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TCS in Tally ERP9 (Tax collected at source) an implementation guide

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What is TCS ?

TCS is the short form of ‘Tax collected at source’.This is the tax collected by the seller from buyer on certain goods specified in  section 206 C of Income Tax Act. In TCS , the buyer will pay Tax and seller will collect and deposit the tax to the government. In this guide we will discuss  TCS in Tally ERP9.

Transactions comes under TCS

In TCS, a few number of type of transactions comes under the TCS ambit.They are,

  • Alcoholic liquor for human consumption including Indian Made Foreign Liquor (IMFL)
  • Tendu leaves
  • Timber obtained under a forest lease
  • Timber obtained by any mode other than under a forest lease
  • Any other forest produce not being Timber or Tendu
  • Scrap (Scrap means waste and scrap from the manufacture or mechanical working of materials which is usable as such because of breakage, cutting up, wear and tear and other reasons)
  • Licensing or leasing of Parking Lot, Toll Plaza
  • Mining and quarrying

Example TCS Trasaction for this Tutorial

Sold scrap to Lakshmi Metal works Ltd 100 MT @1500  = 150000, TCS Collected from Lakshmi Metal work is  1500

MASTERS  CREATION FOR TCS

1.     Enable TCS in Tally ERP9

To activate TCS  go to.

Go to Gateway of Tally > F11: Features > Statutory and Taxation.

In the Statutory and taxation screen enable the following options

  • Enable Tax collected at source ( TCS) : Yes
  • Set/Alter TCS Details :Yes

Activation screen of TCS in Tally ERP9 using F11 feature

When setting Set/alter TCS details to Yes you will have a new screen where companies TCS Collectors details will have to be entered.

Companies or TCS collectors details entry screen

  • Enter TAN registration number : For eg: T8545545KLC
  • TAN:
  • Collector Type
  • Set/alter details of person responsible: No
  • Ignore IT exemption Limit: No

Press Enter and save.

1.     Create TCS Nature of Goods

The next step is to create TCS Nature of Goods.

To do that Go to

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

Enter the details .

TCS Nature of goods creation screen

Enter The name of goods:  In our example it is scrap.

Section: is 206C for all TCS Goods category.

Payment code:  6CE for Scrap

Tcs rate:  for scrap current rate is 1%.

Threshold /exemption limit :   Leave it blank.

There is no excemption limit for TCS other than

“Bullion if consideration (excluding any coin / article weighting 10 grams or less) exceeds Rs. 2 Lakhs or jewellery if consideration exceeds Rs. 5 Lakhs (and any amount is received in cash) (applicable from July 1, 2012)”

For your convenience, I have created a TCS Payment code & TCS Rate Table.

Payment code for TCS

Section Nature of TransactionTCS Payment Code
Section Nature of TransactionTCS Payment Code
206CCollection at source from Alcoholic Liquor for Human Consumption6CA
206CCollection at source from Timber obtained under Forest lease6CB
206CCollection at source from Timber obtained by any Mode other than a Forest Lease6CC
206CCollection at source from any other Forest Produce (not being Tendu Leaves)6CD
206CCollection at source from Scrap6CE
206CCollection at source from contractors or licensee or lease relating to Parking lots6CF
206CCollection at source from contractors or licensee or lease relating to toll plaza6CG
206CCollection at source from contractors or licensee or lease relating to mine or quarry6CH
206CCollection at source from tendu leaves6CI

Here is a TCS Rate chart for your reference.

SectionNature of PaymentTCS Rate for IndividualTCS Rate for Others
SectionNature of PaymentTCS Rate for IndividualTCS Rate for Others
206CScrap11
206CTendu Leaves55
206CTimber obtained under a forest lease or other mode2.52.5
206CAny other forest produce not being a timber or tendu leave 2.52.5
206CAlcoholic Liquor for human consumption11
206CParking Lot, toll plaza, mining and quarrying22
206CMinerals, being coal or lignite or iron ore (applicable from July 1, 2012) 11
206CBullion if consideration (excluding any coin / article weighting 10 grams or less) exceeds Rs. 2 Lakhs or jewellery if consideration exceeds Rs. 5 Lakhs (and any amount is received in cash) (applicable from July 1, 2012)11

 

1. Create a party ledger with tcs applicability

You know how to create a party ledger. To do this, go to.

Gateway of Tally>Accountsinfo>Ledgers>Create

In ledger creation screen,under statutory Information activate the follwing option.

Is TCS applicable ? :  Yes

Buyer/Lessee Type:  Company-Resident

Select exact collectee type from the list

TCS Buyer or lessee type

Filling   ‘Tax registration details’ is a must for E-tcs,The final screen will look like below.

Lakshmi Metal work ledger creation with tcs applicability

1.Creating Sales Ledger

Go to

Gateway of Tally > Accounts Info. > Ledgers > Create

Enter the following details in sales ledger.

  • Name:  Enter the name of sales ledger
  • Under: Sales Account
  • Under statutory information
  • Is TCS Applicable: Applicable.
  • Nature of goods : Select the TCS nature of goods we have created above. ie, scrap.

The screen will look like this.

Creating sales ledger with tcs applicability

1.Creating stock item for TCS

Checkout this article on creating stock item if you are unaware of it.

Go to

Gateway of Tally > Inventory Info. > Stock Item > Create

  • Name: Stock item name
  • Under: Select the group of stock item if any else select primary.
  • Unit: MT – Select the unit for the stock item
  • Is TCS Applicable  : Applicable
  • Nature of goods : Select the TCS nature of goods we have created above. that is, scrap.

Stock item creation with TCS applicability

1.TCS Ledger creation

Next step is to create a tax ledger, called tcs ledger.

  • Name : Enter the TCS Ledger name.
  • Under :  duties & taxes
  • Type of duty/tax : TCS
  • Nature of goods/Contract/License/Lease : Scrap

Below is the screen shot of tcs ledger creation.

TCS Ledger creation with nature of goods/contract/license/lease

TRANSACTIONS IN TCS

1.Sales transaction in tcs

Our example transaction is

Sold scrap to Lakshmi Metal works Ltd 100 MT @1500  = 150000, TCS Collected from Lakshmi Metal work is  1500

Lets enter this transaction into Tally

Go to  Gateway of Tally > Accounting Vouchers > F8: Sales > Item Invoice

Party’s Account Name : Lakshmi Metal Works.

Sales Ledger : Scrap sale ( here scrap sale).

Name of item :  Scrap

Enter quantity ,rate

Press Enter Key  twice

Then choose TCS Ledger  we have created. The TCS will be calculated automatically.

Below is the sales transaction screenshot.

TCS sales transaction in Tally ERP9

Save the screen by using Ctrl+ A/Enter Key.

1.Payment transaction in tcs

According to section 206C shall be paid to the credit of the Central Government within one week from the last day of the month in which the collection is made.
Read more  about TCS Payment here

How to do TCS payment in Tally ERP9?

Go to Gateway of Tally > Accounting Vouchers > F5: Payment

Select bank, then in particulars select TCS Ledger.

TCS bank payment voucher

Press enter, You will have a screen where TCS Nature of Goods details  can be selected.

TCS payment voucher with pending tax details popup

3.Printing TCS challan NO/ITNS 281

Press enter and save the screen after giving details in bank allocation details.

You can print TCS Payment challan No /ITNS 281 right away from this payment voucher.

To do this ,Click Print or use Alt + P from this Payment voucher.

You will get a print configuration screen.

Printing configuration screen for TCS payment challan

Inside the configuration screen there is an option.’Print  as TCS challan’.

Type ‘Yes’Here if  ‘NO’ is given,a Normal payment voucher will be printed.

Here is the image of TCS Payment Challan.

ITNS-281-challan-For TCS-Payment

TCS REPORTS

1.     Form 27 EQ

What is Form 27 EQ?

As per the Income Tax Act, 1961, every corporate and government entity responsible for collection of tax at source should furnish TCS returns containing details of collectee(s) and challan details relating to deposit of tax with the Income Tax Department. Form 27EQ is the quarterly return statement for TCS.  The due dates for filing returns are July 15th, October 15th, January 15th, and for the last quarter, April 30th.

To access Form 27 EQ

Go to  Gateway of Tally > Display > Statutory Reports > TCS Reports > Form 27EQ

The report look like this

Form 27 EQ report in Tally ERP9

1.Challan Reconciliation

TCS are paid along with Challan, hence this challan number can be reconciled with each transaction to know the accuracy of tax payment .

Go to  Gateway of Tally > Display > Statutory Reports > TCS Reports > Challan Reconciliation

You will have a screen  of tcs challan reconciliation.

TCS Challan reconciliation

Click on challan reconciliation button on the right or use short cut key F5,You will get a new screen where you can reconcile the transaction with TCS payment.

TCS voucher reconciled report

The marked area are the place where data entry is required other details are pulled up from TCS vouchers. Press Enter and save the details.

We will have some more guides on TCS in coming tutorials ,Hope you got a clear idea on how to implement TCS in Tally ERP9

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