Enable TCS Finance Act 2020 in Tally ERP 9

Introduction Finance Act 2020 introduced a new provision under Section 206C (1H) for the TCS on Goods With effect and implement in Tally ERP9, prime'

TCS on Goods Sold: Applicability of New Sections 206C(1H)  Implement in Tally ERP Applicable From 1 October 2020

Short Introduction:-  Finance Act 2020 introduced a new provision under Section 206C (1H) for the Tax Collected at Source (TCS) on Goods With effect from 1 of October 2020. As per the new provision if any seller of any goods whose turnover in the preceding  FY exceeds Rs. 10 Crore then, from 1 of October 2020, he shall be liable to collect TCS @0.1% of the sale value from the buyer if the buyer purchase goods for the value exceeding Rs. 50 Lacs (Limit of Rs. 50 Lac shall be seen for each buyer separately). In other words, till the limit of Rs. 50 Lac there is no requirement to Collect TCS by the Seller however the moment purchases of the buyer exceeds Rs. 50 Lac from the same seller than on such excess amount seller shall collect the TCS. However, in the first year of implementation of this new provision Sale made to buyers up to 30 September 2020 shall not be liable to collect the TCS.

TCS on Goods Sold New Finance Act 2020 Applicable from:

  • 1st October 2020

Who is Applicable for TCS on Goods Sold New Finance Act 2020?

  1. If total sales/ gross receipts/ turnover from the business in the previous Financial Year is greater than 10 Cr for the seller. AND
  2. Sale of any goods above Rs. 50 lakhs

TCS on Goods Sold New Finance Act 2020 TCS Rate:

TCS shall be collected & paid on Receipt Basis.

  • 0.1% – if PAN/ Aadhar submitted to the seller
  • 1% – if  PAN/ Aadhar not Submitted to seller

Important Note (Covid-19 relief measures):- Government of India vide press release dated 13 May 2020 has announced a reduction in TCS rates by 25 per cent of the existing rates. New reduced rates are applicable till 31 March 2021. Accordingly, a lower rate of TCS at the rate of 0.075 per cent shall be applied instead of 0.1 per cent till 31 March 2021.

Who is not Applicable for TCS on Goods Sold New Finance Act 2020?

This provision will not be applicable in the following cases:-

  • Goods exported out of India
  • Goods on which TCS/TDS provisions are already applicable under the Income Tax Act
  • If Buyer is: the Central/State Govt, an embassy, a High Commission, legation, commission, consulate & the trade representation of a foreign State a local authority; a person importing goods into India or any other person as notified by the Central Govt.
  • 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.

Compliance:

  • TCS Collected during month need to be paid to Govt by 7th of next Month
  • Quarterly TCS Return in Form 27EQ

How To Enable TCS in Tally ERP9?

In Tally.ERP 9, if you mention threshold limit in TCS category master then on crossing the set limit tax is computed from RS 1. But, for this category tax should be computed on excess value (over and above threshold limit). Hence, we need to follow below steps:
  • Go to Gateway of Tally ➤ F-11 (Company Features) ➤F-3 (Statutory & Taxation) 
  • Set Enable Tax collected at source (TCS)- Yes(Press Yes) 
  • Set/alter TCS Details- Yes (Press Yes):-The Company Operations Alteration screen appears as shown below:
TCS-Details
  • Enter the TAN registration number.
  • Enter the Tax deduction and Collection Account Number (TAN).
  • Select Collector Type.
  • Enter the Collector branch/division.
TCS-Details

  • Enable the option Set/alter details of the person responsible to display the Person Responsible Details screen.
Resposible-Person-Details

  • Press CTRL + A For Save Details:-
  • Press Enter. The TCS Collector Details screen appears.
  • Set Ignore IT Exemption Limit to:

● Yes, if you don't want to consider the IT exemption limit.

● No, if you want to consider the IT exemption limit.

  • Press 3 Times CTRL+A for save all Details

How To Enable TCS on Goods and set Tax Rate?

Go to Gateway of Tally ➤Click on Inventory info➤click on Statutory Info➤Select TCS Nature of Goods ➤Choose Create and view screen appears as shown below:
TCS-on-Goods-and-set-Tax-Rate
  • Press  CTRL+A for save all Details

Enable TCS in Party Ledger:-

Note:- It is Applicable to those Sundry Debtors Ledger who has crossed 50 Lacs or nearby 50 Lacs in this financial year and you want to apply TCS
Go to Gateway of Tally ➤Click on Accounts info➤click on Ledger➤Select Alter ➤ go to Statutory Information section and Enable 'is TCS Applicable "yes" ➤ Select Buyer collectee type from Given list ➤ Fill Party Pan No. ( it is mandatory for TCS Calculation ) and view screen appears as shown below:-
TCS-Enable-In-Ledger

  • Press  CTRL+A for save all Details

Enable TCS in Stock Item:-

Go to Gateway of Tally ➤Click on Inventory info➤click on Stock Item➤Click on Alter Select Stock item Name and view screen appears as shown below:-
Enable-TCS-In-Item
  • Press  CTRL+A for save all Details

Record Sales Invoice for the Sale of Goods?

You need to monitor the amount received from each Party and realize that when the Exemption limit is crossed. You need not select the TCS classification if the Exemption limit isn't crossed in a year instead of select Not applicable.
For Example:-
  • Recording A party first  TCS transactions in Sales/Receipt transaction for Rs 49,00,000. Since the threshold limit of Rs 50,00,000 is not crossed, you have to keep track of the 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 the amount received below the threshold limit, enable the option Allow modification of Tax Details for TCS? under F12: Configure of the Sales invoice.

Go to Gateway of Tally ➤ Click on Accounting Voucher (Press v) ➤click on Sales (F8) ➤ Click on F12: Configure ➤ Enable Allow modification of Tax Details for TCS and view screen appears as shown below:
Allow-modification-of-TCS
  • Press  CTRL+A for save all Details

Record Sales Transaction with TCS

Go to Gateway of Tally ➤ Click on Accounting Voucher (Press v) ➤click on Sales (F8) ➤ Pick the ledger of the party in the Party A/c name from Party List  ➤ select Sales Ledger for Item allocation ➤ Under Name of Item, select the item(s) sold, enter the quantity and rate and view screen appears as shown below:
Sale-Entry
  • Press Enter to display the Accounting Details screen.
  • Select the sales ledger for the sale of any goods.
Bill-Allocation

  • Press Enter to display the TCS Collection Allocations screen. The amount is under the threshold limit.
  • Under Nature of Goods, select Not applicable since the amount is under threshold limit.
Nature-of-goods-in-TCS-selestion

  • If You do not Get Assessable value than click F:12 for Enable Assessable Value and Press y
  • Press Enter
  • Press Enter to return to the voucher screen.
  • Press Enter
Sale-Entry-Accept
  • Press to accept and save the voucher.

When the same party makes further purchases in the same financial year which makes the total amount received exceed the threshold limit, the transaction should be marked with TCS category.

Record the second sales transaction for the same party and TCS category for Rs 6,00,000 as below:

Go to Gateway of Tally ➤ Click on Accounting Voucher (Press v) ➤click on Sales (F8) ➤ Pick the ledger of the party in the Party A/c name from Party List  ➤ select Sales Ledger for Item allocation ➤ Under Name of Item, select the item(s) sold, enter the quantity and rate and view screen appears as shown below:
Sale-Entry

  • Press Enter to display the Accounting Details screen.
  • Select the sales ledger for the sale of any goods.
Item-Allocation
  • Press Enter to display the TCS Collection Allocations screen.
  • Under Nature of Goods, select the TCS category and enter the value of amount received that is over the threshold limit under Assessable Value.
TCS-Modification
  • Press Enter to return to the voucher screen.
  • Press Enter
Sale-Entry-Accept

  • Press to accept and save the voucher.

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