Accounting Entries for booking TCS u/s 206C(1H) in books

From 1st Oct 2020, provisions of TCS u/s 206C(1H) are applicable. This article discusses how we can book TCS entry books of accounts via an example.

Before going ahead with the example, let’s understand the provisions in brief.

Applicability:

Provisions of this section are applicable on every person whose turnover in the preceding financial year is more than 10 Cr. who is receiving the consideration of more than 50 Lakh from any of its customers in the current FY.

Rate of TCS:

• Rate of TCS under this section is 0.075% till 31/03/2021 & 0.10% after 01/04/2021.
• If the PAN/Aadhar of the buyer is not available, then the TCS rate shall be 1%.

Further, you can read FAQs on these provisions for better understanding.

Accounting Entries for booking TCS u/s 206C(1H) in books

Accounting Entries if TCS is booked on a receipt basis.

• Usually, payment is made on the basis of the invoice.
• In this case, ideally, we need to raise a debit note for the collection of the TCS amount whenever the payment is received.
• Now let’s take a situation where receipts have crossed Rs. 50 lakhs from a particular buyer. For calculating the limit of Rs. 50 Lakhs, receipts should be calculated from 1st April 2020.
• The rate of TCS applicable shall be 0.075%.
• We are selling Goods worth Rs. 20 Lakh to the Buyer on which GST rate of 12% is applicable.

Entry At the time of Sales/booking transaction

Sundry Debtor A/C Dr………Rs. 2240000

To Sales A/C………Rs. 2000000

To GST Payable A/C……….Rs. 24000

At the time of receipt of sale proceeds from debtors

Bank A/C Dr………Rs. 2240000

To Sundry Debtor A/C………Rs. 2240000

Booking TCS amount

Sundry Debtor A/C Dr………Rs. 1680

To TCS Payable A/C………Rs. 1680

Note: Sundry Debtor’s balance will remain outstanding for the amount of TCS. Seller will have to issue a debit note for the same.

When the payment of TCS is made on the 7th of Next Month

TCS Payable A/C Dr………Rs. 1680

To Bank A/C………Rs. 1680

Accounting Entries if TCS is booked on an Invoice basis.

In the same example now let’s assume that TCS is booked at the time of booking Invoice only.

At the time of Sales/booking transaction

Sundry Debtor A/C Dr………Rs. 2241680

To Sales A/C………Rs. 2000000

To GST Payable A/C……….Rs. 24000

To TCS Payable A/C……….Rs. 1680

At the time of receipt of sale proceeds from debtors

Bank A/C Dr………Rs. 2241680

To Sundry Debtor A/C………Rs. 2241680

When the payment of TCS is made on the 7th of Next Month

TCS Payable A/C Dr………Rs. 1680

To Bank A/C………Rs. 1680

TCS entry in tally | TCS on Sale of Goods transaction in tally