TCS - Meaning and configuration

1. Configuration of TCS By: Rajeev Kumar
What is TCS?
Answer: The seller has to collect tax from the payer who has purchased the following items:
Alcoholic liquor for human consumption
Tendu leaves
Timber obtained under a forest lease
Timber obtained by any mode other than under a forest lease
Any other forest produce not being timber or Tendu leaves
Scrap
Parking lot
Toll plaza
Mining and quarrying
Required Configuration:
Define Withholding Tax key (206C)
Define Withholding Tax type
Create the access sequence for withholding for TCS in SD. (Copy the existing access
sequence J1AW and create the new access sequence)
Create condition types corresponding to Tax collected at Source in SD
Assign withholding tax types to SD condition types
Define withholding tax codes
Assign GL accounts for withholding tax types
Add TCS conditions in pricing procedure. (Assign TCS conditions in pricing procedure
as a statistical conditions)
We will need to define a new condition type and add this to the pricing procedure to post
to the FI. This condition type will be manual and can be manually filled at the time of
creation of sales order. This can also be copied from the statistical TCS condition types in
the pricing procedure
To calculate and report tax collected at source, make the following settings (all under country
key IN):
Customizing Settings
1.Financial Accounting (New) Financial Create official withholding tax key 206C
Accounting Global Settings (New) Withholding
Tax Extended Withholding Tax Basic
Settings Define Withholding Tax Keys
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2. Configuration of TCS By: Rajeev Kumar
2.Financial Accounting (New) Financial Create withholding tax type S1 with the name Tax
Accounting Global Settings (New) Withholding Collected at Source-Base and make the following
Tax Extended Withholding Tax settings:
Calculation Withholding Tax Type Define - Base amount = Modif. net amount
Withholding Tax Type for Invoice Posting
- Rounding rule = Round w/tax amnt up
- Select Post w/tax amount checkbox
- Accumulation type = No accumulation
- Control data = select checkboxes W/tax base
manual, Manual w/tax amnt, and No cert. numbering
Similarly create withholding tax types S2, S3,
and S4 with the names Tax Collected at Source-
Surcharge, Tax Collected at Source-Education Cess,
and Tax Collected at Source-SECESS respectively
and make settings as stated above.
3.Sales and Distribution Basic Functions Copy the existing access sequence J1AW and create
Pricing Pricing Control Define Access a new access sequence J1IW with the
Sequences (choose Maintain Access name Withholding tax code - country-specific and
Sequences) make the following settings:
- Access sequence-Access number = 10
- Condition table = 399
4.Sales and Distribution Basic Functions Create condition type JTCS with the name TCS-
Pricing Pricing Control Define Condition Base and make the following settings:
Types (choose Maintain Condition Types) - Access sequence = J1IW
- Cond. class = W
- Calculat. type = A
- Cond. category = D
- Select Item Condition checkbox
Similarly create condition types JTEC and JTSE with
the names ECS on TCS and SECess on
TCS respectively and make settings as stated above.
5.Financial Accounting (New) Financial Assign condition types JTCS, JTEC, and JTSE to
Accounting Global Settings (New) Withholding withholding tax types S1, S3, and S4 respectively.
Tax Extended Withholding Tax
Calculation Withholding Tax Type Assign
Condition Type to Withholding Tax Type
6.Financial Accounting (New) Financial Create withholding tax code S1 with name TCS-Base
Accounting Global Settings (New) Withholding and make the following settings:
Tax Extended Withholding Tax - Off. W/Tax Key = 206C
Calculation Withholding Tax Code Define
- Post.indic. = 3
Withholding Tax Codes
Similarly create withholding tax codes S3 and S4 with
the names Education cess on TCS and SECess on
TCS and make settings as stated above.
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3. Configuration of TCS By: Rajeev Kumar
7.Financial Accounting (New) Financial Enter the chart of accounts CAIN. You need to maintain
Accounting Global Settings (New) the same G/L account for the transaction key WIT-based
Withholding Tax Extended Withholding tax line items and SD-FI condition based tax line items.
Tax Posting Accounts for Withholding Maintain a separate G/L account for the transaction key
Tax Define Accounts for Withholding Tax to OFF-based line items.
be Paid Over
Since posting of TCS happens on both SD and FI
documents, ensure that you assign the same G/L account
for each combination of withholding tax type and
withholding tax code.
NOTE
To post tax collected at source for Sales and
Distribution documents, maintain the same G/L account in
Customizing forSales and Distribution, by choosing Basic
Functions Account Assignment/Costing Revenue
Account Determination Assign G/L Accounts .
8.Sales and Distribution Basic Functions Select the pricing procedure JINFAC and double-
Free Goods Control Free goods Pricing click Control data. The system displays the Control
Maintain Pricing Procedure For Pricing data screen.
Define the condition types JTCS, JTEC, and JTSE and
add them to the pricing procedure JINFAC. The system
calculates the values of the goods but does not post them
directly to the Sales and Distribution document (SD).
Instead, posting takes place based on the assignment of
condition types to the withholding tax types (refer step 5).
9.Sales and Distribution Basic Functions Create a new condition type JWTS to post TCS
Pricing Pricing Control Define Condition to Financial Accounting (FI) documents. Add this
Types (choose Maintain Condition Types) condition type to the pricing procedure JINFAC.
Similarly create condition types JETS for ECS on
TCS and JSTS for SECess on TCS and add them to the
pricing procedure JINFAC.
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