TDS on Purchase & TCS on Sale explained with charts and Tally Entry

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CA Mayur J Sondagar | Jul 6, 2021 | Views 1054789

TDS on Purchase & TCS on Sale explained with charts and Tally Entry

TDS on Purchase & TCS on Sale explained with charts and Tally Entry

Understanding Compliance:

From Seller Side

1 If Sale Receipts Above 50 lakh If Buyer is not liable to Deduct TDS u/s 194Q then TCS u/s 206C(1H) @ 0.1 % on Receipts Above 50 lakh
If Buyer is liable to Deduct TDS under any other provision of this Act and has deducted such amount then No TCS u/s 206C(1H)
If Buyer is liable to Deduct TDS under any other provision of this Act and has not deducted such amount then TCS u/s 206C(1H) @ 0.1 % on Receipts Above 50 lakh
2 If Sale Receipts upto 50 lakh No TCS u/s 206(1H)
TDS on Purchase & TCS on Sale explained with charts and Tally Entry

TDS on Purchase & TCS on Sale explained with charts and Tally Entry

From Buyer Side

1 If Purchase Value Above 50 lakh Deduction TDS u/s 194Q @ 0.1 % on Value Above 50 lakh
2 If Purchase Value upto 50 lakh No TDS u/s 194Q but TCS u/s 206(1H) may be applicable if aggregate payment (Including last year due) exceed 50 lakh during the year

Let’s Have some Examples

Seller’s Turnover (Cr) Buyer’s Turnover (Cr) Transaction Value (Lakh) Receipt (Lakh) Section Applicable  

Reason

13.00 12.00 60.00 60.00 194Q – TDS No TCS as TDS applied
8.00 12.00 60.00 60.00 194Q – TDS Buyer’s Turnover Above 10 Cr
13.00 7.00 60.00 60.00 206C(1H) – TCS Seller’s Turnover Above 10 Cr
8.00 7.00 60.00 60.00 No TDS/TCS Turnover upto 10 Cr
13.00 12.00 45.00 45.00 No TDS/TCS Transaction Value upto 50 Lakh
13.00 7.00 45.00 60.00 206C(1H) – TCS Receipts Above 50 Lakh
8.00 12.00 45.00 60.00 No TDS Transaction Value upto 50 Lakh
13.00 7.00 60.00 45.00 No TCS Receipts upto 50 Lakh

Short Summary:

Particular SECTION 194Q SECTION 206C(1H)
Tax TDS TCS
Applicable to Buyer Seller
Applicable on Purchase of Goods Sale of Goods
Turnover Limit of Previous F.Y. 10 Crore 10 Crore
Threshold Limit 50 Lakh 50 Lakh
Normal Rate 0.1% 0.1%
Rate Without PAN 5.0% 1.0%
Time of Deduction/Collection Payment or Credit whichever is earlier At the time of Receipt
Deposit Date 7th of Next Month 7th of Next Month
TDS Return Form Form 26Q Form 27EQ

Accounting Entries For TCS u/s 206C(1H) & TDS u/s 194Q

For Seller if he is liable to Collect TCS & Buyer have not Deducted TDS

S.No. Transaction Type Particular Debit Credit
ENTRY NO. 1 At the time of Booking Sale Transaction Sundry Debtors 1,05,000.00
To Sale 1,00,000.00
To GST 5,000.00
ENTRY NO. 2 On Receipt of Sale Proceeds from Debtors Bank A/c 1,05,000.00
To Sundry Debtors 1,05,000.00
ENTRY NO. 3 Provision for TCS Liability on Date of Receiving Sale Proceeds Sundry Debtors 105
To TCS Payable 105
ENTRY NO. 4 On Payment of TCS on 7th of Next Month TCS Payable 105
To Bank A/c 105

For Buyer if Seller have Collected TCS (Buyer is not liable to Deduct TDS)

S.No. Transaction Type Particular Debit Credit
ENTRY NO. 1 At the time of Booking Purchase Transaction Purchase 1,00,000.00
GST 5,000.00
To Sundry Creditors 1,05,000.00
ENTRY NO. 2 On Payment to Sundry Creditors Sundry Creditors 1,05,000.00
To Bank A/c 1,05,000.00
ENTRY NO. 3 On Receipt of Debit note from Creditors TCS Receivable 105
To Sundry Creditors 105
ENTRY NO. 4 On Payment of TCS to Sundry Creditors Sundry Creditors 105
To Bank A/c 105

For Seller if Buyer have Deducted TDS (Seller Shall not to Collect TCS)

S.No. Transaction Type Particular Debit Credit
ENTRY NO. 1 At the time of Booking Sale Transaction Sundry Debtors 1,05,000.00
To Sale 1,00,000.00
To GST 5,000.00
ENTRY NO. 2 Receipt of Sale Proceeds from Debtors Bank A/c 1,04,900.00
To Sundry Debtors 1,04,900.00
ENTRY NO. 3 Entry of TDS Receivable on date of Receipt from Debtors TDS Receivable 100
To Sundry Debtors 100

For Buyer if he is liable to Deduct TDS

S.No. Transaction Type Particular Debit Credit
ENTRY NO. 1 At the time of Booking Purchase Transaction Purchase 1,00,000.00
GST 5,000.00
To Sundry Creditors 1,04,900.00
To TDS Payable 100
ENTRY NO. 2 On Payment of TDS on 7th of Next Month TDS Payable 100
To Bank A/c 100

*Assumed GST Rate at 5 % / TCS Rate at 0.1 % / TDS Rate at 0.1 % / Threshold Limit of Rs.50 Lakh was crossed

*TCS to be Collected on Total Amount including GST

*TDS to be Deducted on Amount excluding GST & Purchase Return

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