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What is Tax Collected at Source (TCS) and implementation in Tally ERP 9

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,

  1. It is collected when accrued or paid, whichever is earlier.

 

Example:

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

banks.

 

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%
Tendu leaves 5%
Timber wood by any other mode than forest leased 2.5%
A forest produce other than Tendu leaves and timber 2.5%
Scrap 1%
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

 

2%

 

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 :

 

  1. Central Government
  2. State Government
  3. Local Authority
  4. Statutory Corporation or Authority
  5. Company registered under Companies Act
  6. Partnership firms
  7. Co-operative Society
  8. 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:

 

  1. Public sector companies
  2. Central Government
  3. State Government
  4. Embassy of High commission
  5. Consulate and other Trade Representation of a Foreign Nation
  6. 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
May June 7 June
June June 7 July
July Sep 7 august 15 October
August Sep 7 Sep
September Sep 7 Oct
October Dec 7 Nov 15 Jan
November Dec 7 Dec
December Dec 7 Jan
January March 7 Feb 15 march
February March 7  March
March march 7 April

 

Certificate of TCS

 

  1. 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.
  2. Form 27D is the certificate issued for TCS returns filed. This certificate contains the following details:
  3. Name of the Seller and Buyer
  4. TAN of the seller i.e who is filing the TCS return quarterly
  5. PAN of both seller and buyer
  6. Total tax collected by the seller
  7. Date of collection
  8. The rate of Tax applied
  9. This certificate has to be issued within 15 days from the date of filing TCS quarterly returns. The due dates are:

 

TCS under GST

  1. 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)
  2. The tax would have to be deposited to the government by 10th of the next month.
  3. All the dealers/traders are required to get registered under GST compulsorily.These provisions are effective from 1st Oct 2018.

 

Example:

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).

 

TCS Exemptions

Tax collection at source is exempted in the following cases :

 

  1. When the eligible goods are used for personal consumption
  2. 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 in tally erp 9

 

 

TCS statutory masters

Before creating masters the following statutory master are needed to created in tally erp 9

  • Collective type
  • TCS nature of goods
  • Colletee

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

TCS @2.5% under tally

Leger Under Maintain bill wise detail Is TCS applicable Buyer lease type Pan No
Rajesh Timber Sundry

Debtor

Yes YES Individual /HUF residence BBERR1616P

sales under TCS in tally

Ledger Under Inventory value are affected Is TCS applicable Nature of goods
sales Sales Yes Yes Timber obtain from forest lease

sundry debtor in tcs in tally

 

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

unit of measurement in TCS tally erp 9

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
  • Rate>30,000
  • Value : 300000

stock item in TCS tally

  • 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.

 

sales entry in tcs

 

 

 

 

Updated: September 10, 2019 — 9:49 am

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