TCS Filing for Business Owners in AY 2026-27

If your business collects Tax Collected at Source (TCS) during FY 2025-26, you must deposit the tax, file quarterly Form 27EQ, issue Form 27D certificates and correct any errors reported by the Income Tax Department. This guide explains TCS filing in AY 2026-27 by a business owner, including applicable rates, due dates, payment procedure, certificates, corrections, interest and late filing fees.

Strictly speaking, TCS compliance relates to FY 2025-26, while AY 2026-27 is the assessment year in which the income connected with that financial year is assessed. Business owners should therefore track both terms while completing their tax compliance.

TCS filing for AY 2026-27 by business owners: Key points

For FY 2025-26, a business owner collecting TCS should follow this sequence:

1. Obtain and maintain a valid Tax Deduction and Collection Account Number (TAN).
2. Identify whether the transaction falls under Section 206C of the Income-tax Act.
3. Collect the correct TCS amount from the buyer or specified person.
4. Deposit the amount with the Central Government within the prescribed deadline.
5. File quarterly Form 27EQ electronically.
6. Download and issue Form 27D, the TCS certificate.
7. Reconcile the statement with the business books, challans and the buyer’s tax credit in Form 26AS or the Annual Information Statement.

The Income Tax Department’s TDS and TCS resources provide access to relevant forms, services and compliance information.

TCS return filing due dates for FY 2025-26

A business owner must file one quarterly TCS statement for each quarter in which TCS was collected or required to be collected. The due dates for Form 27EQ for FY 2025-26 are generally as follows:

Quarter	Period covered	Form 27EQ due date
Q1	April 2025 to June 2025	15 July 2025
Q2	July 2025 to September 2025	15 October 2025
Q3	October 2025 to December 2025	15 January 2026
Q4	January 2026 to March 2026	15 May 2026

The quarterly statement includes details such as:

• TAN of the collector
• PAN of the collectee
• Nature of the transaction
• Amount paid or debited
• Amount on which TCS was collected
• TCS rate and amount
• Challan details
• Date of collection and deposit

A business owner should not wait until the due date to prepare the return. Errors in PAN, challan numbers and collection dates can lead to a defective statement or a mismatch in the buyer’s tax credit.

Is Form 27EQ required if no TCS was collected?

Form 27EQ is generally filed for a quarter when the collector has TCS transactions to report. If the business had no transaction attracting TCS during a quarter, the owner should maintain internal records showing why no statement was filed.

Businesses with recurring TCS obligations should also review whether the compliance system requires a nil or related reporting action on the reporting platform before assuming that no filing is needed.

TCS rates under Section 206C for FY 2025-26

The applicable rate depends on the nature of the goods, transaction or remittance. The following are commonly relevant TCS rates under Section 206C for FY 2025-26:

Transaction or goods	General TCS rate
Alcoholic liquor for human consumption	1%
Tendu leaves	5%
Timber obtained under a forest lease	2.5%
Timber obtained by any mode other than under a forest lease	2.5%
Forest produce other than timber or tendu leaves	2.5%
Scrap	1%
Minerals such as coal, lignite and iron ore	1%
Parking lot, toll plaza and mining or quarrying	2%
Sale of a motor vehicle exceeding ₹10,00,000	1%
Overseas tour programme package	2%
Remittance under the Liberalised Remittance Scheme for education or medical purposes above the threshold	5%
Other specified LRS remittances above the threshold	20%

Rates can differ based on amendments, transaction conditions and the availability of the buyer’s PAN. The Income Tax Department’s Section 206C guidance should be checked before applying a rate to a specialised transaction.

Important FY 2025-26 change: TCS on sale of goods

The TCS provision for the sale of goods under Section 206C(1H) was withdrawn with effect from 1 April 2025. Therefore, businesses should not continue collecting TCS under Section 206C(1H) merely because their sales exceed the earlier threshold.

This does not automatically remove other TCS provisions. For example, TCS may still apply to specified goods, motor vehicles, overseas tour packages or remittances under other provisions of Section 206C.

The Finance Act, 2025 should be referred to when reviewing amendments effective from FY 2025-26.

What happens when the buyer does not provide PAN?

If the collectee does not furnish PAN, Section 206CC may require TCS at the higher of:

• Twice the rate prescribed in the Act; or
• 5%.

The law contains specific conditions and exceptions. A business should validate PAN details before filing Form 27EQ because an incorrect or missing PAN can increase the applicable rate and create a tax credit mismatch.

How to file quarterly TCS return in India

Business owners can complete Form 27EQ TCS filing online for businesses through the prescribed electronic filing channels. The process is as follows.

Step 1: Verify TAN and registration details

The business must use the correct TAN allotted to the collector. Check:

• TAN status
• Legal name linked to TAN
• Registered address
• Responsible person details
• Authorised signatory details
• Digital signature or electronic verification requirements

A business cannot use its PAN in place of TAN for TCS reporting.

Step 2: Collect transaction information

Prepare a quarter-wise transaction file containing:

• Invoice number and date
• Customer name and PAN
• Transaction category
• Gross amount
• TCS amount
• Date of collection
• Challan identification number
• Payment date
• Any lower or nil collection certificate details

The accounting records, sales register and TCS working should agree before the statement is prepared.

Step 3: Deposit the TCS

TCS collected during a month should generally be deposited by the seventh day of the following month. For TCS collected during March, the usual due date is 30 April.

For example:

• TCS collected in April 2025: deposit by 7 May 2025
• TCS collected in May 2025: deposit by 7 June 2025
• TCS collected in March 2026: deposit by 30 April 2026

The business should make payment through the applicable income tax payment facility using the correct TAN and relevant minor head for TCS. Always verify the challan before submission because an incorrect TAN, assessment year or tax head can delay credit.

Step 4: Prepare Form 27EQ

Form 27EQ is the quarterly statement for TCS. The statement should contain transaction-level and challan-level information in the prescribed format.

Before submission, validate:

• PAN format and PAN status
• TCS rate
• Total consideration
• TCS amount
• Date of collection
• Challan serial number
• BSR code or relevant payment details
• Deposit amount
• Quarter and financial year

Step 5: Submit and verify the statement

After preparing the statement, validate it using the applicable TDS and TCS statement preparation utility or approved filing mechanism. Resolve validation errors before submission.

The authorised person can then submit the statement through the applicable electronic filing process. Keep the following records:

• Acknowledgement number
• Filed statement file
• Challan counterfoils
• Validation report
• Error or rejection file
• Customer-wise TCS reconciliation

This is the practical TCS payment and return filing procedure for businesses.

TCS certificate Form 27D download and issue

Form 27D is the certificate issued to the person from whom TCS was collected. It contains the amount collected and deposited with the Government.

The business owner can download the certificate from the TRACES platform after the relevant Form 27EQ statement has been processed. The general certificate issue timeline is linked to the due date for filing the quarterly TCS statement.

For FY 2025-26, the expected Form 27D availability and issue cycle follows the quarterly statement schedule:

• Q1 certificate: after filing and processing of the July statement
• Q2 certificate: after filing and processing of the October statement
• Q3 certificate: after filing and processing of the January statement
• Q4 certificate: after filing and processing of the May statement

A business should issue Form 27D promptly and retain proof of delivery. The buyer can use the certificate to reconcile TCS credit reflected in Form 26AS or the Annual Information Statement.

Late filing fee and interest on TCS return

Failure to collect, deposit or report TCS can result in tax, interest, late filing fees and penalties.

Interest for failure to collect TCS

Interest may apply at 1% for every month or part of a month from the date on which TCS was required to be collected until the date on which it is actually collected.

Interest for failure to deposit collected TCS

If the business collects TCS but deposits it late, interest may apply at 1.5% for every month or part of a month from the date of collection until the date of payment.

For example, if a business collects ₹20,000 as TCS and deposits it late by one month, interest at 1.5% for one month would be ₹300, subject to the applicable period calculation.

Late filing fee under Section 234E

A late filing fee of ₹200 per day may apply for delay in filing the TCS statement. The fee cannot exceed the amount of TCS deductible or collectible for that statement.

Penalties

Depending on the default, the business may face:

• Penalty for failure to collect TCS
• Penalty for failure to pay collected TCS
• Penalty for filing an incorrect statement
• Penalty for failure to file the statement within the prescribed period

Under Section 271H, penalty for certain failures connected with TDS or TCS statements can range from ₹10,000 to ₹1,00,000. The specific consequences depend on the nature of the default and whether the statement is corrected within the permitted period.

The Income Tax Act provisions on interest and penalties should be checked before finalising a delayed or correction filing.

TCS return correction statement online

A correction statement is required when the filed Form 27EQ contains an error. Common examples include:

• Incorrect PAN of the collectee
• Wrong TCS amount
• Incorrect transaction code
• Wrong challan details
• Duplicate transaction
• Incorrect date of collection
• Challan allocated to the wrong quarter
• Short collection because of an incorrect rate

The usual correction process involves:

1. Downloading the relevant statement or default details from the reporting platform.
2. Identifying the transaction or challan that needs correction.
3. Preparing the correction file using the prescribed utility.
4. Validating the file.
5. Uploading the correction statement.
6. Checking the processing status.
7. Re-downloading the updated statement or justification report.

A PAN correction can be particularly important because the collectee may not receive TCS credit until the corrected statement is processed. The business should obtain documentary support before changing a customer’s PAN or transaction details.

Can a TCS return be revised?

Yes. A business can file a correction statement to rectify eligible errors in a previously filed Form 27EQ. However, a correction statement does not remove interest or late filing fees that already arose because of delayed collection, payment or filing.

The business should also reconcile the revised statement with:

• TCS challan payment
• Ledger entries
• Form 26AS
• Annual Information Statement
• Form 27D issued to the collectee

Business owner TCS compliance checklist for AY 2026-27

Use the following business owner TCS compliance checklist for AY 2026-27:

At the start of the financial year

• Confirm that the business has an active TAN.
• Map each business activity to the correct Section 206C provision.
• Review the FY 2025-26 amendments, including withdrawal of TCS on sale of goods under Section 206C(1H).
• Update the accounting software with the correct TCS rates.
• Configure PAN validation for customers.
• Assign responsibility for monthly payment and quarterly filing.

Every month

• Identify all transactions liable to TCS.
• Collect the correct amount from the buyer or specified person.
• Deposit TCS by the seventh day of the following month.
• Reconcile the TCS ledger with the payment challan.
• Review short collection, excess collection and uncollected amounts.

Every quarter

• Prepare the Form 27EQ data file.
• Validate PAN and transaction codes.
• Match challans with the statement.
• File Form 27EQ by the quarterly due date.
• Download the filing acknowledgement and processing status.
• Issue Form 27D after processing.
• Reconcile customer tax credit where necessary.

At year-end

• Verify that March TCS is deposited by 30 April 2026.
• File the fourth-quarter Form 27EQ by 15 May 2026.
• Check outstanding defaults and late fees.
• Download and issue all pending Form 27D certificates.
• Preserve records for the applicable retention period.
• Share relevant TCS information with the finance and tax teams handling the business income-tax return.

Practical example of TCS compliance

Suppose a business sells scrap during FY 2025-26 in a transaction covered by Section 206C. The applicable TCS rate is 1%, subject to the transaction facts and PAN requirements.

If the taxable transaction value is ₹5,00,000:

• TCS at 1%: ₹5,000
• Amount collected from the buyer: ₹5,000
• TCS deposit: by the seventh day of the next month
• Reporting: Form 27EQ for the relevant quarter
• Certificate: Form 27D after processing

The business should record the ₹5,000 separately from its sales revenue and ensure that the amount reported in Form 27EQ agrees with the amount deposited.

Frequently asked questions on TCS filing

Is TCS filing the same as income-tax return filing?

No. TCS filing is a quarterly compliance obligation of the collector. The business may separately need to file its income-tax return for AY 2026-27.

Which form is used for quarterly TCS filing?

Businesses generally use Form 27EQ for quarterly TCS statements. Form 27D is the certificate issued to the person from whom TCS was collected.

What is the due date for the fourth-quarter TCS return for FY 2025-26?

The fourth-quarter Form 27EQ for January 2026 to March 2026 is generally due by 15 May 2026.

Can a business collect TCS without TAN?

No. A collector required to comply with TCS provisions must obtain and use a valid TAN.

What if the business collected TCS but forgot to deposit it?

The business should deposit the amount immediately, calculate applicable interest, file the relevant statement and address any default shown in the tax statement processing system.

How can a buyer claim TCS credit?

The buyer can generally claim credit based on the TCS reflected against the buyer’s PAN in Form 26AS or the Annual Information Statement, subject to the transaction and tax return records.

Summary

For TCS filing in AY 2026-27 by a business owner, the main compliance period is FY 2025-26. Businesses should identify applicable Section 206C transactions, apply the correct TCS rates under Section 206C for FY 2025-26, deposit the tax on time, file Form 27EQ by 15 July, 15 October, 15 January and 15 May, and issue Form 27D after processing.

The withdrawal of TCS on the sale of goods under Section 206C(1H) from 1 April 2025 is especially important for businesses reviewing their systems. A monthly reconciliation and a clear TCS payment and return filing procedure for businesses can prevent interest, late filing fees, tax credit mismatches and correction requirements. Businesses should complete their business owner TCS compliance checklist for AY 2026-27 before each payment and quarterly filing deadline.