TCS under Section 206C of the Income Tax Act applies to several transaction categories. Section 206C(1H) applies to sellers with annual turnover above INR 10 crores on sales of goods exceeding INR 50 lakhs to a single buyer in a year, at a rate of 0.1%. Other TCS categories include sale of liquor (1%), sale of scrap (1%), sale of forest produce (2.5%), and sale of motor vehicles above INR 10 lakhs (1%). For most businesses in India, Section 206C(1H) for goods sales above INR 50 lakhs is the most commonly encountered TCS provision.
Go to Settings, then Taxes, and enable TCS. Configure the applicable TCS sections and rates. Zoho Books tracks cumulative sales to each customer across the year and alerts you when the INR 50 lakh threshold is crossed for Section 206C(1H). Once the threshold is crossed, all subsequent invoices to that customer include TCS at 0.1% on the excess amount. The TCS is shown as a separate line on the invoice and is posted to a TCS Collected liability account.
TCS and TDS are often confused. TDS is deducted by the buyer from the payment to the seller. TCS is collected by the seller from the buyer on top of the sale price. In Zoho Books, TDS reduces the amount the buyer pays (net of TDS), while TCS increases the amount the buyer pays (sale price plus TCS). The seller deposits TCS with the government; the buyer receives a TCS credit certificate (Form 27D) to claim credit in their income tax return.
TCS (Tax Collected at Source) in Zoho Books is a provision where a seller collects a percentage of income tax from a buyer on specified high-value transactions and deposits it with the government.
Enable TCS in Settings, then Taxes, and assign the applicable section to customers or items. Zoho Books adds TCS to qualifying invoices automatically and posts the collected amount to a TCS liability account.
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