TCS Solution Overview & Address Common Issues faced during solution

Implementation
Sanjay Gadri & Karthikeyan Nataraj
SAP Product Support
Sep 17, 2020
PUBLIC
Agenda

 Tax Collected at Source (TCS) Solution Overview

 Details about Notes & Documentation delivered by SAP

 Common issues faced during Solution Implementation & their Workaround

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Tax Collected at Source (TCS)

Tax collected at source (TCS) is the tax payable by a seller which he collects from the buyer at the time of sale.
Section 206C of the Income-tax act governs the goods on which the seller must collect tax from the purchasers.

As per the latest change proposed in Budget 2020, in addition to the existing provision in section 206C,
government widened the scope by introducing a subsection 206C(1H) in budget 2020, where following
transactions has also been brought under the ambit of TCS provisions

1. TCS on sale of goods over a limit where TDS/TCS has been not been deducted/Collected by buyer under
any other provision of the Income Tax Act
2. On selling of overseas tour package
3. On foreign remittance through LRS of RBI (Liberalized Remittance Scheme)

The TCS collected in the current month will be deposited to the govt authorities before 7th of subsequent month
against buyer which buyer will adjust against his/her income tax liability.

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Key aspects of TCS

 Seller is liable to collect TCS only if his previous year turnover is > 10 crores.
 Seller is liable to collect the TCS only if the sale consideration has exceeded 50 lakhs in the financial year.
 Seller is required to collect TCS @0.075% on the amount exceeding 50 lakhs.
 If the total sale of goods in the year is 60 lakhs then in that case TCS is to be collected only on 10 lakhs that
is amount exceeding 50 lakhs. We use accumulation logic to check if the sale consideration has crossed 50
lakhs
 PAN/Aadhar of the buyer is required else TCS to be collected at higher rate 1%.

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TCS Solution Approach

Notes for TCS on SD solution:
• 2948240 - Data Dictionary Activity for Budget Change 2020 on Tax Collected at Source
• 2948539 - Corrections to enable Tax Collected at Source in Outgoing Invoices
• 2949714 - Section code needs to be updated for TCS billing document
• 2965552 - Corrections to Bill-to-party changes for Accumulation in TCS

Note for TCS on FI solution:

• 2960994 - Corrections to enable Tax Collected at Source in FI Customer Invoices

Important Objects in TCS:

Technical Name Description

J_1IG_ACCUMHDR Sales Accumulation Header Table
J_1IG_ACCUMDTL Accumulation Details for Sales Table
J_1IG_THLDV Threshold Value for Sales View
FV63A364 / FV63A361 364 TCS Pricing Routine for SD side / 361 TCS routine for FI side
BADI_J1IG_TCS BADI for Tax Collected at Source
EI_J1IG_TCSACCUMSD
© 2020 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC Enhancement for Accumulation tables update in FM 5
Frequently Asked Questions:
SL. Question Answer
No
1. Modules supported for TCS Solution SD & FI
2. TCS solution for Solution is planned to be delivered by the end of Oct 2020.
Procurement/Buyer/Account payable/ Word around:  Make use of G/L tab in MIRO to post TCS to separate
G/L which later can be referred to for your internal reconciliation.
3. TCS for advance payment TCS on advance payments is not supported as of now
4. What processes are supported for TCS? Credit notes, Sales return, Excise process,
5. FB70/75 only supports TCS calculation If the gross amount is checked for tax calculation, then arriving at the
on net amount and not gross amount correct tax base amount on which TCS has to be computed is not
possible due to technical limitations
6. How to handle TCS for direct FI postings Direct FI postings are tax code based and MWST access sequence
FB70/75 should be used
7. Transaction codes supported for TCS VF01, VF11, VF04, FB70, FB75, FB08
8. Creating Cancelation/Credit memo/Debit Ensure that all the likely cancelations/credit /debit notes for documents
memo on 1st of October for documents prior to 1st oct, 2020 are completed before go live of new solution. And
posted prior to 1st Oct, 2020 you are passing the correct sale consideration value taking into account
all your invoices, cancelations, credit notes, debit notes as on 1st oct,
2020. This is to ensure that there is no inconsistency in accumulation
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and TCS calculation. 6
Frequently Asked Questions:
SL. Question Answer
No
9. How to transfer the amount from Interim TCS Amount should be transferred once payment is received from
GL account to final TCS GL account. customer and standard report RFUMSV50 should be used for the
same. A note will be released on further guidance.
You can also refer the SAP Note 1800344 - How to start using
deferred tax report RFUMSV50.
10. How to get sale amount for transactions done Customers have to come up with a sale amount for transactions
before 1st Oct done between 1st April to 30th Sept and have to pass the same in
get_sale_amount method of BADI “BADI_J1IG_TCS”.
11. Billing document is posted in current month The Credit Memo will be posted with reference to the invoice and
and credit note is posted in the subsequent even if remittance of tax liability to tax authority is done while
month after remittance, how will it be doing reporting the tax liability will be adjusted against
processed subsequent invoice accordingly and reported.

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Common issues faced during solution implementation & their workaround

SL. Issue Resolution/Workaround

No
1. TCS BADI “BADI_J1IG_TCS” is not triggered Classify TCS condition types with current pricing
during posting of billing document procedure (Standard JINFAC/Customized Z or Y) in the
table J_1IEXCDEFN. Refer the classify condition type
section in configuration guide from the note 2948539
2. Accumulation header and detail tables are not Ensure that BADI "BADI_J1IG_TCS" is implemented
updating after releasing billing to accounting and sale amount is being passed. Also, ensure BTE 1025 is
maintained as per post implementation steps from the note
2948539
3. Wrong Base amount for TCS tax in FB70 Check from and to steps for TCS condition type in tax
document procedure TAXINN
4. DUMP in transactions due to BTE 1025 after Implement the pilot note 2965552
implementing TCS solution.
Accumulation should happen based on bill to
party (PAN).
5. Error:  “Function group J_1IG_TCS_VIEW Activate the Function group “J_1IG_TCS_VIEW” and
cannot be processed” in the log during step3 execute the step3 again.
execution of UDO report NOTE_2948240 for TCS
note 2948240.
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Common issues faced during solution implementation & their workaround

SL. Issue Resolution/Workaround

No
6. Error: "Include report LJ_1IG_TCS_VIEWT00 De-implement the note 2948539 if implemented already.
not found" or "Include report Follow the solution part of the note 2948240.
LJ_1IG_TCS_VIEWF00 not found" during note Implement the note 2948539 again.
2948539 implementation. 
7. Error: The field "GT_BKPF" is unknown, but there De-implement the note 2948539. Ensure note 2948240 is
are the following fields with similar names: implemented completely.
"EX_BKPF" and "IM_BKPF". Again implement the note 2948539. If you get yellow light
Error: The field "GT_BSET" is unknown, but there for include LJ_1IG_TCSTOP then select it manually and
are the following fields with similar names: go ahead with implementation. Ensure all the includes and
"EX_BSET" and "IM_BSET".  function groups are activated. 

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Common issues faced during solution implementation & their workaround

SL. Issue Resolution/Workaround

No
8. How to use the BADI "BADI_J1IG_TCS" and • This method will be triggered while posting the billing or customer invoice
via transactions VF01/FB60.
methods "GET_SALE_AMOUNT“. • This method is delivered to determine and pass the sale amount for
206C(1H) materials that has happened from April 01 to Sept 30 between
the seller(Your PAN) and buyer (based on PAN or Aadhaar or Customer) to
the CH_ACCUMHDR-ACCUM_AMT field.
• You need to pass this ACCUM_AMT amount only once for every Seller
and Buyer combination, once this is updated in table
J_1IG_ACCUMHDR, then from next billing between this seller and buyer
combination ACCUM_AMT will be fetched from the table
J_1IG_ACCUMHDR.
• System will not determine the sale amount automatically. It's mandatory to
write a logic in this BADI to determine Sale amount.
• Once tables J_1IG_ACCUMHDR & J_1IG_ACCUMDTL get updated for a
particular seller and buyer's combination, BADI will not be triggered any
more for that combination, so changing values in BADI for that
combination post updating of tables J_1IG_ACCUMHDR &
J_1IG_ACCUMDTL will not make any difference.
• It's up to customer, how they arrive at the ACCUM_AMT for your buyer
and seller combination. You can use standard table to arrive at the this value
by writing the logic inside the BADI or you can create custom table and
store the ACCUM_AMT in it based on seller and buyer PAN and write a
logic in the BADI to fetch those details.
• Refer the TCS_Process.pdf in 2948539 for more details.

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Common issues faced during solution implementation & their workaround

SL. Issue Resolution/Workaround

No
9. How to use the BADI "BADI_J1IG_TCS" and • This method will be triggered while cancelling the billing/credit
methods "SET_ACCUMULATION_FLAG". memo/debit memo or customer invoice/credit memo posted
between 1st April to 30th Sept.
• This method is delivered to identify if document (posted between
1st April to 30th Sept) should be considered for accumulation
reduction during cancellation via VF11/FB08.
• This method has control code(HSN code) as parameter to
identify whether document belongs to 206C(1H) category and
should be considered for accumulation.
• You need to check whether the material/control code in
billing/credit memo/debit memo or customer invoice/credit
memo which you cancel after 1st Oct(Posted before 1st Oct)
belongs to 206C(1H) category, if yes then you need to pass
FLAG as 'X' so that sales value between the seller and Buyer
will get reduced in the accumulation tables.
• It's up to customer, how they write the logic in this method to
determine whether this HSN code belongs to 1H goods so that
flag can be set.

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References
• TCS Updates: 2898812 - Amendment to Section 206C
• TCS FAQ: 2963124 - FAQ on Tax Collected at Source (TCS)
• TCS Guided Answers: https://ga.support.sap.com/dtp/viewer/#/tree/2702/actions/38464

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Thank you.
Contact information:
Sanjay Gadri
Support Expert
SAP Labs India Pvt Ltd

Karthikeyan Nataraj
Support Expert
SAP Labs India Pvt Ltd