Form 27EQ – TCS Return Filing

Tax Collected at Source (TCS) is a form of tax in which the seller levies a fixed percentage on the buyer at the time of selling some products or services and then deposits it with the government. This is governed by Section 206C of the Income Tax Act of 1961. TCS applies to goods like alcohol, tendu leaves, scrap, minerals, motor vehicles, and the sale of products above a certain limit under Section 206C(1H). The seller, who is the collector, is responsible for collection and remittance of TCS, whereas the buyer, or the collectee, is allowed to avail the tax credit for offsetting its income tax liability.

What is Form 27EQ?

Form 27EQ is a quarterly return required by the Income-tax Act of 1961 to report Tax Collected at Source (TCS). The form is filed by all collectors including companies, firms, individuals, and government offices for collecting TCS from buyers on certain transactions like sale of scrap, spirits, tendu leaves, minerals, motor vehicles, foreign remittances, or, as provided under Section 206C(1H), the sale of goods with an amount exceeding a threshold.

The form includes information about the collector, the collectees (purchasers), type of transactions, amounts collected, and challans used to deposit TCS in the government account. Corporate and government collectors have to submit this form; however, government deductors have the option to use Book Identification Numbers (BIN) instead of challans.

Form 27EQ is required to be filed every quarter, even if no TCS has been collected (in that case, a nil return is filed). Default or wrong filing can attract charges of interest, late fees, and fines.

Contents of Form 27EQ

Form 27EQ specifies the particulars of TCS collection, such as the collector, amount deposited, source of collection, and statutory provisions concerned.

• Collection Details: Mention the TAN, PAN, name, and address of the tax collector. Identification of the authorised signatory or concerned person.
• Statement Information: Mention the Financial Year, Quarter, Type of Return (Original or Correction), and Filing Status.
• Challan/Book Adjustment details: Challan Identification Number (CIN) should have BSR code, date, and serial number. The amount deposited should cover the base TCS, surcharge, education cess, and aggregate. For collectors of the government, use the Book Identification Number (BIN) or Form 24G reference.
• Collectee Details: The name and valid PAN number should be furnished by the collectees. The section code used for the collection of TCS [e.g., 206C(1H), 206C(1F)]. Transaction details should specify the nature, total amount paid, TCS amount, surcharge, and cess.
• Verification: Authorised person’s declaration and signature (DSC/EVC) confirm the correctness of the information provided.

Documentation for Form 27EQ

1. TAN registration information

For uploading your return, a Tax Deduction and Collection Account Number (TAN) must be registered on the Income-tax e-Filing portal.

2. Collector Information

• You have to enter the name, address, contact information, and status of the tax collector (e.g., company, firm, individual, government department).
• Identification of the authorised signatory is needed.

3. Challan/Book Adjustment details

• Mention the Challan Identification Number (CIN) and BSR code, date, and serial number.
• Specify the amount of TCS paid.
• For government deductors, Book Identification Number (BIN) or reference to Form 24G should be mentioned.

4. Collectee (Buyer) Details

• Collectees should give their full name and a valid PAN.
• Mention the section under which TCS was collected (e.g., 206C(1H), 206C(1F), etc.).
• Attach the TCS amount, surcharge, cess, and aggregate collected.

5. Utility and Validation Files

• Return the RPU input file.
• Give the FVU output file (.fvu).
• Download the CSI file (Challan Status Inquiry) from OLTAS to confirm the challan.

6. Digital Signature/EVC:

Use the authorised signatory’s DSC or EVC for e-verification while uploading.

7. TRACES Access

Credentials are to be produced in order to use the TRACES portal and download Form 27D certification and Justification Reports when necessary.

Process of Filing Form 27EQ

Form 27EQ is the quarterly return for TCS to be filed by all collectors in compliance with Section 206C. The form records your challans/book changes and collectee-wise TCS for the quarter. The prescribed format is given in Rule 31AA.

Pre-requisites

1. Register your TAN on the Income-tax e-Filing portal (login using TAN as your user ID).

2. Set up signing options:

• Enrol your DSC on the portal.
• Create an EVC for PAN/TAN where required.

3. Use TRACES to fetch justification reports and Form 27D.

4. Download the .CSI file and challan details from the e-Filing portal and cross-check that they are in sync with the utility.

Filing workflow (step-by-step)

a. Prepare the statement (offline)

1. Download Protean utilities (NSDL).

• Use the Return Preparation Utility (RPU) to enter data.
• Use the File Validation Utility (FVU) to validate and prepare the .fvu files.

2. Enter master details in RPU, such as TAN, financial year, quarter, contact details, and (if required) AIN/PAO/DDO for govt. collectors. The compulsory fields conform to the accepted 27EQ format.

3. To add challans or modify book entries, enter the BSR code, challan number, date, and amount (or AIN/24G details for government).

4. Fill in the collectee rows with PAN, TCS code/section, collected amount, TCS, surcharge/cess, and other information as per the Form 27EQ schema.

5. Validate with FVU: It searches for errors like PAN format, challan mismatches, and section codes. On successful validation, it creates a .fvu file (control/acknowledgement text too).

b. File the statement (online)

1. Log on to the e-Filing portal with your TAN → e-File → Income-tax Forms → File Income-tax Forms → choose Form 27EQ, select FY & Quarter, Original/Correction, and upload the validated .fvu.
2. e-Verify the upload via DSC (attach the signature file through the DSC utility) or EVC.
3. Track the status in your TAN account; upon processing, a token/acknowledgement will be created.

c. Post-filing

• Download and issue Form 27D to every collectee (from TRACES; 27D must be issued within 15 days from 27EQ due date).

How to file a rectification return (in the event of any misstatement)?

1. Obtain the “Conso file” (consolidated statement) for the quarter concerned from TRACES.
2. Prepare a correction in RPU (C1-C5 types for challan, collector, PAN, and flag corrections) and authenticate it with FVU again.
3. Upload the fix.fvu as described above.
4. If CPC(TDS) has found any defaults, fetch the Justification Report from TRACES to ascertain the detailed issue codes and correct them.

Due Date of Form 27EQ

Form 27EQ is a quarterly Tax Collected at Source (TCS) return to be filed as per Rule 31AA of the Income-tax Rules framed in 1962.

It has to be filed quarterly, i.e., by the 15th day of the next month following the end of each quarter.

The due dates for filing Form 27EQ (the quarterly TCS return) are as follows:

• The last date for the first quarter of the financial year (April 1st to June 30th) is July 15th.
• The last date for the second quarter (July 1st to September 30th) is October 15th.
• The last date for the third quarter (October 1st to December 31st) is January 15th.
• The last date for the fourth quarter (January 1st to March 31st) is May 15th.

Linked Deadlines (as related to Form 27EQ):

1. TCS deposits are to be made by the 7th of the month after collection (by Challan ITNS 281).
2. Form 27EQ is to be submitted by the 15th of the month after the quarter’s closure (see table above).
3. Collectees must obtain Form 27D (the TCS Certificate) within 15 days from the date of filing Form 27EQ. The date effective is July 30th, October 30th, January 30th, and May 30th.

Consequences of Non-Compliance

Non-compliance with the Form 27EQ filing requirements under the Income Tax Act, 1962 is serious. If a collector fails to file the quarterly TCS statement on time, there is a late filing charge of ₹200 per day under Section 234E. This is charged until such time as the statement is filed, up to the total of TCS. Moreover, Section 271H imposes fines from ₹10,000 to ₹1,00,000 for non-filing or for filing a wrong statement, which may encompass wrong PAN or challan details. Further, if TCS is not collected and remitted on time, Section 206C(7) provides for the interest at 1% per month, or any part thereof, from the date of the due tax to the date of actual payment. Such defaults can further cause delays in issuing Form 27D certifications to buyers, which can eventually lead to compliance problems and credit issues.

Conclusion

Preparation of TCS returns is a very important compliance requirement of all collectors as mandated by the Income Tax Act, 1961. It guarantees that the tax obtained from purchasers is correctly reported and that the credit is available for them in their income tax return. The timely and accurate filing of Form 27EQ not only prevents penalties, late charges, and interest but also demonstrates transparency and accountability in commercial transactions. As TCS affects the collector as well as the collectee, following timelines and being correct in submissions helps to avoid legal sanctions, along with building confidence in tax compliance. It is vital for all organisations, hence, to be consistent in filing TCS returns.

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