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Tax Collection at Source (TCS) -Indian Indirect Taxes - TCS MECHANISM IN GST

dheerendar_jain
Participant

Dear Experts

I have searched in Google and couldn't find any solution for the Tax Collection at Source (TCS) which is also applicable in every sales with below condition from April 2020.

TCS- Changes required in SAP

  • The change in law will require us to collect TCS @ 0.1% on all sale of goods which will be charged on our invoice.
  • Applicable to only sale of goods (not for service or on Job work where TDS is applicable and for Export)
  • Applicable only if the sale exceeds Rs 50 Lakhs for individual customer for the Financial Year (Apr-March)
  • TCS has to be collected only on the excess of 50 Lakhs (ie If during the FY 20-20, the total sales to a customer is 55 Lakhs , TCS has to be collected only on 5 Lakhs)
  • TCS has to be calculated on the Taxable Value + GST
  • If PAN no of the buyer is not available then the TCS will be 1%
  • Not applicable on sale of scrap where the TCS rate is already @1%

SAP Requirement is :

Is it possible to determine Tax Condition type directly in the Invoice instead of Sales Order?

Total Invoice value is not the base for the TCS tax calculation. Base would be total Invoice value + GST of the customer in the FY 2020 -21 minus Credit Memo Invoice balance of this exceeds more than Rs. 50 LAKHS then TCS is charged for the balance amount.

Example:

Total Sales of the Customer 'A' in year 2020-2021 = 70,00,000. 00

Total value of the Credit Memo Invoice in FY 20-21= -1,00,000.00

---------------------------------------------------------------------------------------

Balance = 69,00,000.00

TCS limit -50,00,000.00

------------------------------------------------------------------------------------------

Total (Base for TCS Calculation) = 19,00,000.00

TCS @ 0.1% (PAN is available) = 1,900.00

How this above calculation using condition record through VOFM Routine or User Exit.?

Please provide your expert solution for the same and let me know if you need any more information.

Thanks & Regards

Dheerendra Jain

Accepted Solutions (1)

Accepted Solutions (1)

jagan4
Explorer
0 Kudos

Hi,

Please check this note 2948539 - Corrections to enable Tax Collected at Source in Outgoing Invoices

Also check the collective note 2898812 - Amendment to Section 206C TCS - Updates

Regards,

Jagankumar

dheerendar_jain
Participant
0 Kudos

Thank you Jagan for sharing this notes this has met my requirement.

In the configuration of the note it is mentioned that requirement of 2 G/L accounts.

Can you please help me to know why there is a requirement of 2 G/L accounts?

Thanks & Regards

Dheerendra Jain

Answers (5)

Answers (5)

Lakshmipathi
Active Contributor

If you address this requirement from FI side, it will be easy. On the other hand, if you want to address it via SD route, more efforts on development is required as you need to validate BSID table from FI side where you can have all open items and BSAD for Cleared items (to fetch credit values) and take logic of Rebate functionality.

0 Kudos

Hi Lakshmipathi

Since TCS is applicable only on Sale of Goods and not services, how are we able to differentiate with BSID/BSAD customer amount as it will be inclusive of everything (i.e. service item and TCS calculated on previous invoices)

Correct me if I'm wrong.

Regards

DB

BalaAP
Active Contributor

Hi, The question is a mini version of "FS" for abap development. Tables BSID & BSAD (rightly given by Lakshmipathi), and also you need to check with order type (only for sale not for service item, this can be analyzed with document type and tax code).

This is basically a "consulting" requirement.

sanilbhandari
Product and Topic Expert
Product and Topic Expert

Hello dheerendar.jain

I could think of the below approaches:

1) When you use the with holding tax type and code for TCS, you need to create a with holding tax type. You can try making the below configuration for with holding tax type with accumulation. Now this is a standard functionality in SAP, that if the accumulation check is ticked on, system starts checking the value of all invoices (both SD and FI) in WITH_ITEM. After that you need to also put in the formulae for with holding tax calculation.

https://wiki.scn.sap.com/wiki/display/ERPFI/Withholding+tax+calculation+with+FORMULA

Now assign the corresponding tax code assigned to with holding tax type in your SD configuration and it should ideally work.

2) The other approach could be to write a small routine in which you fetch the BSET Table and check the total value of invoice and Tax on it to check if the condition you need is met or not.

I think, the approach 1 should work through a standard configuration and your FI Colleague should be able to drive the same.

Thanks & Regards,

Sanil Bhandari

Hi Dheerendra,

I have similar request. Please tell me how did you achieve yours.

@ lakshmipathi.ganesan

Can you please elaborate on how to address the request from FI side?

Appreciate your response.

Thanks and Regards,

Shilpi

kshama4
Participant
0 Kudos

Hi,

I am also working on this. Can you help me understand in detail how can I achieve this in SAP ByDesign.

Regards,

Kshama

0 Kudos

Hi

Did anyone manage to get a solution for this? SAP solution on "Amendment to Section 206C Tax collected at Source(TCS)" is planned to be released on 20-Aug-2020.

Few things to keep in mind while designing the solution is:

1. Withholding tax formula might not work with SD pricing - This is the line from SAP Note 2925854

Please note for country India withholding tax localization formula method for calculating withholding taxes is not supported.

2. The threshold limit must be checked on Bill To Party PAN number wherein multiple Bill To Party customer codes can have the same PAN number.

3. TCS is applicable only on Sale of Goods and services are out of the scope. Therefore when checking from FI tables BSID/BSAD or KNC1, the amount will be inclusive of all the line items in a billing document i.e Material and service. Also, the amount of TCS applied on the previous billing will also be included in the customer balance. So, we need to make sure that TCS tax base amount is calculated correctly.

Let me know your thoughts on this.

Regards

DB