1. Country-Specific Features
  2. India Help Topics
  3. India Localization SuiteTax Engine
  4. Tax Collection at Source
  5. Applying TCS on Transactions

Applying TCS on Transactions

After completing TCS setup, you can calculate TCS on cash sale and invoice transactions. You can also calculate TCS on an invoice converted from a sales order.

TCS subsection codes and challan codes associated with items determine the tax rate rules to apply to transactions. When you select an item that is eligible for TCS in a transaction, TCS is calculated on the item. You can view the TCS tax details in the Tax Details subtab on a transaction.

Important:

Before you apply TCS on transactions, read the following points:

  • If you edit an item's amount in a cash sale transaction, the accumulated bucket amount associated with the item's subsection code will not change. TCS calculated on the item will not change either.

  • If you edit invoice and cash sale transactions where TCS is applied, TCS calculation may be inaccurate.

To apply TCS on a transaction:

  1. Go to an invoice or cash sale transaction.

  2. Click the Items subtab.

  3. Select an item. If TCS is applicable to the item, the TCS section code, TCS subsection code, and TCS challan code associated with the item automatically populates.

  4. Click Add to add the item.

  5. Complete other details as required.

  6. To preview tax, click Preview Tax.

  7. Click Save.

When you preview tax, you can check the TCS tax information in the Summary as well as on the Tax Details subtab on a transaction. TCS is calculated on an item’s gross amount, which is the sum of the item’s amount and GST.

TCS Calculation

The India Localization SuiteTax Engine SuiteApp uses the following buckets to store the accumulated amount for each subsection code and challan code. A bucket is a combination of customer, fiscal year, and subsection or challan code of a transaction. When exchange rate is applied on a transaction, the SuiteApp converts the accumulated bucket values to the base currency of the subsidiary or company and calculates TCS accordingly.

  • India Accumulated Subsection Buckets – This custom record is an unique combination of subsection code, customer, and financial year. The record stores the accumulated amount for each subsection code.

  • India Accumulated Challan Buckets – This custom record is an unique combination of challan code, customer, and financial year. The record stores the accumulated TCS for each challan code.

For more information about the supported TCS subsection codes, see TCS Subsection Codes.

The accumulated amount for a subsection code is stored in its respective bucket. For example, the bucket for Section Code 206C (1F) will contain the accumulated amount for 1F subsection code.

The Audit Trail subtab includes audit logs of changes in the TCS amount and its impact on the accumulated amounts for a subsection code and a challan code.

The SuiteApp uses the following logic to calculate the accumulated amount and threshold for each subsection code:

  • Amount Accumulation and Threshold Calculation for 1H

    • 1H is dependent on 1C and 1E subsection codes. Therefore, the accumulated amount for 1H contains the accumulated amount for 1C and 1E subsection codes. Any changes made to 1C and 1E subsection codes impacts the accumulated amount for 1H.

    • The SuiteApp considers all invoice and cash sale transactions in a financial year to calculate the accumulated amount for a customer. However, the following conditions apply:

      • Item section code cannot be Section 206C (1), Section 206C (1F), and Section 206C (1G).

      • Supply of goods cannot be outside the country. For example, Place of Supply in a transaction cannot be 96-Other Country.

      • Nature of the item cannot be Services.

    • To calculate TCS, the accumulated amount is compared with the threshold amount set in a TCS tax rate rule.

      If the threshold is exceeded after adding an item amount associated with Section 206C (1H) 6CR, TCS is calculated on the balance amount. The balance amount is derived after deducting the threshold amount from the accumulated amount of 1H subsection code.

      If the threshold is exceeded before adding an item amount associated with Section 206C (1H) 6CR, TCS is calculated on the item’s gross amount.

  • Amount Accumulation and Threshold Calculation for Other Subsection Codes Excluding 1H

    • The accumulated amount for a subsection code is stored in its respective bucket.

    • All invoices and cash sale transactions in a financial year for a customer has to be considered for the accumulated amount.

    • To calculate TCS, the accumulated amount is compared with the threshold amount set in a TCS tax rate rule. When the threshold is exceeded, TCS is calculated on the item’s gross amount.

TCS TI Journal

TI Journal is created to offset the changes in tax amount due to modification or deletion of transactions. The India Localization SuiteTax Engine SuiteApp automatically creates TI Journal record for TCS based on the following scenarios:

  • When the accumulated amount for a subsection code is less than the threshold amount but the accumulated TCS is greater than zero.

  • To update the accumulated amount for a challan code when a transaction is created or modified.

Related Topics

General Notices