TDS on Purchase & TCS on Sale explained with charts and Tally Entry

 

TDS on Purchase & TCS on Sale explained with charts and Tally Entry

TDS on Purchase & TCS on Sale explained with charts and Tally Entry

Understanding Compliance:

From Seller Side

1If Sale Receipts Above 50 lakhIf Buyer is not liable to Deduct TDS u/s 194Q then TCS u/s 206C(1H) @ 0.1 % on Receipts Above 50 lakh
If Buyer is liable to Deduct TDS under any other provision of this Act and has deducted such amount then No TCS u/s 206C(1H)
If Buyer is liable to Deduct TDS under any other provision of this Act and has not deducted such amount then TCS u/s 206C(1H) @ 0.1 % on Receipts Above 50 lakh
2If Sale Receipts upto 50 lakhNo TCS u/s 206(1H)
1
TDS on Purchase & TCS on Sale explained with charts and Tally Entry

TDS on Purchase & TCS on Sale explained with charts and Tally Entry

From Buyer Side

1If Purchase Value Above 50 lakhDeduction TDS u/s 194Q @ 0.1 % on Value Above 50 lakh
2If Purchase Value upto 50 lakhNo TDS u/s 194Q but TCS u/s 206(1H) may be applicable if aggregate payment (Including last year due) exceed 50 lakh during the year

Let’s Have some Examples

Seller’s Turnover (Cr)Buyer’s Turnover (Cr)Transaction Value (Lakh)Receipt (Lakh)Section Applicable 

Reason

13.0012.0060.0060.00194Q – TDSNo TCS as TDS applied
8.0012.0060.0060.00194Q – TDSBuyer’s Turnover Above 10 Cr
13.007.0060.0060.00206C(1H) – TCSSeller’s Turnover Above 10 Cr
8.007.0060.0060.00No TDS/TCSTurnover upto 10 Cr
13.0012.0045.0045.00No TDS/TCSTransaction Value upto 50 Lakh
13.007.0045.0060.00206C(1H) – TCSReceipts Above 50 Lakh
8.0012.0045.0060.00No TDSTransaction Value upto 50 Lakh
13.007.0060.0045.00No TCSReceipts upto 50 Lakh

Short Summary:

ParticularSECTION 194QSECTION 206C(1H)
TaxTDSTCS
Applicable toBuyerSeller
Applicable onPurchase of GoodsSale of Goods
Turnover Limit of Previous F.Y.10 Crore10 Crore
Threshold Limit50 Lakh50 Lakh
Normal Rate0.1%0.1%
Rate Without PAN5.0%1.0%
Time of Deduction/CollectionPayment or Credit whichever is earlierAt the time of Receipt
Deposit Date7th of Next Month7th of Next Month
TDS Return FormForm 26QForm 27EQ

Accounting Entries For TCS u/s 206C(1H) & TDS u/s 194Q

For Seller if he is liable to Collect TCS & Buyer have not Deducted TDS


ParticularSECTION 194QSECTION 206C(1H)
TaxTDSTCS
Applicable toBuyerSeller
Applicable onPurchase of GoodsSale of Goods
Turnover Limit of Previous F.Y.10 Crore10 Crore
Threshold Limit50 Lakh50 Lakh
Normal Rate0.1%0.1%
Rate Without PAN5.0%1.0%
Time of Deduction/CollectionPayment or Credit whichever is earlierAt the time of Receipt
Deposit Date7th of Next Month7th of Next Month
TDS Return FormForm 26QForm 27EQ

Accounting Entries For TCS u/s 206C(1H) & TDS u/s 194Q

For Seller if he is liable to Collect TCS & Buyer have not Deducted TDS

S.No.Transaction TypeParticularDebitCredit
ENTRY NO. 1At the time of Booking Sale TransactionSundry Debtors1,05,000.00
To Sale1,00,000.00
To GST5,000.00
ENTRY NO. 2On Receipt of Sale Proceeds from DebtorsBank A/c1,05,000.00
To Sundry Debtors1,05,000.00
ENTRY NO. 3Provision for TCS Liability on Date of Receiving Sale ProceedsSundry Debtors105
To TCS Payable105
ENTRY NO. 4On Payment of TCS on 7th of Next MonthTCS Payable105
To Bank A/c105

For Buyer if Seller have Collected TCS (Buyer is not liable to Deduct TDS)

S.No.Transaction TypeParticularDebitCredit
ENTRY NO. 1At the time of Booking Purchase TransactionPurchase1,00,000.00
GST5,000.00
To Sundry Creditors1,05,000.00
ENTRY NO. 2On Payment to Sundry CreditorsSundry Creditors1,05,000.00
To Bank A/c1,05,000.00
ENTRY NO. 3On Receipt of Debit note from CreditorsTCS Receivable105
To Sundry Creditors105
ENTRY NO. 4On Payment of TCS to Sundry CreditorsSundry Creditors105
To Bank A/c105

For Seller if Buyer have Deducted TDS (Seller Shall not to Collect TCS)

S.No.Transaction TypeParticularDebitCredit
ENTRY NO. 1At the time of Booking Sale TransactionSundry Debtors1,05,000.00
To Sale1,00,000.00
To GST5,000.00
ENTRY NO. 2Receipt of Sale Proceeds from DebtorsBank A/c1,04,900.00
To Sundry Debtors1,04,900.00
ENTRY NO. 3Entry of TDS Receivable on date of Receipt from DebtorsTDS Receivable100
To Sundry Debtors100

For Buyer if he is liable to Deduct TDS

S.No.Transaction TypeParticularDebitCredit
ENTRY NO. 1At the time of Booking Purchase TransactionPurchase1,00,000.00
GST5,000.00
To Sundry Creditors1,04,900.00
To TDS Payable100
ENTRY NO. 2On Payment of TDS on 7th of Next MonthTDS Payable100
To Bank A/c100

*Assumed GST Rate at 5 % / TCS Rate at 0.1 % / TDS Rate at 0.1 % / Threshold Limit of Rs.50 Lakh was crossed

*TCS to be Collected on Total Amount including GST

*TDS to be Deducted on Amount excluding GST & Purchase Return


Comments

  1. Thanks for sharing about TDS on purchase on sale. Not only does filing an income tax return benefit you, but it also benefits the country. You can also check out about TDS Return For Salary here.

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