Setting Up TCS Ledgers in Tally Prime

Tax Collected at Source (TCS) is a tax payable by sellers and collected from buyers on specific transactions. Tally Prime enables businesses to set up TCS ledgers and manage these transactions effectively. This step-by-step guide explains how to set up TCS ledgers in Tally Prime, with a real-world example.

Step-by-Step Guide

Step 1: Enable TCS in Tally Prime

Before setting up TCS ledgers, enable the TCS feature:

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 Details

Define TCS details as per the applicable tax laws:

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 TCS duty head.

Step 3: Create or Modify Ledgers

Create ledgers for sales, TCS, and the party to which TCS applies:

1. Go to Gateway of Tally > Accounts Info > Ledgers.
2. Select Create or Alter to set up 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 TCS Transactions

When recording sales transactions, TCS will be calculated automatically:

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
   • TCS Ledger: "TCS on Scrap Sales"
   • TCS Amount: ₹1,000 (1% of ₹1,00,000)
4. Save the voucher by pressing Ctrl+A.

Step 5: View TCS Reports

Check TCS reports to track the collected amounts:

1. Go to Gateway of Tally > Display More Reports.
2. Select Statutory Reports > TCS Reports.
3. Review the details of TCS collected, payable amounts, and filing requirements.

Example: TCS on Scrap Sales

Consider the following scenario:

• Sale of scrap worth ₹1,00,000 to "XYZ Enterprises".
• Applicable TCS rate: 1% under Section 206C(1).

When recording the transaction, Tally Prime calculates TCS as ₹1,000, resulting in the following entries:

Conclusion

Setting up TCS ledgers in Tally Prime ensures accurate tax collection and reporting. By following the steps in this guide, businesses can streamline their TCS processes, maintain compliance with tax laws, and simplify financial reporting.