TCS

TCS INTRODUCTION

TCS (Tax Collected At Source) is an example of direct tax because it’s an income tax that is collected by the seller from the buyer at the time of sale of goods.

TCS basically apply on certain types of goods such (timber, scrap, liquor, tendu leaves, etc.)

TCS ITEMS WITH TAX RATES

Nature of Goods	Percentage
Alcoholic liquor for human consumption	10%
Tendu Leaves	5%
Timber obtained under a forest lease	2.50%
Timber obtained by any mode other than under forest lease	2.50%
Any other forest produce not being timber or Tendu leaves	2.50%
Scrap	1%

HOW TO ACTIVATE TCS

Open an already existing company.

Press “F11” key.

Select the “Statutory & Taxation”

Make yes to “Enable Tax Collected Source (TCS)” and “Set/Alter TCS Details”

REQUIRED LEDGERS

PARTY LEDGER

Ledger name: Umesh Furniture Store

Group: Sundry Debtors.

Is TCS Application: YesTCS (Tax Collected Source)

TCS TAX LEDGER EXAMPLE

Ledger name: TCS A/c

Group: Duties & Taxes

Nature of Goods/Contract/License/Lease: Timber Obtained Under Forest Lease

Is TCS Application: Yes

TCS VOUCHER ENTRY

To insert TCS transaction's details in voucher we have to follow the below steps. 

1. Click on the "Accounting voucher"

2. Click on "Sales" voucher or press "F8"

3. Insert party ledger under "Party A/c Name"

4. Insert Sales a/c ledger under "Sales Ledger"

5. Add stock items and tax ledger.

TCS PRACTICE QUESTION

Mono Timbers Pvt. Ltd.

Inventory items

Stock items	Group	Quantity	Price	Sales price
Timber	Wood	85,000 (Kg)	60	80
Leaves	Tendu	50,000 (PCs)	5	12
Scrap	Plastic	70,000 (Kg)	12	15

Ledgers Entries

Opening Balance Rs. 7,50,000

Cash at bank Rs. 15,00,000

Voucher Entries
1. Sold goods (750 Kg. Timber) To Umesh Furniture Store with TCS

2. Purchase Ceiling fan for office use amount Rs. 5,000

3. Paid LIC premium Rs. 7,000 by cheque

4. Sold goods (200 Kg. Plastic Scrap) to Mr. Sunil withTCS

5. Sold goods (5,000 Tendu Leaves) Mr. Anil with TCS

6. Withdraw cash Rs. 20,000 from bank to personal use.

7. Paid Employee welfare Rs. 25,000

8. Sold goods (850 Kg Timber & 2,500 Tendu Leaves) to Mr. Anil with TCS

9. Withdraw cash Rs. 5,00,000 from bank to office use.