We are discussing the setup of TCS in NetSuite and its implementation for items and customers in invoice preparation. Below are the steps for the process.
To set up Tax Collection at Source (TCS), configure the customer and item records that are eligible for TCS and create TCS tax rate rules. To complete TCS setup, perform the following steps in the order specified:
1. Configuring Customer Records that are Eligible for TCS
2. Configuring Item Records that are Eligible for TCS
3. Creating TCS Tax Rate Rule
Configuring Customer Records that are Eligible for TCS
We must configure the customer records that are eligible for TCS to ensure TCS calculation.
To configure a customer record for TCS:
1. Go to Lists > Relationships > Customers.
2. Click Edit beside a customer.
3. Click the Financial subtab.
4. Check the TCS Eligibility box. If the customer is exempt of TCS, don’t check this box.
5. In the Permanent Account Number (PAN) field, enter PAN.
6. (Optional) In the Aadhar Number field, enter the Aadhar number.
7. (Optional) In the Tax Exemption Certificate field, enter the tax exemption certificate number.
8. Click Save.
Configuring Item Records that are Eligible for TCS
We must configure the item records that are eligible for TCS to ensure TCS calculation on items.
To configure an item record for TCS:
1. Go to Lists > Accounting > Items.
2. Click Edit beside an item.
3. Click the Accounting subtab.
4. Check the TCS Eligibility box. (To exempt an item from TCS Calculation, we can uncheck this field.)
5. In the TCS Subsection Code field, select a TCS subsection code.
6. In the TCS Challan Code field, select a TCS challan code.
7. Click Save.
Creating TCS Tax Rate Rules
After setting up TCS in customer and items records, we must create TCS tax rate rules to calculate TCS.
To create a TCS tax rate rule:
1. Go to Setup > India Localization > TCS Tax Rate Rules.
2. Enter a name for the rule.
3. Enter description.
4. Check the TCS Eligibility box. (To exempt an item from TCS Calculation, we can uncheck this field.)
5. In the TCS Subsection Code field, select a TCS subsection code.
6. In the TCS Challan Code field, select a TCS challan code.
7. Click Save.
Creating TCS Tax Rate Rules
After setting up TCS in customer and items records, we must create TCS tax rate rules to calculate TCS.
To create a TCS tax rate rule:
1. Go to Setup > India Localization > TCS Tax Rate Rules.
2. Enter a name for the rule.
3. Enter description.
4. In the Customer Type field, select a customer type.
5. In the Subsection Code field, select a subsection code.
6. In the Challan Code field, select a challan code.
7. Check the PAN or Aadhar Available box if either PAN or Aadhar is available for the customer.
8. In the Effective From field, enter the start date of the tax rule’s validity.
9. In the Valid Until field, enter the end date of the tax rule’s validity.
10. In the Threshold Amount field, enter the threshold amount.
11. In the Rate field, enter the tax rate that applies to the rule.
12. Click Save.
When we select an item in a transaction, the subsection code and challan code associated with the item automatically populates in the line item. The subsection code and challan code determine the TCS tax rate rule to apply to an item to calculate TCS. If you want to create a new challan code, complete the following steps:
To create a new challan code:
1. In the global Search field at the top of any NetSuite page, type New TCS Challan.
2. Enter a name for the challan code.
3. In the Subsection Code field, select a subsection code.
4. Click Save.
After setting up TCS, you can apply TCS on transactions.
Applying TCS on Transactions
After completing TCS setup, we can calculate TCS on cash sale and invoice transactions. We can also calculate TCS on an invoice converted from a sales order. TCS subsection codes and challan codes associated with items determine the tax rate rules to apply to transactions. When you select an item that is eligible for TCS in a transaction, TCS is calculated on the item. We can view the TCS tax details in the Tax Details subtab on a transaction.
To apply TCS on a transaction:
1. Go to an invoice or cash sale transaction.
2. Click the Items subtab.
3. Select an item. If TCS is applicable to the item, the TCS section code, TCS subsection code, and TCS challan code associated with the item automatically populates.
4. Click Add to add the item.
5. Complete other details as required.
6. To preview tax, click Preview Tax.
7. After saving, under tax details subtab, we can view the tax calculated.