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Every seller, whose total sales, gross receipts or turnover from the business carried on by him exceed Rs. 10 Crores during the FY 2019-20 & onwards, and if sales to buyer is exceeding Rs 50 lakhs during the FY 2020-21 & onwards, then seller has to collect TCS tax from such buyer on the value exceeding the threshold limit.

Note: No such TCS is to be collected, if the seller is liable to collect TCS under other provision of section 206C such as Section 206C (1), 206C (1F) and 206C (1G) or the buyer is liable to deduct TDS under any provision of the Act and has deducted such amount or export outside India.

The table below will give you all the information related to TCS on Sale of Any Goods.

Name

Sale of Any Goods

Section Code

206C

Payment Code

Yet to be provided by the department
Note: As the Payment Code is not yet notified by the department this field will be left blank and the same will not be printed on ITNS Challan 281.

Rate of Tax

With PAN/Aadhaar    0.075%
No PAN/Aadhaar       1%

Note: As per Finance Bill 2020, the TCS rate for this category with PAN is 0.1% and No PAN will be 1%. Due to COVID 19 outbreak, department has reduced the rate by 25% for PAN holders. Therefore, PAN rate is reduced to 0.075% and No PAN remains as 1%.

Threshold Limit

NA

Effective From

01-10-2020

Note: Standardized terms with explanation

  • Buyer: A person who purchases any goods
  • Seller: Every seller, whose total sales, gross receipts or turnover from the business carried on by him exceed Rs. 10 Crores during the FY 2019-20 & onwards.

In Tally.ERP 9, if you mention threshold limit in TCS category master then on crossing the set limit tax is computed from Re. 1. But, for this category tax should be computed on excess value (over and above threshold limit). Hence, we need to follow below steps:

Create TCS Category Master

Create new TCS Nature of Goods without mentioning threshold limit as shown below:

  • Go to Gateway of Tally > Accounts Info. > Statutory Info. > TCS Nature of Goods > Create.

Record Sales Invoice for the Sale of Goods

You have to manually keep track of sales made to each party in order to apply TCS when the threshold limit is crossed. You have to select TCS category in the transaction to charge tax. However, when the threshold limit is not crossed you can select Not Applicable as TCS category while recording the transaction.

For example: Recording first TCS Sales/Receipt transaction for Rs 48,00,000. Since the threshold limit of Rs 50,00,000 is not crossed, you have to manually keep track of amount received and select Nature of Goods as Not Applicable in the TCS Collection Allocations screen of the sales invoice.

To record a TCS sales with amount received below the threshold limit:

  1. Go to Gateway of Tally > Accounting Vouchers > F8: Sales.
  2. Click F12: Configure and enable the option Allow modification of Tax Details for TCS? to be able to manually select the TCS category.
  3. Select the ledger of the party in the Party A/c name field.
  4. Under Name of Item, select the item(s) sold, enter the quantity and rate.

  5. Press Enter to display Accounting Details screen.
  6. Select the TCS sales ledger created for sale of any goods.

  7. Press Enter to display the TCS Collection Allocations screen.
  8. Under Nature of Goods, select Not applicable since the amount is under threshold limit.

  9. Press Enter to return to voucher screen and display the voucher save options.

  10. Press O to save the transaction with overridden details.

When the same party makes further payment in the financial year which makes the total amount for sale of goods exceed the threshold limit you have to charge TCS on the excess amount by selecting appropriate TCS category in the transaction.

Record the second sales transaction for the same party and TCS category for Rs 5,00,000 as below:

  1. Go to Gateway of Tally > Accounting Vouchers > F8: Sales.
  2. Select the ledger of the party in the Party A/c name field.
  3. Under Name of Item, select the item(s) sold, enter the quantity and rate.

  4. Press Enter to display Accounting Details screen.
  5. Select the TCS sales ledger for sale of any goods.
  6. Press Enter to display the TCS Collection Allocations screen.
  7. Under Nature of Goods, select the TCS category and enter the value of amount received that is over the threshold limit under Assessable Value.

  8. Press Enter to return to voucher screen.
  9. Select TCS duty ledger. Tax is automatically computed. Press Enter to display the voucher save options.

  10. Press O to save the transaction with overridden details.
  11. Press Page Up key to view the saved voucher.
  12. Press Alt+P (P:Print) to print the invoice.
  13. Enable the option Print TCS details? in the Print Configurations. The Sales Invoice will display the TCS details as shown below:

Record TCS Sales using Receipt Voucher

You can record TCS sales transaction using a receipt voucher instead of sales.

  1. Go to Gateway of Tally > Accounting Vouchers > F6: Receipt.
  2. Select the bank account into which the sales amount was received in the Account field.
  3. Under Particulars, select the TCS sales ledger.
  4. Specify the amount and press Enter. The amount is under the threshold limit.


    The TCS Collection Allocations screen is displayed.

  5. Under Nature of Goods, select Not applicable since the amount is under threshold limit.

  6. Press Enter to return to voucher screen and display voucher save options.

  7. Press O to save the transaction with overridden details.

When the same party makes further transactions in the financial year which makes the total amount for sale of goods exceed the threshold limit, you have to charge TCS for excess amount by selecting the appropriate TCS category in the transaction.

Record the second receipt voucher for the same party and TCS category for Rs 5,00,000 as below:

  1. Go to Gateway of Tally > Accounting Vouchers > F6: Receipt.
  2. Select the bank account into which the amount was received in the Account field.
  3. Under Particulars, select the TCS sales ledger.
  4. Specify the amount and press Enter.


    The TCS Collection Allocations screen is displayed.

  5. Under Nature of Goods, select the TCS category and enter the value of amount received that is over the threshold limit under Assessable Value.

  6. Press Enter to return to voucher screen.
  7. Select TCS duty ledger and press Enter to display the Party Details screen.
  8. Enter the Party Name, Collectee Type, and PAN details.


    Tax rate is applied based on the availability of PAN.

  9. Press Enter to display voucher save options.

  10. Press O save the voucher with overridden details.
  11. Press Page Up key to view the saved voucher.
  12. Press Alt+P (P:Print) to print the invoice. The receipt voucher will display the TCS details as shown below:

TCS Duty Payment

The TCS duty payment to be made to department by on or before 7th of next month. You can record TCS duty payment transaction and see its effect in ITNS Challan 281 print.

Impact in Form 27EQ Report

The transactions where the amount does not cross the threshold and marked as Not applicable in TCS Collection Allocations are treated as Excluded Transactions in returns. The transaction tagged with TCS category are treated as Included Transactions in returns.

Record Subsequent Sales to Party after Exceeding Threshold Value

Once the amount for sale of goods to a party exceeds the threshold limit the entire sale value of all subsequent sales to the party in the same year is taxable.

  1. Go to Gateway of Tally > Accounting Vouchers > F8: Sales.
  2. Select the ledger of the party in the Party A/c name field.
  3. Under Name of Item, select the item(s) sold, enter the quantity and rate.

  4. Press Enter to display Accounting Details screen.
  5. Select the TCS sales ledger for sale of any goods.
  6. Press Enter to display the TCS Collection Allocations screen.
  7. Under Nature of Goods, select the TCS category. The entire sales value is pre-filled in Assessable Value field retain the amount since TCS is applicable on the entire amount.

  8. Press Enter to return to voucher screen.
  9. Select TCS duty ledger and press Enter. TCS is calculated for the Assessable Value based on availability of PAN.

  10. Press Enter to display the voucher save options.

  11. Press Enter or Y to save the transaction.

Impact in Form 27EQ Report

The transaction tagged with TCS category are treated as Included Transactions in returns. The Assessable Value and Tax Collected is displayed under Particulars.

Record TCS Sales without Booking Tax

In a scenario you sell goods worth Rs 2 lakhs to one of your regular customers and record TCS sales transaction without collecting TCS, only to later realise that the party’s sales turn over during the financial year has crossed Rs 50 lakhs and you had to collect TCS. You can collect TCS duty by raising debit note transaction. Let us now see the book entries to handle this scenario.

  1. Go to Gateway of Tally > Accounting Vouchers > F8: Sales.
  2. Select the ledger of the party in the Party A/c name field.
  3. Under Name of Item, select the item(s) sold, enter the quantity and rate.
  4. Press Enter to display Accounting Details screen.
  5. Select the TCS sales ledger for sale of any goods.
  6. Press Enter to display the TCS Collection Allocations screen.
  7. Under Nature of Goods, select the TCS category. The entire sales value is pre-filled in Assessable Value field retain the amount since TCS is applicable on the entire amount.

  8. Press Enter to return to voucher screen and display the voucher save options.

  9. Press Enter or Y to save the transaction.

Record Debit Note to Book TCS

  1. Go to Gateway of Tally > Accounting Vouchers > Ctrl+F9: Debit Note.
  2. Debit the ledger of the party and enter the TCS amount in the Debit column.
  3. Credit the TCS duty ledger, Credit amount will appear automatically.

  4. Press Enter or Y to save the transaction.

Impact in Form 27EQ Report

The debit note is displayed under Uncertain Transactions in TCS Form 27EQ Report

  1. Drill down from Uncertain Transactions to displays debit note under the category TCS collected but not linked with sales voucher.

  2. Further drill down to Collection Voucher screen to display all TCS collection transactions made but not linked to booking.

  3. Drill again to Booking Voucher screen to view sales transactions that do have bookings.
  4. Click F3: Auto Fill, F4: Full or F5: Partial to link the amount automatically link, fully link or partially link.
  5. Click Save to confirm the linking.

  6. Once the linking is confirmed, the debit note recorded for collection of tax is considered as included and value is added to Tax Collected.

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