What is form 27c?
Form 27C is a statutory declaration form under Section 206C(1A) of the Income Tax Act.It allows buyers to declare that they will use the purchased goods for manufacturing, processing, or producing goods, and not for trading purposes.
Once properly submitted and approved, sellers are not required to collect TCS from that specific transaction.
Businesses dealing with goods like coal, tendu leaves, scrap, minerals, or alcoholic beverages often face Tax Collected at Source (TCS) requirements under the Income Tax Act. However, not every buyer is liable to pay TCS. When a buyer purchases goods for manufacturing, production, or processing, they can request exemption from TCS and that’s where Form 27C becomes essential.
Purpose of Form 27C for TCS Exemption
Form 27C serves a clear purpose, to prevent unnecessary TCS deduction when manufacturers use goods for industrial or production purposes.
Key benefits:
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Helps buyers maintain cash flow balance
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Avoids the time-consuming process of claiming refunds via income tax return
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Ensures transparency and compliance between buyer and seller
Who Should Use Form 27C?
Form 27C applies only in specific cases. You can use it if:
- You are a manufacturer, producer, or processor
- The purchased goods will be transformed into a new product
- The goods are not meant for trading or resale
Examples of eligible buyers:
Automobile component manufacturers
Cement factories purchasing scrap metal
Paper mills purchasing tendu leaves
Steel units buying coal
Why Submitting Form 27C Matters:
Reduces TCS burden and avoids refund claims
Helps maintain accurate tax compliance records
Ensures exemption is legally documented with the tax department
How to Access and Download Form 27C
Buyers can easily obtain the latest Form format from:
The official Income Tax Department portal
TRACES portal
Government-approved compliance websites
Step-by-Step Process to Submit Form 27C
The filing process involves two parties: the buyer and the seller.
Step 1: Buyer fills and signs Form
Details required include:
Buyer PAN
Address and contact details
Purpose of procurement
Nature of business activity
Declaration of intended usage
Step 2: Buyer submits the form to the seller
This must be done before the transaction or at the time of purchase.
Step 3: Seller verifies buyer eligibility
The seller must ensure:
PAN is valid
Declaration is complete
Goods usage aligns with statutory rules
Step 4: Seller forwards the form to the Assessing Officer
Form 27C must be submitted on or before the 7th day of the following month.
Step 5: Maintain record for compliance
Both parties must retain a copy for documentation and audit purposes.
Required Documents for Filing The Form
To submit Form 27C smoothly, the buyer may need:
PAN card
Business registration certificate
GST registration (if applicable)
Proof of manufacturing or production process
Purchase order or agreement
Conclusion
Form 27C plays an important role in easing the working capital requirements of manufacturing-based businesses by exempting them from TCS payments. Understanding eligibility, documentation, and filing steps ensures seamless compliance and avoids penalties or unnecessary tax deductions.