What is TCS on Sale of Goods (Section 206C-1H) and how do I configure it in Zoho Books?

TCS or Tax Collected at Source is the tax that vendors collect from their customers at the time of sale. The government has introduced a new provision under Section 206C (1H) of the Income Tax Act for collecting TCS on the Sale of Goods after October 1, 2020.

Who should collect TCS on sale of goods?

The new provision requires you to collect TCS if your turnover has exceeded Rs.10 crore in the last financial year and the invoice value of sale to a customer exceeds Rs.50 lakh in the current financial year.

When is this applicable?

The new TCS rates will be applicable only on the amount received after 1 October 2020. It is collected on the sale value which is greater than 50 Lakhs only.

What are the tax rates?

The TCS rate to be collected is 0.1% but currently due to the COVID-19 pandemic, the rate has been reduced to 0.075% till 31 March 2021.

If the customer/buyer does not have a PAN card, then the applicable TCS will be 1%.

How do I configure and apply the TCS rates in Zoho Books?

You will be able to create the TCS rates as you create your transaction. To configure:

  • Create an invoice for your customer in Zoho Books with all the necessary details.
  • In the Total section, click the dropdown near TCS.
  • Click Manage TCS and a pop-up appears.
Creating TCS
  • Click + New TCS Tax. to create a new tax rate.
Creating TCS
  • Enter the following details:
    • Nature of Collection - The reason for collecting TCS and the section under which it is collected.
    • Rate - The percentage of TCS collected.
    • Tax Name - Name of the tax that’s collected. For example, TCS on sale of goods.
    • TCS Payable Account - A liability account used to track the TCS received from the customers.
    • TCS Receivable Account - An asset account used to track the TCS you’ve paid to your vendor.
Creating TCS
  • Save and apply the tax rate. You can also click the Edit icon near the amount and type the TCS rate to override the calculated value.

Insight:TCS is calculated on the Total amount which is inclusive of taxes, shipping charges, discounts and adjustments.

  • Click Save and Send to share the tax invoice with your customer.
  • You can also add other rates and manage them the same way
TCS

Insight: Similarly, you will be able to create and apply them them while recording your bills in Zoho Books.

How do I track the TCS payable or receivable?

You will be able to view the TCS payable or receivable in the transaction’s journal and Form 27EQ.

Transaction’s journal

You can view the journal details available below each transaction to view the TCS Receivable or Payable amount.

Form 27EQ

Zoho Books generates the Form 27EQ automatically which you can use while filing your TCS. To view this report:

  • Go to Reports and then Taxes.
  • Click Form No. 27EQ to view the report.

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