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TCS in TallyPrime – An Overview

Tax Collected at Source (TCS) is a mechanism under the Income Tax Act where tax is collected by the seller from the buyer on specified transactions covered under Section 206C of the Income Tax Act.

TallyPrime helps you manage your TCS, from configuring company’s TCS details, Nature of Goods, rates, thresholds, and party details to recording transactions, and generating statutory reports. You can calculate TCS either when recording the transaction or when receiving the payment, based on the calculation method configured for the Nature of Goods. TallyPrime also helps you track TCS liabilities and payments, review TCS transactions, reconcile challans, and prepare return-related information for filing.

Set up TCS in your company and configure the masters and compliance details required to calculate and record TCS.

• Enable TCS and Set Up TCS Details in TallyPrime

• Create TCS Masters in TallyPrime

TallyPrime lets you calculate TCS either on accrual or realisation, based on the Nature of Goods.

• Accrual – TCS is calculated while billing the customer for the applicable transaction.

• Realisation – TCS is calculated when you receive payment from the buyer.

In TallyPrime, you can configure the TCS calculation method as accrual or realisation for the relevant Nature of Goods.

With TallyPrime, you can record TCS on sales, purchases, and advance receipts, and manage other TCS scenarios based on the nature of the transaction. A few scenarios for which you can collect TCS are listed below:

• Record TCS on Sales in TallyPrime

• Record TCS on Purchase in TallyPrime

• Record TCS on Advance Receipts in TallyPrime

Handle TCS requirements for specific parties and provisions:

Depending on the buyer’s category and the applicable provisions, TCS compliance requirements may vary. TallyPrime provides dedicated workflows to handle different scenarios, including transactions with government-listed parties, buyers who deduct TDS, and specified persons subject to higher TCS rates, ensuring accurate calculation and compliance.

• Record TCS When Buyer Deducts TDS

• Record TCS Exemption for Government-Listed Parties

• Configure Higher TCS Rate for Specified Persons under Section 206CCA

Record TCS payments made to the government and account for applicable late fees, interest, and penalties.

• Record TCS Payment, Late Fee, Interest, and Penalty

Use TCS reports to review TCS transactions, identify pending liabilities, and reconcile challan details after making TCS payments.

• Review TCS Outstanding and Reconcile Challan in TallyPrime

Review the TCS transactions included in the return and resolve transactions that require attention. You can verify the details, correct incomplete or incorrect information, and ensure that the transactions are appropriately included in the return before preparing it for filing.

• View, Prepare, and Export Form 27EQ and Form 143 in TallyPrime

• Validate and File TCS Returns in TallyPrime

With the introduction of the Income Tax Act, 2025, Form 143 replaces Form 27EQ for quarterly e-TCS returns from Tax Year 2026–27 onwards. The first return under the revised format is for Q1 (April–June 2026).

Section 206C(1H) required eligible sellers to collect TCS on the sale of goods once receipts from a buyer exceeded ₹50 lakh in a financial year, and the seller’s turnover in the preceding financial year exceeded ₹10 crore. This provision ceased to apply from 1 April 2025, and such transactions are no longer subject to TCS under this section. In TallyPrime, you can:

• Record Sales of Goods Without TCS — Section 206C(1H)