How to calculate TCS?
TCS stands for Tax collected at Source. Here we have made an attempt to explain on “How to calculate TCS?”. Note that the same logic is applied for “How to calculate TCS on scrap value?” t0o as scrap sales is normally done for a customer who doesn’t pay taxes or its used for some other purpose.
How to calculate TCS on scrap sale under GST
In business for certain transactions, Government expects us to withhold the taxes from total payments and pay it directly to Government. For example Scrap sales, eCommerce consumer sales etc.
TCS on scrap under GST with example:
Method 1: Typically a customer who sells Scrap or do an online eCommerce sales or some other services, needs to be charged with 1% TCS on the selling price. Now this “decision of” Selling price is a confusing factor as each CA / Auditor/ CS treats it different way.
We follow the safest and old way as earlier days, TCS was calculated based on this approach where the Tax was added to total scrap Amount.
For example, we are selling the scrap of Rs 10,000 and the GST applied here is GST 12%.
Now the calculation is as below.
Scrap Value Rs 10,000
GST 12% Rs . 1,200
The invoice value or selling price is Rs 11200.00. So the TCS is calculated on this amount.
Means we added “Scrap value + GST 12%” to arrive at the total “Sales value”. We did this to avoid any confusion from our end and ensure that taxes are not paid less.
TCS 1% on this “Sale Value” is Rs 112.00 and this is withheld back from the total payment. Now you can calculate the TCS on scrap value too.
Total Invoice value is Rs 11312.00
Even the new eCommerce companies have to charge 1% TCS and the transaction is some what same. Now Government of India has extended this to eCommerce sectors too.
A clause has been inserted in GST law for all the e-commerce aggregators like Snapdeal.com, Amazon.in, Shopclues.com, eBay.in, Flipkart.com etc. They are made responsible for deducting and depositing TCS tax at the rate of 1% from each of the transaction. They have to deposit the TCS amount, that’s deducted, by the 10th day of the next month.
All the traders/dealers selling goods/services online would need to get registered under GST even if their turnover is less than 20 Lakhs for claiming the tax deducted by Ecommerce operators.
New GST rule has been proposed, where SMEs with less than Rs 40,00,000 per annum turnover needn’t register for GST tax. But this is effective from 1st Apr 2019.
In GST case, CA’s have come out saying, the total “Sale Value” shouldn’t consider the GST amount. Means, we are selling the scrap of Rs 10,000 and the GST applied here is GST 12%.
Scrap Value is Rs 10,000 and the GST applied on this is Rs 1200.00. But for the TCS calculation, we consider only “Scrap value” to arrive the total “Sales value”.
TCS 1% on this “Sale Value” is Rs 100.00 and this is withheld back from the total payment.
So there is always a confusion here on what’s the correct way.
“ACTouch.com is designed to handle BOTH the above methods based on your needs”
Click below to see how to create GST Invoice with Tax Collected at Source.
How to calculate the GST Purchase Receipt with TCS impact?
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