3522683 - Handling LDC scenario under section 206C (1H) in SD solution - ECC

In the Budget 2024 passed on 16th Aug 2024, provisions of Lower deduction Certificate (LDC) were extended to sale of goods under Section 206C (1H) with effective validity from 1st Oct 2024.

The Assessing Officer upon receipt of the application and, if satisfied, issues a certificate which authorizes the deductor/collector as mentioned in the Annexure to Form 13 to deduct/collect tax at the rate specified in the certificate. The said rate is applicable for the period (financial year) & amount specified on the certificate.

LDC rate and amount - to be applied at combination of TAN of the deductor and PAN of the deductee.

Once the sale consideration from the taxpayer exceeds the amount mentioned in the LDC, then the TCS would be applicable at normal rate.

LDC would be applicable only on amount exceeding the originally 50 Lakhs (see announcement to the section 206C in the SAP note 2976843).

Example: Goods sold to X covered u/s 206C(1h) for Rs.1.25 crore. X has a LDC from tax authorities for 60 lakhs

TCS on 1st 50 lakhs - (range 0-50 lakhs) - No TCS

TCS on next 60 lakhs - (range >50 lakhs - 1.10 crore) - zero or lower rate as mentioned in LDC certificate to be applied

TCS on next 15 lakhs - (range >1.10-1.25 crore) - transactions over the LDC amount - normal rate to be applied

NOTE: This KBA is only valid for SAP ECC version

"Image/data in this KBA is from SAP internal systems, sample data, or demo systems. Any resemblance to real data is purely coincidental."

• SAP ERP

IN (India), TCS (Tax Collected at Source), LDC (Lower Deduction Certificate), PAN (Permanent Account Number), TAN (Tax Deduction and Collection Account Number- This is a ten-digit alphanumeric number issued by the Income Tax department to all persons responsible for collecting or deducting tax), 206C(1H), Union budget, 2024, FY 2025 , KBA , FI-LOC-SD-IN , India (aka XX-CSC-IN-SD) , FI-LOC-LO-IN , India , Problem