Accounting Treatment Of TCS U/S 206c (1h) on Sale of Goods

Accounting Treatment Of TCS U/S 206 c (1h): Everyone, being a seller, who gets any quantity as factor to consider for sale of any items of the worth or aggregate of such worth surpassing fifty lakh rupees in any previous year, aside from the items being exported out of India or items covered in sub-section (1) or sub-section (1F) or sub-or sub-section (1G).

Accounting Treatment of TCS U/S 206 c

These arrangements apply just in regard of deal of sale of items and do not use to sale of services.

Sub-section (1H) of area 206 C has actually been made efficient from 1st October 2020 and state that:

  • A Seller of Item is responsible to gather TCS from Purchaser on Sale of any products
  • Seller indicates an individual whose overall sales, gross invoices or turnover from business continued by him surpass Rs.10 Crores throughout the previous year ended on 31 st March.
  • TCS to be gathered if the Value/Aggregate Worth got for Item from a purchaser is more than 50 Lakhs in a fiscal year.
  • TCS to be gathered on [Overall Sale Worth got– 50 Lakhs.
  • Rate of TCS is 0.075% from 01.102020 to 31.032021 and afterwards the rate will be 0.1%.
  • If the purchaser does not offer PAN/Aadhar number then the TCS will be gathered at 1%, rather of 0.1%. In such scenario, Covid-19 associated concession is likewise not readily available.
  • TCS would be charged on overall billing worth inclusive of GST

TCS is not relevant when the purchaser is from the following classification:–LRB-

  • Central Federal Government
  • State Federal Government
  • Embassy
  • Commission/High Commission
  • Legation
  • Consulate
  • Trade Representation of Foreign state
  • Regional Authority

A few of the standard compliances that a company entity i.e. supplier offering the:–LRB-

  • TAN number– Supplier requires to have Tax Reduction and Collection Account Number (“ TAN“).
  • Gathering the tax– Tax to be gathered at the time of invoice of sale factor to consider.
  • Issuance of certificate (Kind no 27 D) within 15 days from the due date for filing of filing of TCS Return.

Accounting entry for TCS on Sale (In the Books of sealant)

( i) At the time of issuance of billing:

Details Debit Credit
Trade Receivables 236236
To Sale 2000000
To Product and Service Tax (GST) 360000
To Tax Collected at Source 236

( ii) At the time of invoice of sale factor to consider together with TCS:

Details Debit Credit
Bank 236236
Trade Receivables 236236
Tax Gathered at Source 236
To Tax Collected at Source 236


Note: TCS is to be transferred just on invoice of sale factor to consider together with TCS.

( iii) At the time of payment of TCS Liability:

Details Debit Credit
Tax Gathered at Source 236
To Bank 236


Accounting entry for TCS paid/payable on Purchase At the time of reservation of billing

Details Debit Credit
Purchase A/c 20000000
GST Input Tax Credit A/c 360000
Tax Gathered at Source by Others 2360
To Account Payable 2362360

Advised Articles

  • List of Taxes which Commoner pay in India
  • Area 44 ADVERTISEMENT– Tax on Presumptive Basis
  • Area 44 ADVERTISEMENT: Earnings of Company 8%
  • Submission of PAN Particulars of Property Manager
  • Understanding the Sources of the Earnings Tax
  • TDS Rate Chart
  • Deemed Dividend– Area 2(22)( e)

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