Summary: Tax Collected at Source (TCS) applies to specific transactions under Section 206C of the Income Tax Act, where the seller collects tax at the time of receiving payment. Unlike TDS, which is deducted by the payer, TCS is collected by the seller. Transactions subject to TCS include alcoholic liquor, tendu leaves, timber, scrap, toll plaza fees, and sale of motor vehicles, among others. The collector is required to file Form 27EQ quarterly, detailing the collectee whose TCS has been gathered. The due date for filing Form 27EQ is the 15th of the month following each quarter’s end, except for the last quarter (January to March), for which the due date is May 15th. Conversely, TCS challan payments are due monthly, by the 7th of the following month in which the TCS was collected. A TCS certificate, Form 27D, is issued by the collector to the collectee quarterly. Failure to collect TCS on time incurs interest at 1% per month or part thereof from the date it was collectible until actual collection. If TCS is collected but not deposited on time, interest is levied at 1.5% per month or part thereof from the date of collection until payment. Notably, such interest on late collection or payment is disallowed as an expense under the Income Tax Act.
TCS return Form 27EQ: Due date of return & challan
1.Applicability of 27EQ:-
- TCs is collected on specified transaction of category which is defined under Section 206C.
2. TCs is collected by the seller while receiving the payment but TDs is deducted by the person making the payment.
3. List of transactions:
- Alcoholic liquor for human consumption
- Tendu leaves
- Timber
- Scrap
- Toll plaza
- Sale of motor vehicles …….
4. TCs return:-
In case of TCs is collected on specified transactions, collector is required to file the Form-27EQ, which contains the details of collectee whose TCs has been collected.
5. Collector vs Collectee:-
| 1 | Collector | The person who collects the TCs |
| 2 | Collectee | The person whose TCs is collected |
6.TCs rate:-
TCs rates are prescribed under Section 206C.
7. TCs return due date:-
| Sr. No. | Period | Due date of filing of 27EQ |
| 1 | April to June | 15th July |
| 2 | July to September | 15th October |
| 3 | October to December | 15th January |
| 4 | January to March | 15th May instead of 15th April |
- The return will be filed on quarterly basis.
- The due date is the 15th of the month following the end of the each quarter except for the 4th quarter.
8. Challan due date:-
| Sr. No. | Period of collection | Due date of payment |
| 1 | April | 7th May |
| 2 | May | 7th June |
| 3 | June | 7th July |
| 4 | July | 7th August |
| 5 | August | 7th September |
| 6 | September | 7th October |
| 7 | October | 7th November |
| 8 | November | 7th December |
| 9 | December | 7th January |
| 10 | January | 7th February |
| 11 | February | 7th March |
| 12 | March | 7th April |
- Challan should be deposited on monthly basis.
- The due date is the 7th of the following month in which TCs was collected.
9. Form-27D:-
- TCS certificate is issued by collector to collectee on quarterly basis.
10. Interest on late collection of TCs:-
- If TCs is not collected on time then interest liability will arise @1% per month or part thereof.
- Period for interest calculation:
From the date on which TCs was collectible till actual date of collection.
- Suppose, TCs of April month is collected on 9th June, then interest will be levied from April to June.
- Interest will be calculated on TCs amount.
- For interest calculation, part of month is considered as full month.
| S. No. | Particulars | Amount |
| 1 | TCs liability | 1,00,000 |
| 2 | Liability for collection of TCs | In April month |
| 3 | Actually collected | In June month |
| 4 | Interest rate | 1% |
| 5 | Liability of interest | 3,000 ** |
** Interest calculation 1,00,000 * 1% * 3 months = 3,000
11. Interest on late payment of TCs:-
- If TCs is collected but not deposited on time then interest liability will arise @1.5% per month or part thereof.
- Period for interest calculation:
From the date on which TCs was collected till actual date of payment.
- Suppose, TCs of April month is collected on 30th April, but deposited on 10th June then interest will be levied from April to June.
- Interest will be calculated on TCs amount.
- For interest calculation, part of month is considered as full month.
| S. No. | Particulars | Amount |
| 1 | TCs liability | 1,00,000 |
| 2 | Liability for deduction of TCs | In April month |
| 3 | Actually collected | In April month |
| 4 | Due date of payment | 7th May |
| 5 | Actual date of payment | 10th June |
| 6 | Interest rate | 1.5 % |
| 7 | Liability of interest | 4,500 ** |
** Interest calculation 1,00,000 * 1.5% * 3 months = 4,500
*** The earlier rate was 1%. From 1st April 2025, it has been increased to 1.5%.
12. Allowance or disallowance of interest:-
Interest is disallowed under IT Act. Assessee cannot claim such interest as an expense.
13. Deferred tax on interest:-
It is a type of permanent difference. Hence, no deferred tax is created on interest.
14. Refer to the 26Q article for TDs deducted of resident on other than salary:
https://taxguru.in/income-tax/tds-return-form-26q-due-dates-other-applicable-forms.html
15. Refer to the 24Q article for TDs deducted of resident & non-resident on salary:
https://taxguru.in/income-tax/salary-tds-return-24q-due-date-return-challan.html
16. Refer to the 27Q article for TDs deducted of non-resident on other than salary:
https://taxguru.in/income-tax/tds-return-form-27q-due-date-return-challan.html
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