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Digital Transformation of Tax on
SAP S/4HANA and ECC complying with new rules for TCS on Goods Sold
effective from 1’st October 2020
Govt of India has been strengthening its tax
Collection capabilities by implementing
measures to collect tax at source.
TDS or Tax Deduction at Source provisions of
income tax cover payments such as rent,
commission, professional fees, salary, interest
etc. Persons making such payments deducts
income tax and makes net payment.
1. SD (Sales and Distribution 2. FI (Financials)
TCS on advance payments is not supported as of now.
There is ambiguity on calculation of TCS at the time of advance payment receipt. TCS on advance is applicable on 206c(1H) goods but for goods
under 206C others the rule says TCS is applicable at the time of advance payment/invoice whichever is earlier. Also Advance payment received can
be adjusted against 206c(1H) goods, Services etc.
Now if TCS is to be charged at the time of advance payment then what is the guarantee that the advance received will be adjusted against
206C(1H) goods only? So if the advance is cleared against any TCS invoice the liability will be picked up for payment due 7th of subsequent month.
A3. It is Legally not required to capture TCS in the incoming side as the seller will be depositing the collected tax against PAN/Aadhar of the buyer
and the same can be adjusted by the buyer against his/her income tax liability. Here there is no Tax credit adjustment against payable and
receivables unlike GST.
As per section 206C(4) of the IT Act, TCS collected by the seller and deposited with the Central Government is deemed to be tax paid on behalf of
buyer and the tax so deposited is available as a credit to the buyer to set it off against its income-tax liability.
Accordingly, since the TCS is in the nature of income-tax paid by the buyer, the buyer will not be allowed to claim deduction of this expenditure.
Therefore, the buyer will not capture TCS on the purchase side and will book it as ‘Advance income-tax’ paid by it.
A4. Yes credit notes and Sales return processes are supported
Yes the current solution supports TCS postings for excisable goods as well.
JTC2 condition type is for TCS others like Sale of Alcoholic liquor, timber, tendu leaves etc. JTC2 if for goods other than 206c(1H) where threshold
check of 50 Lacs is not required.
As per the standard behaviour if tax category is introduced in OVK1 then the same will by default appear in customer tax classification and
material tax classification. Customers tax classification option is used to identify whether TCS is applicable for the customer or not.
TCS is not applicable for central government, state government, high commission, embassy, foreign customer so with this identifier TCS applicability
will be considered.
Material classification here has no significance but by default it will appear if the user creates a new material or changes existing material. In that
case please maintain any of the given classification. This is not used in the TCS solution.
Accumulation table will get updated with the total accumulation/sales amount and TCS amount only once the posting hits accounting.
If the billing document is posted and not released to accounting then tables J_1I_ACCUMHDR and J_1IG_ACCUMDTL will not be updated;
meanwhile is subsequent documents are posted the accumulation would have been increased/decreased and if you now try to release the billing
document to accounting at this point TCS will not be correct. So in order to have the right accumulation value and calculation of correct TCS
amount, document should be posted to accounting.
For any reason if the document could not be released to accounting because of some error then you will have to retrigger pricing before "Release
to Accounting". This will ensure that correct TCS calculation will happen and accumulation tables will be updated correctly.
As per the rule for TCS, tax is to be collected only when the sale consideration has exceeded 50 Lacs. In order to achieve this, we accumulate
the total sale value with the documents that are posted. If the gross amount is checked for tax calculation, then arriving at the correct tax base
amount on which TCS has to be computed is not possible due to technical limitations. So currently FB70/75 only supports TCS calculation on net
A10. VF01, VF11 ,VF04 , FB70, FB75 & FB08
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