TCS with threshold

This article explains the requirement of threshold amount in TCS and  the process of calculating TCS for such transactions.

TCS calculation considering threshold limits

TCS threshold defines the threshold limit for each TCS Nature of Collection. TCS can be deducted only if the total transaction with the assessee exceeds the threshold limit in the financial year.

If a payment under TCS Type A is below Threshold INR 20,000, no tax is collected. Another factor to be considered is the aggregate of total payments to be made in a year. If for a customer it's expected that the threshold limit would be crossed eventually, it means Threshold is overlooked. Hence, payments received from customers can cross the TCS threshold of INR 20,000. However, if the payment expected is below the threshold limit defined, TCS won't be collected.

1. GL Entries for TCS where payment is less than the threshold limits, as follows:

   Particulars	Amount
   Customer Account	19000
   Sales Account	-19000

2. GL Entries for TCS where payment is more than (exceeding) Threshold limits, as follows:

   Particulars	Amount
   Bank Account	10000
   TCS Payable Account	287
   Customer Account	-9713

See also

TCS Adjustment Entry

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