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Form 27C

What Is Form 27C?

Form 27C is a declaration form used by a buyer to ensure no Tax Collected at Source (TCS) is deducted by the seller during the purchase of specified goods. It is primarily used in cases where the buyer intends to use the goods for manufacturing, processing, or producing articles or things, and not for trading purposes.

By submitting Form 27C, eligible buyers can legally avoid TCS deduction and ensure the full value of the purchase is retained at the time of payment.

When Is Form 27C Used?

Form 27C applies in transactions involving the purchase of

• Coal, lignite, or iron ore
• Alcoholic liquor for human consumption
• Timber obtained under forest lease
• Scrap
• Other notified goods where TCS would usually apply

If the buyer declares that the goods will not be traded further but used for production or manufacturing, and that they are a resident Indian, Form 27C can be submitted to the seller to waive TCS deduction.

Who Can Submit Form 27C?

Form 27C can be submitted by:

• Resident buyers purchasing specified goods
• Who will use the goods for industrial or manufacturing purposes
• Who declare that the goods will not be sold or traded

The seller, in turn, is required to submit a copy of the form to the Income Tax Department.

Details Required in Form 27C

The declaration form typically includes

• Name and PAN of the buyer and seller
• Address and contact details
• Nature of the goods being purchased
• Purpose of usage (manufacturing/processing/production)
• Statement confirming that the goods will not be traded
• Date of declaration and signature of the declarant

It must be submitted in duplicate — one copy to the seller, and one forwarded by the seller to the jurisdictional Chief Commissioner or Commissioner of Income Tax.

Process of Submission

1. The buyer fills and signs Form 27C before or at the time of the transaction
2. The seller does not collect TCS and accepts the declaration
3. The seller then submits one copy of the signed form to the jurisdictional tax authority
4. The seller is also required to electronically file Form 27C through the TIN-NSDL portal (or as per the latest CBDT guidelines)

Responsibilities of the Seller

Once Form 26QB is filed and payment is made

• Maintain a record of declarations received in Form 27C
• Submit the form electronically within 7 days of the following month in which it was received
• Quote the correct PAN of the buyer; failing which, TCS must be collected at a higher rate

Any failure in compliance may attract penalties or interest under the Income Tax Act.

Why Is Form 27C Important?

• Avoids unnecessary TCS where tax liability doesn’t exist
• Supports industrial and manufacturing buyers in managing cash flows
• Ensures transparency and accountability in transactions
• Prevents delays and complications during tax audits or assessments

Form 27C serves as a useful mechanism for manufacturers and industrial buyers to avoid unwanted tax collection on essential raw materials or goods used for production.