How to book TCS u/s 206C(1H) in books, at the time of Receipt or Invoicing

TCS u/s 206C(1H) is applicable with effect from 1st Oct 2020. It is applicable on:

• Every person whose turnover in the preceding financial year is more than 10 Cr,
• If consideration received from any of its customers in current FY is more than 50 Lakh

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%.

Usually, as per TCS provisions, TCS should be booked at the time of payment or while making an entry in books, whichever is earlier. However, TCS liability u/s 206C(1H) is arising at the time of “Receipt of Sale Consideration” and not at the time of billing.

Now the question arises here is, How to book TCS u/s 206C(1H) in books, at the time of Receipt or Invoicing?

What if we book TCS at the time of each and Receipt?

• Usually, payment is made on the basis of the invoice.
• In this case, since TCS was not booked at the time of billing, this will lead to confusion.
• In this case, ideally, we need to raise a debit note for the collection of the TCS amount whenever the payment is received.
• In case you have a limited number of buyers, you may choose this option.

What if we book TCS at the time of generating the Invoice?

• In this case, the TCS amount will be included in the Invoice itself.
• This will be easy for reconciliation as payment is made on the basis of the invoice.

In this regard, we have made a small video, the link of which is given below for reference:

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