All entities that are liable to collect Tax Collected at Source(TCS) must file Form 27EQ as a quarterly return. Sellers collect TCS from buyers while selling certain goods or services. Government and non-government collectors can use Form 27EQ, which Section 206C of the Income Tax Act governs.
Companies generally use the 27EQ filing to report TCS deposited, collected, and other transactional details against a quarter. Similar to the requirement to file income tax returns by collectees and collectors, collectors also have to file Form 27EQ within the prescribed due dates to stay away from penalties and be in compliance.
Learning the Form 27EQ Structure
Form 27EQ has essential information such as:
- TAN of collector
- PAN of collector and collectees
- Amount collected and credited to TCS
- Mode of payment
- Challan particulars
You must file this return electronically and sign it digitally or authenticate it using an Electronic Verification Code (EVC). Upon submission, the deductor must issue a certificate of TCS to the deductee (in Form 27D).
Due Dates for Furnishing of Form 27EQ
Form 27EQ, relating to quarterly returns of Tax Collected at Source (TCS), must be filed within a specified time from the end of every quarter.
- 15th July is the due date for filing Form 27EQ for the first quarter, i.e., April to June.
- The second quarter, i.e., July to September, is 15th October.
- You must file the third quarter, from October to December, on or before 15th January.
You must file the last quarter of the financial year, from January to March, on 15th May of the following financial year.
Both the dates prescribe and all TCS collectors, government as well as non-government officials must adhere to them. Delayed payment will incur a late fee and fine. Note that the submission due date of Form 27EQ is unrelated to the due dates for filing income tax returns, and you must comply with it independently to meet taxation obligations.
TCS Payment Deadlines
You must submit the quarterly Form 27EQ, and you must deposit the TCS month by month. You must deposit the TCS by the 7th day from the close of the month in which you receive the TCS, except in March when you will deposit it by 30th April.
Example:
- TCS received in April – Pay by 7th May
- TCS received in March – Pay by 30th April
- Payment of TCS should be made on time prior to filing the return for the specific quarter by Form 27EQ.
Penalty and Interest for Delayed Payment or Filing
Delayed TCS payment or non-filing of Form 27EQ by the due date can lead to interest, penalties, and disallowance of specific expenses. The key outcomes are as follows:
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Interest for Non-Collection of TCS
If a collector does not collect TCS on due dates, then they also have to pay interest at the rate of 1% for a month or part of a month from the payment date of TCS up to the date of actual collection.
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Interest on Non-Payment of Collected TCS
If TCS is collected but not deposited before the due date, then the collector will be required to pay interest at 1.5% for a month or fraction thereof from the collection date to the deposit date.
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Section 234 Late Filing Fee
If you do not submit Form 27EQ within the due date, you will incur a late fee of ₹200 for every day up to the date of filing the return.But the aggregate of late fees should not be more than the aggregate TCS amount.
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Penalty under Section 271H
In case of furnishing incorrect information or prolongation of delay, the Assessing Officer can charge an additional penalty of Rs 10,000 to Rs 1,00,000.
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Exclusion of Expense under Income Tax Act
Interest or penalty incurred on account of default in TCS liability is not allowable as business expense. Disallowance will reduce tax liability of collectors while filing income tax return.
Form 27EQ Filing Process
Form 27EQ filing process is as follows:
- Collection of TCS – Collect tax from buyer at prevailing rates at time of transaction.
- Deposit the TCS – Deposit the amount received by utilizing Challan 281 on or before the 7th of the next month.
- Preparation of Form 27EQ – Collect information like PANs, TAN, challan information, type of transaction, and tax paid.
- Filing the Form – Submit the form electronically via the income tax e-filing portal.
- Issue of Certificate (Form 27D) – After successful submission, prepare and issue Form 27D to the deductee as evidence of collection and deposit of TCS.
Significance of 27 EQ Filing on time
Prompt filing of Form 27EQ ensures:
- Easy credit of TCS in the PAN account of the deductee
- Avoidance of undue penalty and interest
- Adherence to income tax provisions
- Exposition of accurate taxes in your income tax return filing
- You must also ensure adequate documentation and hold backup records that support the figures reported in the return. You can utilize these documents in your favor in audits or notices.
Mistakes should be Avoid
- Incorrect or missing deductees PAN
- matched details of challans
- Delayed TCS deposit
- Filing return without verifying data
- Delay or absence in issuing Form 27D
- Make sure everything is correct in all 27 EQ filings to prevent corrections and penalties at a later stage.
Conclusion
Form 27EQ is not a formality; it is a tax compliance process that is very important. As a business, trader, or institution that is required to collect TCS, one has to be in sync with the due date of payment and filing through 27 EQ. Non-compliance can invite serious penalties, interest, and even disallowance of tax. Keeping it precisely in line with your income tax return filing dates facilitates easy compliance along with enhancing your image as a tax-compliant entity.
FAQs
By whom is Form 27EQ to be filed?
Any organization or business which is necessitated to collect TCS under Section 206C of the Income Tax Act has to file Form 27EQ.
Till when is Form 27EQ for Q4 (Jan-Mar) to be filed?
Q4 due date of filing is 15th May of the next financial year.
What if TCS is collected but not deposit?
A 1.5% per month rate of interest from the collection date to the date of deposit. There could be some other charges as well.
Is there a penalty for late filing of Form 27EQ?
Yes, late filing of Form 27EQ attracts a penalty.
Yes. ₹200 per day is payable until filing of the return, but not exceeding the amount of aggregate TCS.
Is filling up of Form 27EQ associated with income tax return filing?
No. Filing of Form 27EQ is for TCS compliance whereas income tax return filing is another obligation in respect of your own income and taxes.
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