TCS calculation and transactions as per Section 206C(1H)

This article describes TCS calculation on customer receipts using the section 206C(1H) configuration. The historical examples assume a threshold of INR 50,00,000 and a TCS rate of 0.10%. These values illustrate the calculation and aren't guidance on current tax law. Use the rates and thresholds that apply to your transactions.

Provision has been provided to enter amount on which TCS can be calculated on the event of receipt of payment from customer. In addition to it, provision for selecting posted sales lines for updating amount in 'TCS on Recpt. Of Pmt. Amount' in payment line has been provided. By this way, user is able to update / enter applicable amount for TCS calculation in 'TCS on Recpt. Of Pmt. Amount' field.

When TCS On Recpt. Of Pmt. is selected for the nature of collection, TCS uses TCS On Recpt. Of Pmt. Amount instead of the journal line amount as its base. The calculation adds TCS to this base rather than extracting it from an inclusive payment amount.

Before posting, specify TCS Debit Note No. in General Ledger Setup and an effective TCS Posting Setup line. Posting creates a separate customer debit note for the TCS amount.

The receipt examples assume that the threshold has already been exceeded, so the entered receipt base is fully taxable.

TCS calculation on customer payments under section 206C(1H)

  • Create General Journal, Cash Receipt Journal, or Bank Receipt Journal

    1. [!INCLUDE [open-search](../../includes/open-search.md)] Enter General Journal, Sales Journal, Cash Receipt Voucher, or Bank Receipt Voucher, and then choose the related link.
    2. Select Document Type as Payment.
    3. Select Customer in Account Type and select relevant customer code in Account No. field.
    4. Fill the Amount field with the credit amount.
    5. Select G/L Account or Bank Account in Bal. Account Type, and select the relevant cash or bank account in Bal. Account No.
    6. Select relevant TCS Nature of Collection in journal line. Location Code and T.C.A.N No. fields shouldn't be blank.
    7. Enter TCS On Recpt. Of Pmt. Amount directly, or choose Get Open Posted Lines For TCS On Payment Calculation and select the applicable sales lines. The lookup includes lines without a TCS nature of collection from the customer's open posted invoices. The selected line amounts, including GST where applicable, are totaled into the field. The amount must be nonnegative and can't exceed the absolute journal line amount.
    8. If TCS Nature of Collection selected in payment line has TCS on Recpt. Of Pmt. field marked as 'TRUE' in TCS Nature Of Collection table, then system should calculate TCS on TCS On Recpt. Of Pmt. Amount, and shouldn't calculate TCS on line amount.

TCS to be calculated on customer receipt (through general journal, cash receipt journal and bank receipt journal)

For example, payment has been received from customer for INR 1,00,000 on which 0.10 % TCS is applicable for Nature of Collection '1H', 'TCS on Recpt. Of Pmt. Amount' is INR 75,000 hence 'TCS Base Amount' is also INR 75,000.

  • In this case TCS calculation is as following:

    Component Value
    TCS Base Amount 75,000
    TCS Amount 75 (75000 x 0.10 %)

  • GL Entries are as following:

    Particulars Amount
    Bank Account 100000
    Customer Account -100000
    Customer Account 75
    TCS Payable Account -75

TCS calculation on customer payments under section 206C(1H) and where GST is also applicable

  • Create General Journal, Cash Receipt Journal, or Bank Receipt Journal

    1. [!INCLUDE [open-search](../../includes/open-search.md)] Enter General Journal, Sales Journal, Cash Receipt Voucher, or Bank Receipt Voucher, and then choose the related link.
    2. Select Document Type as Payment.
    3. Select Customer in Account Type and select relevant customer code in Account No. field.
    4. Fill the Amount field with the credit amount.
    5. Select G/L Account or Bank Account in Bal. Account Type, and select the relevant cash or bank account in Bal. Account No.
    6. Select relevant TCS Nature of Collection in journal line. Location Code and T.C.A.N No. fields shouldn't be blank.
    7. Enter TCS On Recpt. Of Pmt. Amount directly, or choose Get Open Posted Lines For TCS On Payment Calculation and select the applicable sales lines. The selected line amounts, including GST where applicable, are totaled into the field. The amount must be nonnegative and can't exceed the absolute journal line amount.
    8. If TCS Nature of Collection selected in payment line has TCS on Recpt. Of Pmt. field marked as 'TRUE' in TCS Nature Of Collection table, then system should calculate TCS on 'TCS On Recpt. Of Pmt. Amount', and shouldn't calculate TCS on line amount.
    9. Select GST Group Code and HSN/SAC Code, then select GST on Advance Payment. GST is calculated from the GST-inclusive receipt amount.

TCS to be calculated on customer receipt (through general journal, cash receipt journal or bank receipt journal)

For example, payment has been received from customer for INR 1,00,000 on which 0.10 % TCS is applicable for Nature of Collection '1H', 'TCS on Recpt. Of Pmt. Amount' is INR 55,000 hence 'TCS Base Amount' is also INR 55,000. GST 18% will also be charged.

  • In this case TCS calculation is as following:

    Component Value
    TCS Base Amount 55,000
    TCS Amount 55 (55000 x 0.10 %)
    GST Base Amount 84,745.76
    GST Amount 15,254.24 (84745.76*18/100)

  • GL Entries are as following:

    Particulars Amount
    Bank Account 100000
    Customer Account -100000
    Customer Account 55
    TCS Payable Account -55
    GST Receivable 15,254.24
    GST Payable -15,254.24

TCS 206C-1H-Overview

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