In India, businesses are required to comply with tax regulations and also file various returns with the Income Tax Department. One such return is Form 27EQ which is used for reporting Tax Collected at Source (TCS). TCS refers to the tax collected by a seller from the buyer on certain goods or services, that are as per the provisions of the Income Tax Act.
What is Form 27EQ?
Form 27EQ is an annual statement that must be submitted by businesses that are responsible for collecting tax at the source. The TCS provisions are applicable to certain categories of goods, such as scrap, liquor, forest produce, and bullion, among others. This form thus helps the government track the tax collected by businesses and ensure compliance.
Key Points About Form 27EQ:
- Who Must File? Any person or business who has collected TCS during the financial year must file Form 27EQ. This also includes sellers of specified goods or services like alcohol, timber, or motor vehicles. This form should be filed quarterly by businesses.
- When is it Due? You must sumbit the form quarterly, and the due dates are as follows:
- Quarter 1 (April to June) – 31st July
- 2nd Quarter (July to September) – 31st October
- Quarter 3 (October to December) – 31st January
- Quarter 4 (January to March) – 31st May
- Details Required The form includes the following details:
- Seller’s and buyer’s details (name, address, PAN number)
- Amount of sale and the TCS collected.
- The challan details of tax deposited.
- Penalty for Non-Compliance If the business fails to file Form 27EQ on time, they can also face penalties, including a late fee, and the collected TCS may not be credited to the buyer’s account.
Example of TCS and Form 27EQ Filing:
Let’s say a business sells scrap metal to customers and collects a 1% TCS on the sale. If the total sales for the first quarter are ₹5,00,000, the tax collected would be ₹5,000 (1% of ₹5,00,000).
In Form 27EQ, the business will:
- Report the total TCS collected (₹5,000) for the quarter.
- Provide challan details, such as the payment date and the unique identification number.
- It will also mention the pan details of the buyers (if applicable).
After filing the form, the business will also receive an acknowledgment from the Income Tax Department. You must submit the form within 15 days from the end of the relevant quarter.
Sections Under Which TCS is Collected:
TCS is collected under several sections of the Income Tax Act, such as:
- Section 206C(1): For the sale of goods like alcohol, timber, and scrap.
- Section 206C(1H): For the sale of goods where the value exceeds ₹50 lakh.
Conclusion:
Filing Form 27EQ is an essential responsibility for businesses that collect TCS. It also ensures compliance with tax laws and helps maintain transparency in the tax collection process. Regular and accurate filing of this thus return prevents penalties and helps in proper tax administration.
– Ketaki Dandekar (Team Arthology)
Read more about Form 27EQ here – https://www.indiafilings.com/learn/27eq/