TCS Return Form 27EQ – Filing Process, Deadlines & Compliance

File Form 27EQ quarterly to report TCS on goods sold in India. Stay compliant, avoid penalties.

Form 27EQ Overview

Form 27EQ is a type of TCS (Tax Collected at Source) return in India. TCS is a tax collected by the seller from the buyer at the time of sale of specified goods, and it is deposited with the government. The person collecting TCS is required to file a TCS return using Form 27EQ to report the details of tax collected.

TCS Return Overview:

Form 27EQ is the statement cum challan for depositing tax collected at source. The form captures details such as:

• Collector’s Details: Information about the person or entity collecting TCS.
• PAN of Collector: Permanent Account Number of the collector.
• PAN of Deductee: Permanent Account Number of the buyer.
• Details of TCS Transactions: Specifics of the transactions on which TCS has been collected.
• TCS Amount: The amount of TCS collected.
• Payment Details: Challan details for the deposit of TCS with the bank.

Due Date for Form 27EQ

• 31st July for the quarter ending 30th June
• 31st October for the quarter ending 30th September
• 31st January for the quarter ending 31st December
• 31st May for the quarter ending 31st March

Why Do You Need Form 27EQ?

• To report and remit Tax Collected at Source (TCS) on specific goods and services.
• To ensure compliance with Section 206C of the Income Tax Act 1961.
• To provide the government with accurate information on TCS collections.
• Helps track TCS collections, prevents tax evasion, and allows buyers to claim credit.
• Avoids penalties and ensures legal compliance with TDS Return Filing.

Key Reasons for Filing:

1. Compliance with TCS Provisions:

   • TCS is a mechanism where a seller collects tax from the buyer at the time of sale and remits it to the government.
   • Form 27EQ is mandatory for sellers who have collected TCS to declare and deposit the tax.

2. Tracking TCS Collections:

   • The form helps the government track TCS collections effectively.
   • It provides details on the amount of TCS collected, the nature of goods or services, and the parties involved.

3. Preventing Tax Evasion:

   • Mandated filing of Form 27EQ discourages tax evasion by ensuring that TCS is collected and remitted correctly.
   • It helps maintain transparency in tax transactions.

4. Claiming Credit for TCS:

   • Buyers who have paid TCS can claim credit for it while filing their income tax returns.
   • Form 27EQ serves as proof of TCS payment, enabling buyers to claim the credit.

5. Avoiding Penalties:

   • Failure to file Form 27EQ by the due date can attract penalties and interest charges.
   • Timely filing is crucial to avoid such consequences.

Who Needs to File:

• Corporates
• Government entities
• Other sellers who have collected TCS under Section 206C

What is Collectee Code in TCS Return?

A collectee code is a unique identifier used in Form 27EQ to categorize the type of buyer (deductee) from whom TCS is collected. This code helps in correctly classifying the deductee for tax purposes. Different collectee codes are assigned to individuals, companies, firms, and other entities.

How to Choose the Correct Collectee Code?

Collectee Code	Type of Deductee
01	Company
02	Government
03	Firm
04	Individual/HUF
05	AOP/BOI
06	Local Authority

Features of Form 27EQ

1. Purpose:

• Reporting and remittance of Tax Collected at Source (TCS) on specific goods and services.
• Compliance with Section 206C of the Income Tax Act, 1961.

2. Filing Frequency:

• Quarterly (every three months)

5. Information Required:

• TAN (Tax Deduction and Collection Account Number)
• PAN (Permanent Account Number) (except for government deductors)
• Financial year and assessment year
• Details of TCS collected:
  • Collection code
  • Amount of TCS
  • Education cess
  • Surcharge
  • Interest charged (if applicable)
• Details of payment made to the government:
  • BSR code
  • Date of deposit
  • Challan serial number or cheque/DD details

6. Filing Method:

• Online filing through the TRACES portal of the Income Tax Department

7. Key Sections:

• Section 1: Basic information (TAN, PAN, financial year, assessment year)
• Section 2: Details of deductor/collector
• Section 3: Declaration
• Section 4: Details of tax payment
• Section 5: Annexure (details of tax collected and paid)

How to File Form 27EQ?

Step 1: Register on TRACES Portal

• Visit TRACES Portal.

• Use TAN and PAN to register and obtain login credentials.

Step 2: Gather Required Information

• TAN, PAN, financial year, assessment year.

• Details of TCS collected (collection code, amount, cess, surcharge, interest).

• Tax payment details (BSR code, date of deposit, challan/cheque details).

Step 3: Validate and Digitally Sign the Form

• Use the File Validation Utility (FVU) to check for errors.

• Apply a Digital Signature Certificate (DSC) before submission.

Step 4: Submit Online via TRACES Portal

• Log in, navigate to “File Returns,” upload Form 27EQ, and submit.

• Receive confirmation and File Reference Number (FRN).

Step 5: Make TCS Payment (if not done already)

• Pay through designated banks and keep challan details for records.

Submission of Form 27EQ

1. Registration on TRACES Portal:

• If you haven’t already, register on the TRACES portal (https://www.tdscpc.gov.in/app/login.xhtml) using your TAN and PAN (except for government deductors).
• During registration, you’ll receive a User ID and password for accessing the portal.

3. Validation of Form:

• Use the File Validation Utility (FVU) available on the TRACES portal to validate the form and ensure there are no errors.
• If errors are found, correct them and re-validate the form.

4. Digital Signature:

• Obtain a valid Digital Signature Certificate (DSC) from a certifying authority.
• Use the DSC to digitally sign the validated Form 27EQ.

5. Online Submission:

• Log in to the TRACES portal using your User ID and password.
• Go to the “File Returns” section and select “Form 27EQ.”
• Upload the digitally signed form and submit it.
• Upon successful submission, you’ll receive a confirmation message and a File Reference Number (FRN).

6. Payment of TCS:

• If you haven’t already paid the TCS collected, make the payment to the government through designated banks using a challan or electronic payment methods.
• Keep the challan or payment receipt for records.

Contents of Form 27EQ:

The contents of Form 27EQ include:

• Collector’s Details:
  • Name and Address of the Collector
  • TAN (Tax Deduction and Collection Account Number) of the Collector
• PAN of Deductee:
  • Permanent Account Number of the buyer on whom TCS is collected
• Details of TCS Transactions:
  • Nature of Payment
  • Transaction Amount
  • TCS Rate
  • TCS Amount
• Challan Details:
  • BSR Code (Bank and Branch Code)
  • Challan Serial Number
  • Date of Deposit
  • Amount Deposited
• Others:
  • Assessment Year
  • Quarter for which the return is filed

Collectee Code in TCS Return

In Form 27EQ, the Collectee Code is used to categorize the type of deductee (buyer) from whom TCS is collected. It helps in identifying the nature of the entity for tax reporting.

Common Collectee Codes in TCS Return

• Company

•  Central Government

• State Government

• Local Authority

• Statutory Body

• Partnership Firm (collectee code in tcs return for partnership firm”, “collectee code for firm in tcs return)

• Individual or HUF (Hindu Undivided Family)

• AOP/BOI (Association of Persons / Body of Individuals)

How to Choose the Correct Collectee Code?

• If the buyer is a private limited or public limited company, use Collectee Code 01.

• If the buyer is a partnership firm, use Collectee Code 06.

• If the buyer is an individual or HUF, use Collectee Code 07.

• Always verify the PAN of the collectee before selecting the code to avoid errors in TCS return filing.

Penalties for Non-Payment of TCS and Late Filing

Failing to collect, deposit, or file TCS returns on time can lead to severe penalties under the Income Tax Act.

• Late Filing of Form 27EQ:

  • A penalty of ₹200 per day under Section 234E until the return is filed.

  • The total penalty cannot exceed the TCS amount due.

• Failure to Collect or Deposit TCS:

  • Interest @ 1% per month (or part of the month) if TCS is not collected.

  • Interest @ 1.5% per month (or part of the month) if TCS is collected but not deposited.

• Penalty for Incorrect Filing (Section 271H):

  • A penalty between ₹10,000 and ₹1,00,000 if Form 27EQ is filed with incorrect details.

• Prosecution Under Section 276B:

  • In extreme cases, non-payment of TCS can result in imprisonment of 3 months to 7 years, along with a fine.

Common Errors to Avoid While Filing Form 27EQ

Many businesses face issues while filing Form 27EQ due to avoidable mistakes. Here are some key errors and how to prevent them:

1. Incorrect PAN or TAN Details:

   • Ensure PAN of both collector and deductee is correct to avoid rejections.

2. Mismatched TCS Amount:

   • The TCS amount filed should match the amount deposited with the bank.

3. Late Payment of TCS:

   • Delayed TCS deposit leads to interest charges, so ensure timely remittance.

4. Skipping Validation Using FVU:

   • Use the File Validation Utility (FVU) to check for errors before submission.

5. Missing Challan Details:

   • Incorrect or missing BSR codes and challan numbers may lead to rejection of Form 27EQ.

6. Filing Without Digital Signature (DSC):

   • DSC is mandatory for online submission. Ensure you have a valid DSC before filing.

Conclusion

Form 27EQ is essential for businesses and entities collecting Tax Collected at Source (TCS) in India. It ensures compliance with tax regulations, provides transparency in the taxation system, and serves as documentation for TCS transactions. The form is filed quarterly, with due dates.

Accurate and timely submission of Form 27EQ is essential to avoid penalties and stay compliant with tax laws. It involves providing details of the collector, deductee, TCS transactions, and challan information. The form can be submitted online through the Income Tax Department’s portal. Keeping abreast of any updates to tax regulations and seeking professional advice ensures adherence to the latest guidelines.

FAQ

When is the deadline for filing Form 27EQ, and what are the consequences of late filing?

The deadline for filing Form 27EQ depends on the quarter during which you collected TCS:

• Quarter ending June 30th: Due July 31st
• Quarter ending September 30th: Due October 31st
• Quarter ending December 31st: Due January 31st
• Quarter ending March 31st: Due May 31st.Late filing attracts penalties and interest charges. The current penalty is Rs.200 per day for the initial delay and Rs.5 per day for subsequent delays. The interest on unpaid TCS is as per prevailing rates.

Can Form 27EQ be filed electronically, and what is the process for online submission?

Yes, Form 27EQ can be filed electronically through the TRACES portal Here's the process:1.Register on TRACES: Use your TAN and PAN (except for government deductors) to register and obtain a User ID and password.
2.Prepare the Form: Gather necessary information like TAN, PAN, financial year, TCS details, and payment details. Download and fill the form, either offline or using the online utility.
3.Validate the Form: Use the FVU on the TRACES portal to check for errors and correct them if needed.
4.Sign and Submit: Obtain a valid DSC and digitally sign the form. Log in to TRACES, choose File Returns and select Form 27EQ, upload the signed form, and submit it. You'll receive a confirmation message and File Reference Number (FRN).

What information and details are required to be filled in Form 27EQ for accurate TCS reporting?

You need to include:

Basic Information: TAN, PAN (except for government deductors), financial year, and assessment year.

Deductor/Collector Details: Your name, address, and contact details.

Declaration: Confirming the accuracy of the information and your compliance with provisions.

Tax Payment Details: BSR code, date of deposit, challan/cheque/DD details.

Annexure: Detailed breakdown of collected and paid TCS for each transaction (collection code, amount, cess, surcharge, interest).

Are there any exemptions or thresholds for certain transactions in relation to TCS and Form 27EQ?

Yes, some transactions are exempt from TCS, and thresholds apply for others. For example, TCS isn't applicable on purchases below Rs.10 lakhs for cars, Rs.50 lakhs for immovable property, and Rs.2 lakhs for purchase of timber. Refer to the Income Tax website or consult a tax professional for specific exemptions and thresholds.

What is the penalty for non-compliance or incorrect filing of Form 27EQ?

Penalties for non-compliance or incorrect filing can include:

Fine of up to Rs.10,000 for non-filing or late filing.

Interest on unpaid TCS as per prevailing rates.

Disallowance of expenses related to the transaction where TCS wasn't deducted or deposited correctly.

In severe cases, prosecution under the Income Tax Act.

Can a taxpayer make corrections or amendments to a filed Form 27EQ and what is the process for doing so?

Yes, corrections can be made by filing a revised Form 27EQ within the filing deadline for the relevant quarter. You need to clearly mention it's a revision and provide details of the original submission. Remember, late filing penalties still apply to the revised form.

Where can businesses and individuals find guidance or support for understanding and filing Form 27EQ for TCS returns?

You can access resources through:

Income Tax Department website: Detailed information on TCS provisions, Form 27EQ instructions, and FAQs.

TRACES portal: User manuals and tutorials about online filing.

Tax consultants: Seek professional guidance for complex situations or specific queries.

Chartered Accountant associations: Offer workshops and publications on TCS compliance.