Tax Collected at Source (TCS) 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 1 October 2020.
The new provision requires you to collect TCS if your turnover has exceeded ₹10 crore in the last financial year and the invoice value of the sale to a customer exceeds ₹50 lakhs in the current financial year.
The new TCS rates are applicable on the sale amount received after 1 October 2020, when the total sale amount for the fiscal year is greater than ₹50 lakhs.
When TCS is applicable on your sales transactions, Zoho Books will automatically show you the TCS field near the Total in the transaction if the total sales amount for that particular customer’s PAN exceeds ₹50 lakhs in that financial year. You can select the applicable TCS rate and it will be included in the transaction.
Zoho Books calculates the total sales amount by adding all the sent invoices’ amount, and subtracting the written-off amount and the TCS applied on previous invoices.
Total Sales Amount = Sum of sent invoices’ total - Sum of write-off amount - Sum of TCS applied on invoices
The TCS rate to be collected from a customer or buyer who has a PAN card is 0.1%. However, during the COVID-19 pandemic, the rate was reduced to 0.075% till 31 March 2021.
If the customer or buyer does not have a PAN card, then the applicable TCS rate will be 1%.
When you create a transaction, if the total sale amount for that customer’s PAN exceeds ₹50 lakhs in that financial year, you will see the TCS field, where you can create and apply the respective TCS rates. To configure:
Click + New TCS Tax to create a new tax rate.
|Nature of Collection
|The reason for collecting TCS and the section under which it is collected.
|The percentage of TCS collected.
|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.
|The date when the TCS applicable period starts.
|The date when the TCS applicable period ends.
Insight:TCS is calculated on the Total amount which is inclusive of taxes, shipping charges, discounts and adjustments.
Insight: Similarly, you will be able to create and apply them them while recording your bills in Zoho Books.
You will be able to view the TCS payable or receivable in the transaction’s journal and Form 27EQ.
You can view the journal details available below each transaction to view the TCS Receivable or Payable amount.
Zoho Books generates the Form 27EQ automatically which you can use while filing your TCS. To view this report:
and GST filing.