Tax Collected at Source (TCS) Set up in Tally

Tax Collected at Source (TCS)

TCS means Tax Collected at Source, collected at source from the buyer / lessee ( also referred as collectee / payee), by the seller  (also referred as lessor, licensor, or Collector) at the point of sale of on sale of specified goods (defined u/s 206C of the Income Tax Act, 1961). 

The Tax collector deposits with the Government Account.

Excluded Buyers: The following types of Buyers are excluded from TCS

  • Public Sector Companies
  • Central Government
  • State Government
  • Embassy of High Commission, Consulate and other Trade Representation of a Foreign State
  • Any Club, such as social clubs, sports clubs and the like

TCS Exemptions : TCS may be totally or partly exempted in following cases :

– Full Exemption: TCS may not be collected on goods used for manufacturing or processing and not trading, on submitting a declaration by the buyer in Form 27C. A copy of the declaration has to be given to the collector of TCS, who will submit the copy to the authorities concerned on or before the seventh day of the following month.

– Lower Rate: If the Total Income of the buyer is lower than the applicable limit of TCS, the buyer (Collectee) may apply to the Assessing Officer (AO) for a lower rate (in Form No.13). The AO on being satisfied, may issue a certificate, specifying the lower rate of TCS. On submitting a copy of such certificate to the collector, the collector will charge TCS at the lower rate as specified in the certificate.

TCS Certificate

The TCS certificate, in Form 27D, must be issued by the seller to the buyer within one month from the end of month in which the TCS was collected / debited .     

Consolidated Certificate : Some times, a buyer requires multiple certificates as proof of the tax collected at source for the period ending on 30th September and 31st March, in each financial year. In such cases, the person collecting the tax, can on request, issue a consolidated certificate (Form No. 27D) within a month.

TCS Collector Types

For the purpose of TCS, the Sellers (or Collectors) are classified as

  • Central Government
  • State Government
  • Local Authority
  • Statutory Corporation or Authority
  • Company
  • Partnership Firm
  • Co-operative Society
  • Individual/HUF (whose turnover exceeds the threshold limits specified u/s 44AB (a) / 44AB (b) of  I Tax Act, 1961, during the previous year.

TCS Returns Filing  

TCS Returns are to be filed as follows:

  • Quarterly Returns : The Quarterly returns for first 3 quarters (i.e Q/e June, September & December) are to be filed in Form 27EQ within 15th of following month of the Quarter. For the last quarter (i.e Q/e March), the Returns are to be filed on or before April 30.  
  • Annual Returns : Annual Returns are to be filed in Form 27E  by June 30 of the following financial year.

Electronic TCS Return Filing  : Every Corporate and Government collector must file TCS returns in electronic form (referred as e-TCS). Other Collectors may file TCS Returns either in electronic or in physical form. NSDL collects the e-TCS returns from the Collectors on behalf of the Income Tax Department.

Now we describe compliance of TCS, like collection of TCS, deposit to Government and submission of Statutory Returns, using Tally.

TCS Activation in Tally

Click F11: Features> Statutory and Taxation to get Statutory & Taxation screen.

At Statutory & Taxation screen , set  :

  • Activate TCS : At Enable Tax Collect at source, set Yes
  • TCS Details : Having set Yes at Enable Tax Collect at source, at set Yes at set/Alter TCS Details, set Yes to get Company Deductor/ Collector Details

TCS Activation in Tally

Deductor / Collector Details entry for TCS set up in Tally

At Company Deductor/ Collector Details screen , enter the following details :

TCS Details entry for TCS Set up in Tally

Tax Collection No (TAN) : At Tax Deduction & Collection Account Number, Enter the 10 digit TCS Number (4 Alpha, 5 Numeric, 1 Alpha) allotted by the I Tax Deptt. In case of wrong number pattern entry, an error message will be displayed .

TAN Entry Error Message in Tally

  • Head Office TAN : At Head Office TAN Number, enter the Head Office TAN, if any, else leave blank
  • Income Tax Circle / Ward (TDS/TCS): At Income Tax Circle / Ward (TDS/TCS), enter the Income Tax Circle / Ward # to which the organisation is being assessed under I Tax Act.
  • Collector Type : At Deduction / Collector Type, select the Type of the organisation  from the list

Collector Company Type List in Tally

  • Officer Name: At Name of the Person Responsible, enter the name of the officer  in the organisation responsible for filing the return under Income Tax Act
  • Father Name : At Son / Daughter of, enter the Officer’s Father’s name as stated above
  • Designation : At Designation, enter the Designation of the named officer.

The data entered in the Form will be carried and printed in Reports / Challans etc

TCS Statutory Info Lists in Tally

At GoT>Display, select Statutory Info to get Statutory Info Menu, showing the Statutory Details, for information (you do not need to enter /modify anything)

TCS Statutory Info  menu in Tally

TCS Collectee Types in Tally

At Statutory Info Menu , Collectee Type to get TCS Collectee Type List .

TCS Collectee Type List

TCS Surcharge Rates in Tally

Drill down through any Collectee Type at TCS Collectee Type  List, to get Collectee Type Details, showing the TCS Surcharge Rate applicable for the respective Collectee Type.

TCS Collectee Type Details

TCS Goods Type List in Tally

At Statutory Info Menu, select TCS Nature of Goods to get TCS Goods Type List .

TCS Goods Type List

Collectee Type / TCS Rates List in Tally

Drill down through any Item at any Goods at TCS Goods List to get TCS Goods Rate List showing the TCS Rate applicable for the respective Good, for each  type of Collectee

TCS Goods Rate List

Collectee Ledger TCS set up in Tally

CustomerLedger creation has been explained earlier. Here we discuss about features relating to

TCS for ledger creation of Customer (Collectee).

At Gateway of Tally  select Accounts Info > Ledgers > Create to get Ledger Creation screen .

Collectee Ledger Creation in Tally

Set Yes at Is TCS Applicable to get TCS details screen for the Collectee .

Collectee TCS Details entry in Tally

At TCS  details screen, enter as follows:

  • Collectee Type : At Buyer / Lessee, select the appropriate Collectee Type from the list
  • Tax Relief : At Is Lower / No Tax Rate applicable :
    • Relief : Set Yes where Lower Rate Tax or Tax Exemption (No Tax) is applicable
    • No Relief : Set No if Tax  is collected at Normal Rate

In case of Tax Relief (where Yes is set at Is Lower / No Tax Rate applicable), enter the following details further:

Section Number : At Section Number, enter the relevant section number of Income Tax Act 1961, under which the Relief is made available to the Party

Lower Rate : At Rate of TCS,  Enter the applicable TCS Rate for the Party (0 in case of total exemption)

  • Surcharge Limit : At Ignore Surcharge Limit (it appears for a few specified Collectee Types only), set,
    • Yes to ignore the threshold limit of Surcharge
    • No to Consider the threshold limit of Surcharge

Collectee TCS Details Entry  in Tally

TCS Ledger creation in Tally

We have discussed Ledger Creation earlier. Create a TCS Ledger (Ledger Account to which TCS charged in Sales Invoice is booked) under Duties & Taxes Group (like TDS Ledger). Create separate Ledger for each type of TCS Goods, as the ledger is to be linked with specific TCS Goods Type

Here, we discuss about specific points relating to TCS Ledger.

TCS Ledger Creation in Tally

At Ledger Creation screen , enter as follows:

  • Parent Group : At Under, select Duties & Taxes Account Group or its sub Group from the list of Groups
  • Duty Type : At Type of Duty / Tax, select TCS from the list
  • TCS Type : At Nature of Goods/Contact/License/Lease, select TCS Type from the list

Duty Type List in Tally

  • Inventory Values Link : At Inventory Values are affected, set No

Sales & Purchase Ledgers :  Create Sales & Purchase Ledger as usual. There is no special information required to be given specifically for TCS in Sales & Purchase Ledger.

TCS  Stock Item set up in Tally

Stock Item creation has been discussed earlier. For Stock Item, on which TCS is applicable, set the TCS related additional options.

At  Stock Item Creation screen , at Tax Information section, at TCS Nature of Goods, select the Goods Type from the TCS Goods Type list .

TCS set up Stock Item

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