Applying TCS on Transactions

After you've finished setting up TCS, you can calculate it for items that are eligible. You can calculate TCS on invoices and cash sales.

When you select an item that's eligible for TCS in a transaction, the line item displays the following:

• The Apply TCS box is checked by default. To exclude an item from TCS, clear the box. If you try to calculate TCS for an ineligible item, the SuiteApp gives you an error.

• The item's subsection and challan codes automatically populates on line items. These codes also show up on TCS-eligible items when invoices are converted from sales orders.

Note:

You can't use the Apply TCS box for cash sales.

If you don't create an invoice through the UI, you'll need to manually check the Apply TCS box for eligible items. The subsection and challan codes only populates if the box is checked.

To exclude an item from TCS, clear the Apply TCS box and remove the subsection and challan codes from the line item in the UI.

To view TCS tax details, click the Tax Details subtab on a transaction.

Important:

Before you apply TCS to transactions, keep these points in mind:

• If you edit an item's amount in a cash sale, the accumulated bucket amount for its subsection code won't change, and neither will the TCS calculated.

• If you edit invoices or cash sales where TCS is applied, the 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 applies, the section code, subsection code, and challan code fill in automatically.

4. (Optional) To exempt the item from TCS, clear the Apply TCS box.

5. Click Add to add the item.

6. Complete other details as required.

7. To preview tax, click Preview Tax.

8. Click Save.

When you preview tax, you can view TCS information in the Summary and on the Tax Details subtab. TCS is calculated on the item's gross amount, which includes the item's amount plus GST.

TCS Calculation

The India Localization SuiteTax Engine SuiteApp uses the following buckets to store the accumulated amount for each subsection and challan code. A bucket combines the customer, fiscal year, and the subsection or challan code from a transaction. When an exchange rate applies to a transaction, the SuiteApp converts the bucket values to your company's base currency and calculates TCS.

• India Accumulated Subsection Buckets– This custom record combines subsection code, customer, and financial year, and stores the total amount for each subsection code.

• India Accumulated Challan Buckets– This custom record combines challan code, customer, and financial year, and stores the total TCS for each challan code.

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

Each subsection code's total is stored in its own bucket. For example, the bucket for Section Code 206C (1F) holds the total for the 1F subsection code.

The Audit Trail subtab shows logs of changes in the TCS amount and how they affect the totals for each subsection and challan code.

The SuiteApp uses the following logic to calculate the accumulated amounts and thresholds for each subsection code:

• Amount Accumulation and Threshold Calculation for 1H

  • 1H depends on 1C and 1E subsection codes, so its total includes the amounts from 1C and 1E. Any changes to 1C or 1E affect the total for 1H.

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

    • The item section codes can't be Section 206C (1), (1F), and (1G).

    • The goods can't be supplied outside the country. For example, Place of Supply can't be 96-Other Country.

    • The item can't be a service.

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

    If the threshold is crossed after adding an item for Section 206C (1H) 6CR, TCS is calculated on the balance. The balance is the total for 1H minus the threshold amount.

    If the threshold is already crossed before adding the item, TCS is calculated on the item's gross amount.

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

  • Each subsection code's total is stored in its own bucket.

  • All invoices and cash sales for a customer in a financial year are counted toward the total.

  • To calculate TCS, compare the total to the threshold in the TCS tax rate rule. If the threshold is crossed, TCS is calculated on the item's gross amount.

TCS TI Journal

A TI Journal is created to adjust for changes in tax amounts when transactions are changed or deleted. The SuiteApp automatically creates a TI Journal for TCS in the following scenarios:

• When the accumulated amount for a subsection code is less than the threshold, but the TCS total is still above zero.

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

Related Topics

• Tax Collection at Source
• Setting up Tax Collection at Source

General Notices