TCS with threshold
This article explains the requirement of threshold amount in TCS and the process of calculating TCS for such transactions.
TCS calculation considering threshold limits
The tax rate defines the threshold for each TCS nature of collection. The calculation considers transactions within the tax accounting period and the customer's Threshold Overlook setting. Select Threshold Overlook on Allowed NOC to calculate without applying the threshold.
The following illustrative scenario assumes a threshold of INR 20,000 for TCS Type A. This threshold isn't a statement of current tax law. With Threshold Overlook cleared, a transaction of INR 19,000 below the threshold doesn't collect TCS. If you expect the customer's transactions to exceed the threshold and want to collect from the first transaction, select Threshold Overlook.
Calc. Over & Above Threshold on the tax rate controls whether the threshold amount is excluded from the taxable base after the threshold is crossed. It differs from Threshold Overlook, which ignores the threshold entirely.
GL Entries for TCS where payment is less than the threshold limits as follows:
Particulars Amount Customer Account 19000 Sales Account -19000 For an illustrative tax-inclusive receipt of INR 10,000 with calculated TCS of INR 287 after the threshold is crossed, the G/L entries are:
Particulars Amount Bank Account 10000 TCS Payable Account -287 Customer Account -9713