tax at source to the sellers.
Let us know who are those buyers:
- Public sector companies
- Central Government
- State Government
- Embassy of High commission
- Consulate and other Trade Representation of a Foreign Nation
- Clubs such as sports clubs and social clubs
Due date under Tax collected at source
|Collection month||Quarter ending||Due date of payment||Due date of filing returns|
|April||June||7 may||15 July|
|July||Sep||7 august||15 October|
|October||Dec||7 Nov||15 Jan|
|January||March||7 Feb||15 march|
Certificate of TCS
- When a tax collector files his quarterly TCS return i.e Form 27EQ, he has to provide a TCS certificate to the purchaser of the goods.
- Form 27D is the certificate issued for TCS returns filed. This certificate contains the following details:
- Name of the Seller and Buyer
- TAN of the seller i.e who is filing the TCS return quarterly
- PAN of both seller and buyer
- Total tax collected by the seller
- Date of collection
- The rate of Tax applied
- This certificate has to be issued within 15 days from the date of filing TCS quarterly returns. The due dates are:
TCS under GST
- Any dealer or traders selling goods online would get the payment from the online platform after deducting an amount tax @ 1 % under IGST Act. (0.5% in CGST & 0.5% in SGST)
- The tax would have to be deposited to the government by 10th of the next month.
- All the dealers/traders are required to get registered under GST compulsorily.These provisions are effective from 1st Oct 2018.
Mr. Mohan is a trader who sells clothes online on Amazon (buyer). He receives an order for Rs 15,000 inclusive of commission. Amazon would thus be deducting tax for Rs 150 (1% of Rs. 15000).
Tax collection at source is exempted in the following cases :
- When the eligible goods are used for personal consumption
- The purchaser buys the goods for manufacturing, processing or production and not for the purpose of trading of those goods.
Late filing of TCS
As per the Section 234E, the taxpayer must have to pay a late fee of INR 200 per day, until if file the return. You also have to pay this fine every day of delay until the fine amount gets equal to the actual TDS amount required to be paid.
How to implement TCS in Tally.ERP 9
Tally.ERP’s TCS feature enables you to record transactions related to Tax Collected at Source with ease. It also helps you generate necessary reports and returns such as Form 27D, e-TCS Forms ( Form 27E, Form 27EQ) and Form 27B.
Step-1 : ( Enabling TCS in Tally.ERP )
Go to Gateway of Tally.ERP à F11: Features à F3 : Statutory & Taxation
Under Statutory & Taxation
Set YES to Enable Tax Collected at Source (TCS)
Set YES to Set / Alter TCS Details.
TCS statutory masters
Before creating masters the following statutory master are needed to created in tally erp 9
- Collective type
- TCS nature of goods
TCS nature of Goods
- Go to gateway of tally >Accounting info >statutory info >
- TCS Nature of goods
- Create Timber obtain from forest lease > under section > 206c
- under rate > 2.5%
Create following ledger
|Ledger||Under||Type of duty||Nature of goods /contract licenser lease|
|TCS @2.5%||Duties and taxes||TCS||Timber obtain under forest lease|
|Leger||Under||Maintain bill wise detail||Is TCS applicable||Buyer lease type||Pan No|
|Yes||YES||Individual /HUF residence||BBERR1616P|
|Ledger||Under||Inventory value are affected||Is TCS applicable||Nature of goods|
|sales||Sales||Yes||Yes||Timber obtain from forest lease|
Create unit of measurement
- go to gateway of tally>Inventory info>unit of measurement >create>type >simple
- Symbol: MT
- Formal name :metric ton
- Number of decimal places :1
Create stock item
- Go to gateway of tally>inventory info >stock item> create
- Name : Timber
- Under : primary
- Unit : MT
- Alter standard rate
- 1/4/2019: 30000(standard cost)
- 1/4/2019: 40000(standard selling cost)
- Is TCS applicable :applicable
- Nature of goods: Timber obtain from forest lease
- Now in opening quantity >10 mt
- Value : 300000
- Now got to gateway of Tally > accounting voucher >F8 (Ctrl +V)
- In party name select >Rajesh Timber
- Name of item >select > timber
- Quantity :1 > rate and amount will automatically appears
- Select ledger: sales
- Screen appears : select timber obtain from forest lease
- Enter and select ledger: TCS @2.5%
- Tcs will automatically selected.