Form 27EQ: A Comprehensive Guide for TCS Return

A tax that is gathered from the customer and given to the government by the seller is known as Tax Collected at Source or TCS. The vendor must file a TCS return on Form 27EQ if they have collected the tax, as per Section 206C of the Income Tax Act of 1961. Both corporate and government collectors and deductors have to submit this form. In this guide, we will explain all a taxpayer needs to understand about Form 27EQ for filing a TCS return.

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Table of Contents

Understanding Tax Collected at Source

What is Form 27EQ?

Contents of Form 27EQ

Due Date to File Form 27EQ

How to Download Form 27EQ?

Penalties for Late Submission of Form 27EQ

Conclusion

Most Asked Questions

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Understanding Tax Collected at Source

The tax that is collected at the point of sale by the vendor and lodged with the relevant tax authorities is known as tax collected at source or TCS. Section 206C of the Income-tax Act governs the items on which the seller is required to collect tax from the customers. For them to be able to collect TCS, they need to have the Tax Collection Account Number.

For instance, the buyer pays Rs. 20 as TCS (Rs. 80 + Rs. 20) for a box of chocolates costing Rs. 100. This is the tax that was collected at the point of sale. After that, the money is moved to a certain bank branch that has been given permission to accept payments. The vendor is not obligated to pay this tax; rather, they are solely in charge of having the client pay it. The tax is meant to be collected throughout transactions, when goods are being sold, when cash payments are received from the customer, or when checks or drafts are issued, depending on which method is paid first.

What is Form 27EQ?

The information on tax collected at the source by the seller while accepting payments from the customer on specific commodities is contained in Form 27EQ, a TCS Return/Statement. Form 27EQ essentially contains information about taxes collected and paid to the federal government. It must be turned in on time each quarter, on or before the deadline. The features of Form 27EQ are as follows:

• Falls under Section 206 of the Income Tax Act 

• Collected on a quarterly basis

• TAN details have to be mentioned

• Government employers must mention ‘PANNOTREQD’

• Non-government employers  must mention the PAN details

Contents of Form 27EQ

Form 27EQ has five sections, each requiring an individual to share a specific set of details. Here are the contents you need to fill out section-wise.

Section 1: The deductor has to enter the following details in this section:

• PAN details

• TAN details

• Assessment year

• Financial year

• If a statement has already been filed for the said quarter, the provisional receipt number of the original statement

Section 2: The collector has to enter the following details in this section:

• The collector’s name

• The collector’s personal details such as address, email ID, and phone number

• The collector’s branch or division where applicable

Section 3: The person who is in charge of collecting the tax must provide the following details in this section:

• The individual’s name

• The individual’s address

Section 4: This section requires the following details regarding the TCS and tax paid to the Central Government:

• The amount of Tax Collected at Source (TCS)

• Collection code

• Surcharge amount 

• Amount of interest levied

• Amount of education cess

• Any other amount

• Total tax deposit amount (sum of the aforementioned amounts)

• BSR code

• Cheque number or Demand Draft number where applicable

• Date when the tax amount was deposited

• Number mentioned in the transfer voucher/challan serial number

• If the TCS has been deposited via book entry

Section 5: The taxpayer provides the details of TCS and a amount paid with appropriate signatures in this section. All details have to be given in the annexure provided with the form.

Due Date to File Form 27EQ

Since Form 27EQ is to be filed quarterly, the due dates are mentioned in the following table:

Quarter	Period	Due date
Quarter 1	1st April – 30th June	15th July
Quarter 2	1st July – 30th September	15th October
Quarter 3	1st October – 31st December	15th January
Quarter 4	1st January – 31st March	15th May

Goods Subjected to TCS

Tax Collected at Source is not applicable to all goods. It is collected only on specific items, listed as follows:

• Alcoholic liquor for human consumption

• Timber obtained under a forest lease or by any other means

• Tendu leaves

• Other forest produce (besides timber and tendu leaves)

• Minerals like coal, lignite, or iron ore

• Scrap

• Sale of new or old cars with the sale value above INR 10,00,000

• Sale of goods with consideration exceeding INR 50,00,000 during a financial year

How to Download Form 27EQ?

The Form 27EQ is easy to download. Simply adhere to these steps:

• Go to the official NSDL website.

• Go to the Menu's 'Downloads' tab and select 'E-TDS/E-TCS.'

• Click "Regular" after selecting "Quarterly Returns."

• Locate and click Form 27EQ to open, download, or print it as needed.
  

Key Update: In conformity with the Central Board of Direct Taxes (CBDT) Income Tax Circular, the deadline for filing TDS Returns in Forms 26Q, 27Q, and 27EQ for the first quarter of the fiscal year 2023–2024 has been extended to September 30, 2023.

Penalties for Late Submission of Form 27EQ

It is essential to submit Form 27EQ on time to avoid fines. Submissions that are late may result in: 

• Until filing, there will be a daily late cost of Rs. 200; the total late fee cannot be more than the TCS amount. 

• The penalty for not filing might be anything from 10,000 to 1,000,000 rupees, based on how long the delay was. 

Form 27EQ is essential to ensuring smooth tax collection and payment. Sellers who understand the procedure and adhere to the deadlines not only avoid penalties but also contribute to the upkeep of an effective tax system.

Conclusion

In India, Form 27EQ is necessary for TCS (Tax Collected at Source) compliance, especially when selling products. TCS returns are filed and reported using it. This form contains the TCS collection code for the sale of goods. It is essential to know the correct collection code when filing Form 27EQ and making timely payments. The goal of this form is to ensure tax compliance and record TCS on products. Recognise the 27EQ TDS return deadline in order to fulfil your responsibilities and stay out of trouble. Form 27EQ, which provides data on the total value of purchases subject to TCS, is important to the TCS procedure.

FAQ

Q1. Who has to submit Form 27EQ?

The following organisations must send in Form 27EQ.

• Individuals and HUF with turnover over INR 1 Cr

• Government collectors and deductors

• Corporate collectors and deductors, including Firms and LLPs

Q2. What is a TCS certificate?

The tax collector must give the buyer of the items a TCS certificate at the time they make their quarterly report in 27EQ. The certificate should be issued within fifteen days following the day the TCS return was filed.

Q3. What is the difference between Form 27Q and Form 27EQ?

Forms 27Q and 27EQ perform largely comparable tasks. NRIs or foreigners must, however, fill out the former as a declaration of TDS returns. The latter, however, is pertinent to TCS statements that corporate collectors and the government submit on a quarterly basis.

Q4. How TCS is different from TDS?

The Indian tax system uses TDS and TCS as tax collecting methods. In the first scenario, a deductor pays taxes to a deductee while also collecting the taxes from their source of income. In the meanwhile, when a seller sells something to a buyer, they receive the taxes.

Q5. What is the difference between TDS and TCS, and how does Form 27EQ relate to TCS?

TDS and TCS differ in their application and purpose. TDS is deducted by the payer at the time of certain payments, while TCS is collected by the seller from the buyer during specified transactions. Form 27EQ is utilized for reporting TCS transactions, indicating the tax collected by the seller.

Q6. What are some examples of transactions that require TCS reporting using Form 27EQ?

Transactions subject to TCS reporting under Form 27EQ include the sale of alcoholic liquor, scrap, tendu leaves, forest produce, minerals like coal and iron ore, and motor vehicles above specified thresholds. Sellers collect TCS from buyers during these transactions.

Q7. How does the government utilize the data collected through Form 27EQ?

Data collected through Form 27EQ aids the government in various tax compliance endeavors, such as monitoring TCS transactions, ensuring accurate tax reporting and payment by sellers, and identifying potential instances of tax evasion or non-compliance.

Q8. Are there exemptions or thresholds for transactions exempt from TCS reporting on Form 27EQ?

Yes, small sellers with turnover below specified limits may be exempt from collecting TCS on certain transactions. Additionally, transactions below certain thresholds may not require TCS collection or reporting.

Q9. What are the consequences of non-compliance with Form 27EQ regulations?

Non-compliance with Form 27EQ regulations can lead to penalties and legal ramifications for businesses. To avoid such issues, it's crucial for businesses to maintain accurate transaction records, timely file Form 27EQ, and adhere to all requirements under the Income Tax Act. Regular compliance helps prevent penalties and maintains good standing with tax authorities.

Q10. Which form is used for TCS return?

Form 27EQ, "Statement of Return for Tax Collected at Source by Seller," must be completed and submitted for TCS return.

Q11. What happens if the seller fails to collect the TCS?

A seller will be required to pay interest at the rate of 1% per month until the tax is collected if they are unable to collect TCS on time. If the seller fails to timely file Form 27EQ and TCS returns, they may be subject to further fines.

Q12. Can I get a refund on TCS?

In a financial year, a taxpayer may, in fact, request TCS refunds. Purchasers whose yearly income is less than Rs. 2.5 lakh are exempt from paying taxes and TCS. They are entitled to TCS refunds in this situation.