Form 27EQ: The Quarterly TCS Return Explained
Table of Contents
Most tax is deducted from what you pay someone. TCS works the other way round. It is collected by the seller from the buyer at the time of sale, and the seller reports it using Form 27EQ.
Form 27EQ is the quarterly return filed by a collector to report tax collected at source under Section 206C. It lists each collection, the amount collected, the section under which it was collected, and the challans through which the tax was deposited.
Key points
- Form 27EQ reports tax collected from buyers, not tax deducted from payments
- It is filed quarterly by the seller or collector, using their TAN
- Whatever you file here appears as a credit in the buyer’s Form 26AS
- From Tax Year 2026-27, it becomes Form 143, and the due dates changed
- The monthly deposit date did not change, which is where most confusion starts
The Due Dates Changed, Not Just the Form Number
Read this part twice, because the renumbering has hidden a real change.
Under the old rules, Form 27EQ was due on the 15th of the month following the quarter. From Tax Year 2026-27, Form 143 follows the same calendar as the TDS returns, which pushes each deadline to the end of the month.
| Quarter | Old Form 27EQ due date | New Form 143 due date |
|---|---|---|
| April to June | 15 July | 31 July |
| July to September | 15 October | 31 October |
| October to December | 15 January | 31 January |
| January to March | 15 May | 31 May |
Are Two Opposite Mistakes Being Made Right Now?
A collector who still has 15 July on the calendar thinks they have defaulted, but they have not. Another, hearing that the date moved, assumes the extra fortnight is slack rather than a statutory deadline. Neither is right. For Tax Year 2026-27, the date is the end of the month.
What did Not Change?
TCS collected in a month must still be deposited by the 7th of the following month. Only the return deadline moved. Treating the later filing date as a later payment date is the most expensive misreading of this change.
Which Form Applies to Which Quarter
The governing law follows the period the statement covers, not the date you file it.
- Q4 of FY 2025-26, meaning January to March 2026, stays under the Income-tax Act, 1961. It is filed on Form 27EQ, even if you file, revise or correct it in late 2026
- Q1 of Tax Year 2026-27 onwards, meaning April 2026 and later, falls under the Income-tax Act, 2025 and is filed on Form 143
Choosing the form by filing date rather than by period is the single most common transition error.
| Old | New |
|---|---|
| Form 27EQ | Form 143 |
| Section 206C | Section 394 |
| Statement filed under Rule 31AA | Rule 219, under Section 397(3)(b) |
| Late fee under Section 234E | Section 427 |
| Penalty under Section 271H | Section 461 |
Who has to File Form 27EQ
Anyone who collects tax at source. In practice, that means:
- Sellers of specified goods such as scrap, timber, tendu leaves, minerals and alcoholic liquor for human consumption
- Operators of parking lots, toll plazas and mining or quarrying leases
- Sellers of motor vehicles above the notified value
- Sellers of notified luxury goods above the specified threshold
- Authorized dealers handling foreign remittances under the Liberalized Remittance Scheme, and sellers of overseas tour packages
- Sellers whose aggregate sales crossed the specified turnover threshold in the previous year, collecting on the sale of goods
Government collectors file too, although their returns carry a book identification number instead of a bank challan.
One Rule Catches New Collectors
If the buyer does not provide a PAN, tax is collected at double the applicable rate or 5%, whichever is higher. Collect the PAN before the invoice, not after.
TDS or TCS: The Difference in One Line
| TDS | TCS | |
|---|---|---|
| Who acts | The payer deducts | The seller collects |
| When | While making a payment | While receiving payment for a sale |
| Salary return | Form 24Q | Not applicable |
| Non-salary return | Form 26Q | Form 27EQ |
| Certificate issued | Form 16A | Form 27D |
Simple way to hold it: TDS comes out of money you pay. TCS is added to money you receive.
What Goes into the Return
Form 27EQ carries four blocks of information:
- Collector details: TAN, PAN, name, address and the category of collector
- Challan details: BSR code, date of deposit, challan serial number and amount
- Collectee details: name, PAN, amount received, tax collected and the collection code
- Verification: signed by the person responsible
The collection code matters. Each transaction type has its own code. A wrong code puts the credit against the wrong section in the buyer’s records, even when the amount is right.
How to File Form 27EQ
- Prepare the return using the Return Preparation Utility from the Protean portal, or generate the file from your accounting system
- Validate it through the File Validation Utility, which flags PAN errors and challan mismatches before submission, the same step used for your payroll compliance checklist filings
- Submit the validated file online, or through a TIN facilitation centre
- Check processing status on TRACES once the return is accepted
- Download Form 27D from TRACES and issue it to each buyer within 15 days of the return due date
Only a Form 27D downloaded from TRACES is valid. A certificate prepared in Excel or accounting software does not meet the requirement, the same rule that applies to TDS certificates.
Penalties for Late or Wrong Filing
| Default | Consequence |
|---|---|
| Late filing of the return | ₹200 for each day of delay, capped at the total TCS in that return |
| Not filed within one year, or wrong details | Penalty of ₹10,000 to ₹1,00,000 |
| TCS not collected | Interest at 1% per month from the date it became collectible |
| TCS collected but not deposited | Interest at 1.5% per month from collection to deposit |
A Worked Example
Your quarterly return carries ₹1,20,000 of TCS and you file 30 days late. The fee is ₹200 × 30, which is ₹6,000. File 600 days late and the fee reaches the ₹1,20,000 cap, with a separate penalty possible on top.
Note the gap between the two interest rates. Collecting the tax and sitting on it costs more than not collecting it at all, which is deliberate.
What the Buyer Sees
Everything you file lands in the buyer’s tax records.
TCS you collect appears in Part VI of their Form 26AS, and they claim it as a credit against their own tax liability. So a wrong PAN in your return means your customer loses that credit and comes back to you to fix it.
For the buyer, TCS is not a cost. It is tax paid in advance, adjustable against their final liability, and refundable if they have overpaid.
Getting It Right before Filing
Three checks prevent almost every Form 27EQ problem, and all three happen before the return is prepared.
Collect PANs at the point of sale. A missing PAN means collecting at double the rate or 5%, and it means the buyer gets no credit. Both conversations are easier before the invoice than after.
Reconcile challans monthly, not quarterly. An unmatched challan blocks certificate generation entirely, so the problem surfaces only when your customer asks where their Form 27D is. Since it is easier to fix a challan in the same month it was paid, do not leave it to filing week.
Use the right collection code. The amount can be correct and the credit still land in the wrong place.
These sit alongside the rest of your statutory compliance calendar. The discipline is the same one that keeps TDS filings clean: correct PANs, matched challans, and filing on the date rather than near it.
Conclusion
Form 27EQ reports tax you collected from buyers and deposited with the government. Get three things right and the rest follows: the PAN, the collection code and the challan.
For Tax Year 2026-27, remember the two dates separately. The return moved to the end of the month as Form 143, while the deposit deadline stayed at the 7th. Confusing the two is the mistake this transition is quietly creating.
FAQs on Form 27EQ
What is Form 27EQ?
Form 27EQ is the quarterly return through which a seller or collector reports tax collected at source. It carries collector details, challan details and collectee-wise TCS data, and the amounts filed appear as a credit in each buyer’s Form 26AS.
What is the Difference between Form 27EQ and Form 26Q?
Form 26Q reports tax deducted at source on non-salary payments made by the filer, while Form 27EQ reports tax collected at source from buyers on specified sales. One is about money you pay out, the other about money you receive.
What are the Form 27EQ Due Dates?
For quarters up to March 2026, the return was due on 15 July, 15 October, 15 January and 15 May. From Tax Year 2026-27 the return is Form 143, due on 31 July, 31 October, 31 January and 31 May, matching the TDS calendar.
Has the TCS Deposit Date Changed Too?
No. Only the return filing deadline moved. TCS collected in a month must still be deposited by the 7th of the following month. Treating the later filing date as a later payment date attracts interest.
What is Form 27D?
Form 27D is the TCS certificate the collector issues to the buyer, showing the tax collected and deposited. It is downloaded from TRACES after the return is processed and must be issued within 15 days of the return due date.
What Happens if the Buyer does Not Give a PAN?
Tax is collected at double the applicable rate or 5%, whichever is higher. The buyer also loses the credit in their Form 26AS, since there is no PAN for the amount to be recorded against.
Is Form 27EQ Still Valid in 2026?
For quarters up to January to March 2026, yes. Those returns stay on Form 27EQ under the Income-tax Act, 1961, even if filed or corrected later. From April 2026 onwards the return is Form 143 under the Income-tax Act, 2025.
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