Form 27C of Income Tax: Declaration, Filing, and Downloading

Form 27C of Income Tax: Declaration, Filing, and Downloading. Tax Collected at Source (TCS) is an important compliance mechanism under the Income Tax Act, 1961. It mandates the seller of certain goods to collect tax from the buyer at the time of sale. However, there are certain situations where a buyer may not be liable to pay TCS. In such cases, the buyer can submit a declaration in Form 27C of Income Tax to the seller. This declaration allows exemption from the collection of TCS, provided the buyer meets specific eligibility criteria.
What is Form 27C of Income Tax?
Form 27C of Income Tax is a statutory declaration form submitted by the buyer to the seller of goods to claim exemption from Tax Collected at Source (TCS). Under the Income Tax Act, sellers are required to collect TCS on certain goods. However, if the buyer is eligible and intends to use the goods for manufacturing, processing, or producing articles or things (and not for trading), they can file Form 27C. This form is crucial for ensuring that unnecessary TCS is not collected from buyers who are not liable under the law.
Buyers filing Form 27C must be residents of India and must use the goods exclusively for industrial purposes. The form must be submitted in duplicate, and one copy must be given to the seller, who then submits it to the relevant income tax authority.
Declaration of Exemption Under Form 27C of Income Tax
Filing Form 27C of Income Tax allows the buyer to declare that they are not liable to pay TCS as the goods purchased are not intended for trade but for processing, manufacturing, or production. This declaration is a legal document and must be furnished in duplicate by the buyer. The first copy goes to the seller, while the second must be maintained for records. The exemption under Form 27C of Income Tax is significant because it reduces the financial burden on businesses engaged in manufacturing or production. However, it also places a responsibility on the buyer to ensure all declarations are accurate and truthful.
Form 27C Applicability
Form 27C of Income Tax is applicable to a defined list of sellers, buyers, and goods. Below is a list showing who can file Form 27C and under what conditions:

If Indian Made Foreign Liquor (IMFL) is sold by the Central Government, the buyer can submit Form 27C.

For timber obtained through a forest lease, if the seller is a local authority, the buyer can claim exemption by submitting Form 27C.

Tendu leaves sold by State Governments also fall under this category.

Timber obtained through means other than forest lease, when sold by statutory corporations or authorities, is also covered.

If forest produce other than tendu leaves and timber is sold by co-operative societies, buyers may submit Form 27C.

Toll plaza licensing, parking area leasing, and similar services offered by sole proprietors or partnership firms are also included.

Scrap material from manufacturing, when sold by public or private companies, falls under the scope of Form 27C of Income Tax.

Quarrying and mining activities involving Hindu Undivided Families (HUFs) are also included under the applicability criteria.

Why is Form 27C of Income Tax Required?
Form 27C of Income Tax is essential for buyers who are not liable to pay TCS but still fall under the categories where sellers are generally required to collect it. The form acts as a formal declaration that the goods will be used for manufacturing, processing, or producing goods and not for trading purposes.
It ensures that tax authorities are informed about the transaction, promotes transparency, and avoids unnecessary tax collection. Without Form 27C, the seller would be obligated to collect TCS even if the buyer is not liable, causing unnecessary cash flow strain on businesses. Therefore, this form plays a pivotal role in supporting tax compliance and minimizing financial inefficiencies.
How to Download Form 27C of Income Tax?
To download Form 27C, follow these simple steps through the Income Tax Department's official website:

Visit the official website: https://www.incometaxindia.gov.in.

Navigate to the "Tax Laws & Rules" section.

Click on "Income Tax Forms."

Use the search bar to find "Form 27C."

You will see options to download the form in PDF format or as a Word document. Depending on your preference, you can select the appropriate format. Note that this form is primarily to be filled out by the buyer. The buyer must complete Part I of the form and submit it to the seller for further filing and documentation.
How to File Form 27C of Income Tax?
Filing Form 27C involves a coordinated effort between the buyer and seller. Here’s a step-by-step process:
Buyer Responsibilities
The buyer must download and fill out Part I of Form 27C. This includes details such as name, PAN, address, nature of goods, nature of business, and declaration regarding the intended usage of goods. This part must be duly signed and submitted to the seller.
Seller Responsibilities
Once the seller receives the buyer’s declaration in Part I, the seller must:

Go to "e-File" > "Income Tax Forms" > "File Income Tax Forms."

Select the form for persons not dependent on any source of income.

Choose Form 27C from the list.

Fill in Part II with seller details and upload the scanned copy of Part I received from the buyer.

Submit the form online.

Documents Required for Filing Form 27C of Income Tax
Before filing Form 27C, the buyer and seller must have the following documents and details prepared:

Name, status (individual, company, HUF, etc.), PAN or Aadhaar number, mobile number, email address, nature of goods purchased, nature of business, and the specific reason for using the goods (manufacturing, processing, etc.).

The date when Form 27C is signed and submitted by the buyer.

The date when the buyer’s account is debited or payment is made.

A signed declaration form stating the goods will not be used for trading purposes.

Consequences of Incorrect Filing of Form 27C
Filing Form 27C with incorrect information can have serious consequences. If the declaration is found to be false or misleading, the buyer can face penalties under the Income Tax Act. Furthermore, the seller may also be held liable for not collecting TCS if the form was improperly filed. It is important to double-check all information before submission. In case of errors, the buyer must redo the entire process, including obtaining a new declaration and resubmitting it.
Submission Deadline for Form 27C
The seller is required to submit Form 27C to the concerned income tax authority on or before the seventh day of the next month in which the declaration is received. For example, if the declaration is received on 10th June, it must be submitted by 7th July. Timely submission is important  to ensure that the TCS exemption is valid and recorded properly in the system. Delay in submission may result in non-compliance and penalties.
TCS Return Filing – Section 206C(3)
Under Section 206C(3) of the Income Tax Act, the seller must include Form 27C declarations in the TCS return. The TCS return is filed quarterly in Form 27EQ. All declarations received under Form 27C must be reported in the relevant quarter’s return. Filing accurate TCS returns ensures proper matching of data between the buyer’s and seller’s accounts. It also helps the Income Tax Department track exemptions and confirm compliance with TCS provisions.
TCS Certificate – Form 27D
If TCS has been collected, the seller issues a TCS certificate to the buyer in Form 27D. However, if Form 27C is filed correctly and accepted, no TCS is collected, and hence, no Form 27D is required. Nevertheless, Form 27D remains important for transactions where TCS is applicable. It contains details such as amount collected, rate of collection, and PAN/TAN details of both buyer and seller.
Penalty and Prosecution for Non-Compliance
Failure to collect TCS when required, or accepting false Form 27C declarations, can lead to penalties and prosecution under the Income Tax Act.

If the seller does not submit the declaration to the authorities on time, penalties may apply.

If the buyer provides false information, they may be subject to legal action and financial penalties.

These provisions are in place to ensure responsible behavior by both buyers and sellers in the tax ecosystem.
Section 206CCA – Higher TCS for Non-Filers
Section 206CCA mandates a higher rate of TCS for individuals who have not filed their income tax returns for the previous two years and whose aggregate TDS/TCS is Rs.50,000 or more in each year. The rate of TCS in such cases will be either twice the specified rate or 5%, whichever is higher. This provision encourages timely income tax return filing and ensures that habitual defaulters pay higher taxes. Buyers seeking TCS exemption through Form 27C must also ensure compliance with return filing norms to avoid higher tax rates.
Conclusion
Form 27C of Income Tax plays an important role in ensuring that eligible buyers are not subjected to unnecessary TCS. It simplifies the tax process, reduces the financial burden on manufacturers and producers, and promotes transparency. However, accuracy and timely submission are key to making the most of this exemption. Both buyers and sellers must know their responsibilities, keep the necessary documents ready, and follow the prescribed procedures to ensure smooth and compliant transactions.
If you have any tax related queries, you can book a consultation with Compliance Calendar LLP Experts through mail at info@ccoffice.in or Call/Whatsapp at +91 9988424211.
FAQs
Q1. Who can file Form 27C of Income Tax? 
Ans. Only Indian resident buyers who use the purchased goods for manufacturing, processing, or producing goods—not for trading—can file Form 27C.
Q2. Can traders file Form 27C? 
Ans. No. Buyers purchasing goods for trading purposes are not eligible to submit Form 27C.
Q3. Is submission of Form 27C mandatory for exemption? 
Ans. Yes, exemption from TCS can only be claimed by submitting a properly filled Form 27C.
Q4. What happens if the form is not submitted on time? 
Ans. The seller must collect TCS if the form is not submitted within the deadline. Late submission can lead to compliance issues.
Q5. Can I file Form 27C online? 
Ans. Only the seller can file Form 27C online after receiving the declaration from the buyer.
Q6. Do I need to file Form 27C every time I purchase goods? 
Ans. Yes, a separate declaration is needed for every transaction unless covered under a continuous contract with periodic declarations.
Q7. Can I revise a wrongly submitted Form 27C? 
Ans. No. Once submitted, a wrongly filled form cannot be revised. A new form must be filled and re-submitted.
Q8. Is Form 27C required for cash transactions? 
Ans. Yes. Mode of payment does not affect the requirement to file Form 27C.

Tax Collected at Source (TCS) is an important compliance mechanism under the Income Tax Act, 1961. It mandates the seller of certain goods to collect tax from the buyer at the time of sale. However, there are certain situations where a buyer may not be liable to pay TCS. In such cases, the buyer can submit a declaration in Form 27C of Income Tax to the seller. This declaration allows exemption from the collection of TCS, provided the buyer meets specific eligibility criteria.

What is Form 27C of Income Tax?

Form 27C of Income Tax is a statutory declaration form submitted by the buyer to the seller of goods to claim exemption from Tax Collected at Source (TCS). Under the Income Tax Act, sellers are required to collect TCS on certain goods. However, if the buyer is eligible and intends to use the goods for manufacturing, processing, or producing articles or things (and not for trading), they can file Form 27C. This form is crucial for ensuring that unnecessary TCS is not collected from buyers who are not liable under the law.

Buyers filing Form 27C must be residents of India and must use the goods exclusively for industrial purposes. The form must be submitted in duplicate, and one copy must be given to the seller, who then submits it to the relevant income tax authority.

Declaration of Exemption Under Form 27C of Income Tax

Filing Form 27C of Income Tax allows the buyer to declare that they are not liable to pay TCS as the goods purchased are not intended for trade but for processing, manufacturing, or production. This declaration is a legal document and must be furnished in duplicate by the buyer. The first copy goes to the seller, while the second must be maintained for records. The exemption under Form 27C of Income Tax is significant because it reduces the financial burden on businesses engaged in manufacturing or production. However, it also places a responsibility on the buyer to ensure all declarations are accurate and truthful.

Form 27C Applicability

Form 27C of Income Tax is applicable to a defined list of sellers, buyers, and goods. Below is a list showing who can file Form 27C and under what conditions:

If Indian Made Foreign Liquor (IMFL) is sold by the Central Government, the buyer can submit Form 27C.
For timber obtained through a forest lease, if the seller is a local authority, the buyer can claim exemption by submitting Form 27C.
Tendu leaves sold by State Governments also fall under this category.
Timber obtained through means other than forest lease, when sold by statutory corporations or authorities, is also covered.
If forest produce other than tendu leaves and timber is sold by co-operative societies, buyers may submit Form 27C.
Toll plaza licensing, parking area leasing, and similar services offered by sole proprietors or partnership firms are also included.
Scrap material from manufacturing, when sold by public or private companies, falls under the scope of Form 27C of Income Tax.
Quarrying and mining activities involving Hindu Undivided Families (HUFs) are also included under the applicability criteria.

Why is Form 27C of Income Tax Required?

Form 27C of Income Tax is essential for buyers who are not liable to pay TCS but still fall under the categories where sellers are generally required to collect it. The form acts as a formal declaration that the goods will be used for manufacturing, processing, or producing goods and not for trading purposes.

It ensures that tax authorities are informed about the transaction, promotes transparency, and avoids unnecessary tax collection. Without Form 27C, the seller would be obligated to collect TCS even if the buyer is not liable, causing unnecessary cash flow strain on businesses. Therefore, this form plays a pivotal role in supporting tax compliance and minimizing financial inefficiencies.

How to Download Form 27C of Income Tax?

To download Form 27C, follow these simple steps through the Income Tax Department's official website:

Visit the official website: https://www.incometaxindia.gov.in.
Navigate to the "Tax Laws & Rules" section.
Click on "Income Tax Forms."
Use the search bar to find "Form 27C."

How to File Form 27C of Income Tax?

Filing Form 27C involves a coordinated effort between the buyer and seller. Here’s a step-by-step process:

Buyer Responsibilities

The buyer must download and fill out Part I of Form 27C. This includes details such as name, PAN, address, nature of goods, nature of business, and declaration regarding the intended usage of goods. This part must be duly signed and submitted to the seller.

Seller Responsibilities

Once the seller receives the buyer’s declaration in Part I, the seller must:

Log in to the official income tax e-filing portal using their TAN as the User ID.
Go to "e-File" > "Income Tax Forms" > "File Income Tax Forms."
Select the form for persons not dependent on any source of income.
Choose Form 27C from the list.
Fill in Part II with seller details and upload the scanned copy of Part I received from the buyer.
Submit the form online.

Documents Required for Filing Form 27C of Income Tax

Before filing Form 27C, the buyer and seller must have the following documents and details prepared:

Name, status (individual, company, HUF, etc.), PAN or Aadhaar number, mobile number, email address, nature of goods purchased, nature of business, and the specific reason for using the goods (manufacturing, processing, etc.).
The date when Form 27C is signed and submitted by the buyer.
The date when the buyer’s account is debited or payment is made.
A signed declaration form stating the goods will not be used for trading purposes.

Consequences of Incorrect Filing of Form 27C

Filing Form 27C with incorrect information can have serious consequences. If the declaration is found to be false or misleading, the buyer can face penalties under the Income Tax Act. Furthermore, the seller may also be held liable for not collecting TCS if the form was improperly filed. It is important to double-check all information before submission. In case of errors, the buyer must redo the entire process, including obtaining a new declaration and resubmitting it.

Submission Deadline for Form 27C

The seller is required to submit Form 27C to the concerned income tax authority on or before the seventh day of the next month in which the declaration is received. For example, if the declaration is received on 10th June, it must be submitted by 7th July. Timely submission is important to ensure that the TCS exemption is valid and recorded properly in the system. Delay in submission may result in non-compliance and penalties.

TCS Return Filing – Section 206C(3)

Under Section 206C(3) of the Income Tax Act, the seller must include Form 27C declarations in the TCS return. The TCS return is filed quarterly in Form 27EQ. All declarations received under Form 27C must be reported in the relevant quarter’s return. Filing accurate TCS returns ensures proper matching of data between the buyer’s and seller’s accounts. It also helps the Income Tax Department track exemptions and confirm compliance with TCS provisions.

TCS Certificate – Form 27D

If TCS has been collected, the seller issues a TCS certificate to the buyer in Form 27D. However, if Form 27C is filed correctly and accepted, no TCS is collected, and hence, no Form 27D is required. Nevertheless, Form 27D remains important for transactions where TCS is applicable. It contains details such as amount collected, rate of collection, and PAN/TAN details of both buyer and seller.

Penalty and Prosecution for Non-Compliance

Failure to collect TCS when required, or accepting false Form 27C declarations, can lead to penalties and prosecution under the Income Tax Act.

If the seller does not submit the declaration to the authorities on time, penalties may apply.
If the buyer provides false information, they may be subject to legal action and financial penalties.

These provisions are in place to ensure responsible behavior by both buyers and sellers in the tax ecosystem.

Section 206CCA – Higher TCS for Non-Filers

Section 206CCA mandates a higher rate of TCS for individuals who have not filed their income tax returns for the previous two years and whose aggregate TDS/TCS is Rs.50,000 or more in each year. The rate of TCS in such cases will be either twice the specified rate or 5%, whichever is higher. This provision encourages timely income tax return filing and ensures that habitual defaulters pay higher taxes. Buyers seeking TCS exemption through Form 27C must also ensure compliance with return filing norms to avoid higher tax rates.

Conclusion

Form 27C of Income Tax plays an important role in ensuring that eligible buyers are not subjected to unnecessary TCS. It simplifies the tax process, reduces the financial burden on manufacturers and producers, and promotes transparency. However, accuracy and timely submission are key to making the most of this exemption. Both buyers and sellers must know their responsibilities, keep the necessary documents ready, and follow the prescribed procedures to ensure smooth and compliant transactions.

If you have any tax related queries, you can book a consultation with Compliance Calendar LLP Experts through mail at info@ccoffice.in or Call/Whatsapp at +91 9988424211.