Form 27EQ

What is Form 27EQ?

Form 27EQ is a quarterly tax return that must be filed by entities responsible for collecting Tax Collected at Source (TCS) on specified transactions. The form provides details of the TCS return filing, including the TCS collected, the buyer's PAN details, and the amount deposited with the government.

The obligation to file Form 27EQ arises under Section 206C of the Income Tax Act, which mandates that businesses collecting TCS on specified goods must report their tax collection and remittance. The Form 27EQ submission process ensures that tax authorities track TCS compliance and that businesses follow tax laws effectively.

Key elements reported in Form 27EQ include,

• Tax Deduction and Collection Account Number of the collector
• PAN (Permanent Account Number) of the buyer
• Challan details of the deposited TCS amount
• Nature of transaction and tax collected
• Form 27EQ format specifications as per government guidelines

Failure to comply with Form 27EQ filing requirements can result in TCS return penalties, including fines under Section 271H and interest on delayed tax payments. Therefore, timely TCS return submission is crucial for smooth business operations.
 

Who Needs to File Form 27EQ?

The requirement to file Form 27EQ applies to businesses and organizations engaged in collecting Tax Collected at Source (TCS). The following entities are mandated to submit Form 27EQ,

1. Companies and Business Entities
Any registered business that engages in TCS return filing must file Form 27EQ every quarter. This applies to businesses selling goods or services that fall under the TCS applicability criteria as per Section 206C of the Income Tax Act.

2. Government Entities
Government departments or agencies that collect Tax Collected at the Source on specified transactions must also ensure Form 27EQ submission within the TCS return due date.

3. Partnership Firms and Individuals (Where Applicable)
While Form 27EQ applicability primarily focuses on corporations and large businesses, certain high-value transactions also require TCS return filing by partnership firms or even individual taxpayers.

Transactions that necessitate TCS return submission include,

• Sale of motor vehicles exceeding ₹10 lakhs
• Foreign remittances above ₹7 lakhs
• Sale of goods exceeding ₹50 lakhs (as per the Finance Act, 2020)
• Transactions involving tendu leaves, timber, scrap, and minerals

Businesses that fail to meet Form 27EQ filing requirements within the prescribed TCS return due dates may face penalties under Section 271H, resulting in fines and potential interest charges on delayed tax payments.

Ensuring proper TCS return preparation utility usage and adhering to the TCS return filing process can help businesses avoid non-compliance risks and maintain smooth financial operations.
 

Transactions Requiring TCS and Form 27EQ

Under Section 206C of the Income Tax Act, businesses must collect Tax Collected at Source (TCS) on specific transactions. Some key categories include,

• Sale of Alcoholic Liquor for Human Consumption – Any sale of alcoholic beverages is subject to TCS return due dates and must be reported under Form 27EQ submission.
• Tendu Leaves and Timber Sales – Sellers of tendu leaves and timber must collect TCS at specified TCS rates and file TCS return accordingly.
• Scrap Material Transactions – Transactions involving scrap materials require the collection and reporting of Tax Collected at the Source.
• Sale of Minerals (Coal, Lignite, Iron Ore) – Businesses selling these minerals must comply with Form 27EQ filing requirements.
• Sale of Motor Vehicles Above ₹10 Lakhs – High-value vehicle transactions require TCS return filing process compliance.
• Foreign Remittances Above ₹7 Lakhs – Under the Liberalized Remittance Scheme (LRS), remittances exceeding ₹7 lakhs attract TCS at applicable rates, depending on the purpose of the remittance. Non-compliance with TCS reporting may lead to penalties.
• Sale of Goods Exceeding ₹50 Lakhs – TCS on the sale of goods exceeding ₹50 lakhs was introduced under the Finance Act, 2020, making TCS return preparation utility essential for compliance.

If a business collects TCS on specified goods, it must file Form 27EQ to report the collected tax to avoid Form 27EQ penalties.
 

Key Components of Form 27EQ

Tax Collector’s Information

• TAN (Tax Deduction and Collection Account Number) – The unique TAN assigned to the tax collector is essential for the Form 27EQ filing procedure.
• PAN (Permanent Account Number) – The PAN of the entity collecting Tax Collected at Source must be mentioned.
• Name and Address of the Collector – The complete details of the entity responsible for TCS return filing are required for accurate reporting.

Details of the Person Responsible for Collecting TCS

• Name and Designation – The full name and job title of the person responsible for managing the Form 27EQ submission.
• PAN Number – The PAN of the individual responsible for the TCS return preparation utility.
• Contact Information – Valid contact details for further communication regarding TCS return penalties or compliance issues.

Challan Details

• Challan Serial Number – The unique identification number of the TCS return filing process payment.
• BSR Code of the Bank – The Bank Serial Register (BSR) code of the bank where the Tax Collected at Source (TCS) is deposited.
• Date and Amount of TCS Deposited – The exact date and amount of TCS deposited as per TCS return due dates.

TCS Collection Information

• Buyer’s PAN and Name – The PAN details and name of the individual/entity from whom Tax Collected at Source was collected.
• Type of Transaction – A detailed classification of the transaction, such as TCS on sale of goods, scrap, or mineral sales.
• Amount of TCS Collected and Deposited – The total TCS amount collected and submitted in compliance with Form 27EQ filing requirements.
   

Due Dates for Filing Form 27EQ

Filing Form 27EQ on time is crucial to avoid penalties and ensure compliance with TCS return filing requirements. Below are the TCS return due dates for each quarter as mandated under Section 206C of the Income Tax Act, 

Failure to comply with Form 27EQ due date requirements can lead to financial and legal consequences, impacting business operations. Timely TCS return submission ensures seamless tax compliance and prevents unnecessary penalties.

Penalties for Late Filing of Form 27EQ

Non-compliance with TCS return due dates can attract penalties under the Income Tax Act. Below are the penalties associated with late or incorrect Form 27EQ submission,

• Late Filing Fee: A penalty of ₹200 per day is levied until the return is successfully filed.
• Penalty under Section 271H: If Form 27EQ is filed incorrectly or after the due date, the penalty can range from ₹10,000 to ₹1,00,000. However, no penalty is imposed if the TCS amount has been correctly deducted and deposited and the return is filed within one year from the due date.
• Interest on Late Payment of TCS: If TCS is collected but not deposited within the due date, an interest rate of 1% per month or part thereof is charged until payment is made. However, if TCS is deducted but not deposited, interest may be higher in certain cases.

To avoid these penalties, businesses must ensure timely TCS return filing process compliance and maintain accurate records for Form 27EQ submission.
 

Step-by-Step Guide to Filing Form 27EQ

To comply with Form 27EQ filing requirements, follow these steps,

Step 1: Obtain a Valid TAN
Before filing Form 27EQ, ensure your business has a Tax Deduction and Collection Account Number (TAN). This is mandatory for all entities collecting Tax Collected at Source (TCS).

Step 2: Collect Necessary Data
Gather all required details, including,

• TCS collected on specified transactions
• Buyer’s PAN and transaction details
• Challan details related to TCS deposits

Step 3: Use the TDS Return Preparation Utility (RPU)
Download the Return Preparation Utility (RPU) from the TIN NSDL website to accurately fill out Form 27EQ.

Step 4: Validate the File Using File Validation Utility (FVU)
Before submission, use the File Validation Utility (FVU) to verify the correctness of Form 27EQ contents and ensure there are no errors.

Step 5: Submit the Form
Businesses can submit Form 27EQ using one of the following methods,

• Online submission via the TIN NSDL portal for faster processing.
• Physical submission at authorised TIN Facilitation Centers.

Step 6: Issue TCS Certificates
Once Form 27EQ is successfully filed, the business must issue a TCS certificate (Form 27D) to buyers. This certificate should be provided within 15 days from the due date of filing.

By following this TCS return filing process, businesses can ensure compliance with government tax regulations and avoid penalties.
 

Importance of Compliance with Form 27EQ

Ensuring accurate Form 27EQ filing is beneficial for businesses in several ways,

• Avoidance of Penalties: Timely Form 27EQ submission prevents unnecessary fines and legal troubles.
• Smooth Tax Operations: Proper TCS return preparation utility use simplifies audits and tax assessments.
• Enhanced Business Reputation: Adhering to TCS return filing requirements reflects professionalism and compliance, strengthening trust with stakeholders.

Conclusion

Understanding and filing Form 27EQ is essential for all the businesses collecting Tax Collected at Source (TCS). By ensuring Form 27EQ submission before the Form 27EQ due date, businesses can avoid Form 27EQ penalties and maintain seamless tax compliance.

If you are unsure about the Form 27EQ filing procedure, seeking professional guidance or using online TCS return preparation utility services can help ensure accuracy and compliance.