Recording TCS on Sales Transactions in Tally Prime

Tax Collected at Source (TCS) applies to certain sales transactions as per tax regulations. Tally Prime simplifies the process of recording TCS on sales transactions. This article explains the steps involved in recording TCS, using a practical example.

Step-by-Step Guide

Step 1: Enable TCS in Tally Prime

To begin, ensure TCS is enabled in Tally Prime:

1. Go to Gateway of Tally > F11: Features.
2. Under Statutory & Taxation, set Enable Tax Collected at Source (TCS) to "Yes".
3. Set Set/Alter TCS Details to "Yes".
4. Press Ctrl+A to save the settings.

Step 2: Configure TCS Duty Heads

Define the applicable TCS rates and rules:

1. Go to Gateway of Tally > Accounts Info > Statutory Info.
2. Select TCS Duty Heads > Create.
3. Enter the following details:
   • Duty Head: "TCS on Scrap Sales"
   • Nature of Collection: "Scrap Sales"
   • Applicable Section: "206C(1)"
   • TCS Rate: 1%
4. Press Ctrl+A to save the duty head.

Step 3: Create Necessary Ledgers

Set up the required ledgers for sales, TCS, and customers:

1. Go to Gateway of Tally > Accounts Info > Ledgers.
2. Create or modify the following ledgers:
   • Sales Ledger:
     • Name: "Scrap Sales"
     • Under: "Sales Accounts"
     • Is TCS Applicable: "Yes"
     • Select TCS Duty Head: "TCS on Scrap Sales"
   • TCS Ledger:
     • Name: "TCS on Scrap Sales"
     • Under: "Duties & Taxes"
     • Type of Duty: "TCS"
     • Select TCS Duty Head: "TCS on Scrap Sales"
   • Customer Ledger:
     • Name: "XYZ Enterprises"
     • Under: "Sundry Debtors"
     • Is TCS Applicable: "Yes"
3. Press Ctrl+A to save each ledger.

Step 4: Record the Sales Transaction

Once the ledgers are set up, record the sales transaction including TCS:

1. Go to Gateway of Tally > Vouchers.
2. Select the Sales voucher type.
3. Enter the following details:
   • Date of the transaction.
   • Party Account: "XYZ Enterprises".
   • Sales Ledger: "Scrap Sales".
   • Amount: ₹1,00,000.
   • Select the TCS Ledger: "TCS on Scrap Sales".
   • TCS Amount: ₹1,000 (1% of ₹1,00,000).
4. Verify the voucher and save it by pressing Ctrl+A.

Step 5: Review TCS Reports

View TCS reports to monitor collected amounts:

1. Go to Gateway of Tally > Display More Reports.
2. Select Statutory Reports > TCS Reports.
3. Review the details of TCS collected and outstanding payments.

Example: Recording TCS on Scrap Sales

Consider the following scenario:

• A sale of scrap worth ₹1,00,000 is made to "XYZ Enterprises".
• The applicable TCS rate is 1% under Section 206C(1).

When recording the transaction in Tally Prime, the following entries are created:

Conclusion

Recording TCS on sales transactions in Tally Prime is straightforward and ensures compliance with tax laws. By setting up the correct configurations and ledgers, businesses can accurately calculate and manage TCS, simplifying tax compliance and reporting.