Under section 206C (1) of Income Tax Act, 1961 seller of following specified goods must collect Tax (along with sales value) from Buyer at the given rates:
| Nature of Goods | Percentage / Rate of Tax |
| Alcoholic Liquor | 1 |
| Timber Obtained Under Forest Lease | 2.5 |
| Timber Obtained by any other mode | 2.5 |
| Tender Leaves | 5 |
| Parking Lot, Toll Plaza | 2 |
| Mining & Quarrying | 2 |
| Other Forest produce, excluding tender leaves & timber | 2.5 |
| Scrap | 1 |
| Surcharge (on TCS) – To Foreign companies if collection exceeds Rs.1 Crore | 2.5 |
| Education Cess (on TCS) – only for foreign companies | 3 |
Here, the term seller refers to all types of assessees including individuals / HUF covered by tax audit. Buyer refers to all types of assessees except PSU, governments, embassies, club and for own consumption.
As in the case of TDC, TCS must be remitted on or before 7th of succeeding month through designated banks. For every quarter, TCS return must be uploaded in Form 27E within the stipulated date. Buyer must issue form 27D to seller as proof of TCS.
Setting up TCS features:
Since TCS is for specified goods, select ‘Accounts with Inventory’ as type when creating a company. TCS must be enabled through F11: Features -> F3: Statutory by setting ‘Yes’ to ‘Enable Tax Collected at Source’ (TCS) and ‘Set / Alert TCS details’ fields. As in TDS, type TAN, collector type, name and designation of person responsible.
Creation of masters and input of TCS details:
Before entering vouchers required accounts and inventory masters must be created. Let us discuss such creations below:
Creations of party ledger:
While creating buyers ledgers, Collectee type and PAN are two important fields.
Set ‘Yes’ to ‘Is TCS Applicable?’ field and select Collectee type from the given list. From the same TCS details screen, setting lower / nil rates, ignoring limits are also possible.
Creating of Tax Ledger:
Separate tax ledger is necessary for every specified goods. So specify the name of the item, place it under duties and taxes under group, select TCS as type of duty and select correct TCS type from the given list.
Creation of Sales ledger:
Since TCS rates are picked from stock item, sales ledger creation screen will not seek TCS information. But VAT tax class is to bet set, if applicable.
Creation of Stock Item:
Separate stock item is to be created for every specified goods. Relevant TCS type must be selected in the ‘TCS nature of goods’ field.
Entering Vouchers:
Let us discuss how to enter sales entry and to prepare auto filled TCS remittance entry below.
Sales entry with TCS:
It is a normal sales entry. Select buyer as party, specified goods in name of item, enter the quantity, rate and select tax ledger finally. TCS details screen will appear automatically and tax and bill details will be shown. Accept the details and the sales voucher.
TCS remittance entry with auto fill option:
As in TDS, Stat Payment button and auto fill option is available for TCS remittance. Select type of TCS, buyer status and to date. Relevant due amount will be filled automatically. The same can be printed as TCS challan in ITNS 281.
Display of TCS payables:
Display -> Statements of accounts -> TCS Outstandings -> TCS payables is the path to list all TCS payables along with due dates. This will help to know the exact amount to be remitted as TCS.
Printing TCS Reports:
Let us discuss how to print TCS challan, TCS certificate and TCS return below.
Printing TCS Challan:
As already discussed a TCS remittance voucher can get printed as TCS challan. To do so, set ‘Yes’ to ‘Print as TDS Challan’ field in Print configuration.
Printing Form 27D:
There are two ways available to print TCS certificate in Form 27D:
- Multi account printing -> Multi Form 27D printing
- Display -> Statutory Reports -> TCS Reports -> Print Form 27D.
Printing Form 27B:
Form 27B furnishes information about the content of electronic media field with the statement of TCS.
To print it, use this path: Display -> Statutory Reports -> TCS Reports -> Print Form 27B
Chapter – 22 Tax Collected Sources (TCS)
Exercise 1:
A proprietary concern owned by Selvakumar S/o Raman resides at 12 C Senkaluneer Oadi st, Kanchipuram engaged in sale of forest timber products. Its TAN is TBN40487R.Sales and other details are as follows;
| Date | Sold to | PAN | Qty. (CBM) | Rate | Amount |
| 03.05.XX | Sundaram & Co | CREPS4521T | 210 | 320 | 67200 |
| 17.05.XX | Kanchipuram Municipality | AACLK0001Y | 173 | 320 | 55360 |
| 26.05.XX | Kumar Traders | BAPFK1078U | 312 | 320 | 99840 |
| 06.06.XX | Sundaram & Co | 76 | 320 | 24320 | |
| 24.06.XX | Kumar Traders | 82 | 320 | 26240 |
CBM = (Cubic Meter)
Please help to prepare a) TCS Payable b) TCS remittance challan dated 14.6.XX paid vide SBI cheque no.154263
Exercise 2:
An Orissa based Tendu leaves (used for wrapping beedis) trading company submits the following details:
| Date | Sold to | PAN | Qty (SB) | Rate | Amount |
| 14.4.XX | Mangalore Ganesh Beedis | BASCM0723T | 87 | 550 | 47850 |
| 26.4.XX | Taj Tobacco Co | AART4152V | 46 | 550 | 25300 |
| 08.5.XX | Raja Beedi Co | ATRPr6589C | 41 | 550 | 22550 |
| 26.5.XX | Mangalore Ganesh Beedis | 52 | 550 | 28600 | |
| 18.6.XX | Raja Beedi Co | 30 | 550 | 16500 |
SB=Standard Bag (1 SB = 1000 Bundles/50000 Leaves)
Help its partner Mr.Chandrakanta S/o Oshram to prepare form 27D to Mangalore Ganesh Beedis and to print form 27B. He resides at 56 Central Avenue Deogarh Orissa, The firm’s TAN is DEO17452Y