Form 27EQ TCS Returns Explained (2026 Guide)

Quick summary: Form 27EQ reports tax collected at source (TCS) for periods governed by the Income-tax Act, 1961. For Tax Year 2026–27 onwards, the corresponding quarterly statement is Form 143. Check the transaction period before using a rate, deadline or certificate: the two regimes have different filing calendars. TCS is collected from the buyer; TDS is deducted from a payment to its recipient.

Reading the older form: the following introductory sections explain Form 27EQ under the Income-tax Act, 1961. The current Form 143 rates, deadlines and certificates are distinguished in the sections below.

What Is TCS, and How Is It Different From TDS?

Tax Collected at Source (TCS) is tax that a seller collects from a buyer at the time of receiving payment for specified goods or transactions, and then deposits with the government. This is the reverse mechanism of TDS: with TDS, the person making a payment deducts tax before paying the recipient; with TCS, the person receiving payment (the seller) adds tax on top of the sale price and collects it from the person paying (the buyer).

A simple worked example: 

For this arithmetic illustration only, assume Mr. A sells goods worth ₹1,00,000 to Mr. B and the applicable TCS rate is 1%. This is not a general current rate for goods. Mr. A collects ₹1,01,000 from Mr. B (the ₹1,00,000 sale price plus 1% TCS of ₹1,000). Mr. A is responsible only for collecting this tax and depositing it with the government; he is not responsible for paying it out of his own pocket, since the buyer bears the actual cost of the TCS.

TCS is governed by Section 206C of the Income Tax Act, 1961, and its purpose is to widen the tax base and create a documented paper trail in specific categories of high-risk or high-value trade, particularly transactions where buyers (especially firms or associations of persons) have historically been difficult for the tax department to trace after the fact.

What Is Form 27EQ?

Form 27EQ is the quarterly statement that a TCS collector must file, reporting the tax collected at source during that quarter and confirming that it has been deposited with the Central Government. It falls under Section 206C and, like the TDS return forms covered elsewhere in this series, requires the collector to hold a valid TAN (Tax Deduction and Collection Account Number, the same identifier used for TDS purposes).

Both government and non-government collectors must file this form. Non-government collectors must quote their PAN in the return; government collectors quote “PANNOTREQD” instead, following the same convention used across Form 24Q, Form 26Q, and Form 27Q, all covered in our earlier articles in this series.

The details reported in Form 27EQ flow directly into the buyer’s Form 26AS and Annual Information Statement, allowing the buyer to claim credit for the TCS collected from them, just like TDS credit, when they file their own income tax return.

Who Is Required to Collect TCS and File Form 27EQ?

Any individual, company, government department, firm, or other entity that collects tax at source on a specified transaction under Section 206C is required to file Form 27EQ. In practice, this most commonly applies to sellers, traders, manufacturers, and authorised dealers dealing in the specific categories of goods and transactions listed below.

What Transactions and Goods Actually Attract TCS?

For transactions governed by the Income-tax Act, 2025, section 394(1), as amended by the Finance Act, 2026, specifies these standard rates from 1 April 2026:

These are not universal charges on every sale. Definitions of seller and buyer, transaction triggers, declarations, exemptions and PAN-related rules must also be checked. Qualifying education-loan-funded LRS remittances are excluded under section 394(4)(b). Certain resident buyers using specified goods for manufacturing, processing, production or power generation rather than trading may provide the prescribed declaration under section 394(2). Do not apply these rates retrospectively to Form 27EQ periods.

What About Section 206C(1H): TCS on Sale of Goods Above ₹50 Lakh?

This former general-sale-of-goods TCS provision does not apply from 1 April 2025. It should not be treated as continuing throughout FY 2025–26 merely because the old Act still governs that year. Historical liabilities need to be assessed under the law applicable to their own period. This change does not remove other category-specific TCS obligations or a buyer’s separate TDS obligations.

What Is Form 27D and How Does It Relate to Form 27EQ?

For the old regime, Form 27EQ is the quarterly statement and Form 27D is the TCS certificate given to the collectee. Form 27D is due within 15 days of the statement’s due date, not 15 days after the date on which you happen to file.

Under the 2026 Rules, Form 143 is paired with Form 133. The latter is generated from processed statements through TRACES and issued to the collectee after signing. Its standard quarterly deadlines are 15 August, 15 November, 15 February and 15 June respectively. Check any specific extension that applies to the period.

What Are the Due Dates for Form 27EQ and the Underlying TCS Deposit?

These are standard statement deadlines, subject to notified extensions. Paying the collected tax is a separate obligation.

• Old-regime TCS: non-government collectors ordinarily deposit by the seventh of the following month, including March collections. Government collectors depositing without a challan pay the same day; with a challan, by the seventh of the next month.
• Rule 218 under the 2026 Rules: non-government collections for April–February are due within seven days of month-end; March collections are due by 30 April. Government payments remain same-day without a challan, or within seven days of month-end with a challan.

How Do You Actually File Form 27EQ or Form 143?

1. Identify the correct Act, period and form before calculating the collection.
2. Deposit the collected tax using the applicable payment process and deadline. Reconcile the challan or book-entry details.
3. Use the current filing instructions for that form and year. Check TAN, collectee PAN, receipt amounts, rates and payment details.
4. Form 143 must be filed electronically in the prescribed format. A submitted form cannot simply be edited; a correction statement follows processing of the original statement.
5. Retain the acknowledgement, check processing, and issue the correct certificate, Form 27D or Form 133, by its statutory deadline.

What Penalties Apply for Non-Compliance?

Collection, deposit, statement filing and accurate reporting are separate obligations. A default can attract interest, a late-filing fee and penalties under the Act governing that period. Do not assume that old section numbers and rates automatically apply to Form 143. The Department’s Form 143 FAQ identifies section 427 for the filing fee and sections 461 and 465(2)(g) for penal provisions. Have the applicable period and nature of default checked before calculating a liability; filing a late statement does not by itself resolve every default.

Form 27EQ vs Form 24Q, Form 26Q, and Form 27Q: What Is the Difference?

Historical comparison: the following table describes forms under the Income-tax Act, 1961. For the new regime, use the current form mapping and deadlines above.

For details on the other three forms, see our guides on Form 24Q for TDS on salary, Form 26Q for non-salary TDS, and Form 27Q for NRI payments.

Form 27EQ Has a Successor: Form 143

The Income Tax Department confirms Form 143 under section 397(3)(b) and Rule 219 for quarterly TCS reporting under the 2025 Act. Section 394 sets the collection provisions, and the new Act commenced on 1 April 2026. Check the applicable transaction period and collection trigger, rather than selecting the regime only from the date a return is uploaded.

Form 143 correction statements must be filed within two years from the end of the tax year in which the statement was required to be delivered. This is not simply two years from the transaction date. Lower-rate TCS certificates are dealt with in section 395(3); that subsection should not be described as a general nil-rate certificate provision.

Frequently Asked Questions

1. What is the basic difference between TDS and TCS? 

TDS is deducted by the person making a payment (for example, an employer deducting tax from salary, or a company deducting tax from a contractor’s invoice). TCS is collected by the person receiving a payment, specifically the seller of certain specified goods or the provider of certain specified transactions, from the buyer. Form 27EQ reports TCS; Forms 24Q, 26Q, and 27Q report various categories of TDS.

2. Do I need a TAN to file Form 27EQ? 

Yes. Filing Form 27EQ requires the collector to hold a valid TAN, the same identifier used for TDS compliance under Section 203A.

3. My business sells scrap. Do I need to collect TCS on every sale? 

If your business sells scrap and the transaction falls within the categories specified under Section 206C, TCS applies at the prescribed rate on the sale value. Unlike the now-omitted Section 206C(1H), which had a ₹50 lakh threshold for general goods, TCS on scrap under the specific Section 206C category generally applies without a similar high-value threshold, so check the applicable provision carefully with your CA.

4. Can the buyer claim credit for TCS collected from them? 

TCS credit depends on collection, deposit and correct reporting, not merely on uploading a statement. Obtain the applicable certificate, Form 27D for old-regime periods or Form 133 under the new rules, and reconcile the credit reflected in the tax records. Ask the collector to correct discrepancies.

5. Is TCS on foreign remittances under LRS the same as TCS on sale of goods? 

For old-regime periods, these are distinct categories under section 206C, reported through Form 27EQ. Under the new regime, section 394 and Form 143 apply. LRS remittance TCS is collected by authorised dealers, with its own purpose-based rates and threshold; a general goods-sale rate is not interchangeable with it.

6. What happens if a Section 206C(1H) transaction occurred in FY 2025-26 but the corresponding Form 27EQ is filed after 1 April 2026? 

The premise needs correcting: section 206C(1H) stopped applying from 1 April 2025. It did not continue for all FY 2025–26 transactions. For genuinely earlier liabilities, the applicable historical law and filing period must be checked; a later upload date alone does not switch the transaction to the new Act.

7. What replaces Form 27EQ from April 2026? 

Form 143 is the corresponding quarterly TCS statement under section 397(3)(b) and Rule 219 for the new regime. Collection is governed by section 394. Its filing dates and Form 133 certificate must not be confused with the old Form 27EQ/Form 27D calendar.

Key Takeaways

• First identify the transaction period: Form 27EQ and Form 143 belong to different regimes.
• Quarterly statement deadlines, monthly tax deposits and certificates are separate obligations.
• Section 206C(1H) ceased applying from 1 April 2025, not April 2026.
• Use the enacted rules and rates, not a Budget proposal or a generic filing checklist.

Primary Sources

Checked 27 October 2026: Income-tax Act, 2025 as amended by Finance Act, 2026; Form 143 FAQ; Form 133 FAQ; Rule 218; old-regime TCS guide.

This is general information, not personalised tax advice. Consult a practising Chartered Accountant for a specific compliance position.

Last Updated on 7 days ago by Team Paisaseekho