Form 27C: TCS Declaration Form Applicability, How to File

The Indian taxation system uses various mechanisms to prevent the evasion of tax liabilities and ensure compliance. TCS or tax collected at source is one such measure. TCS is the tax payable by the seller, but collected from the buyer at the time of sale of certain specified goods and services. Section 206C(1) of the Income Tax Act of 1961 mandates collection of TCS by sellers dealing in sale of specified items like liquor, tendu leaves, timber, strap metal, and minerals. Buyers can claim exemption from TCS payments if they meet certain eligibility parameters and file a TCS declaration in Form 27C.

Form 27C in income tax is a declaration form for non-deduction of TCS by the buyer of goods to its seller. According to Section 206C(1), sellers of specified goods need to collect taxes from the buyer. However, the buyer can avoid paying TCS, if she/he is an Indian resident and can furnish Form 27C declaring that the goods purchased will be used for the purpose of manufacturing, processing, or producing other goods, and not for trade. This declaration needs to be submitted to the seller, who then submits a copy to the relevant authorities on or before the 7th day of the following month.

The TCS declaration form, Form 27C, can be used by buyers if the specified goods are intended for the manufacturing process. In cases where the goods bought for the purpose of trade, buyers cannot use the TCS declaration form to claim tax exemption. The following list of eligible buyers and sellers can submit a TCS declaration via Form 27C of the Income Tax Act :

Eligible Sellers

• Central government
• State government
• Local authorities
• Statutory authorities or corporations
• Hindu Undivided Families (HUF)
• Public and private companies
• Sole proprietorship or partnership firms
• Co-operative societies

Eligible Buyers

• Central government
• State government
• Embassy of High Commission, Consulate, or other trade representatives of a foreign state
• Public sector companies
• Clubs

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As mentioned, Form 27C is applicable on a list of specified goods. This list is formulated by the Central Government, who also reserves the right to revise the list from time-to-time. Currently, TCS is applicable on the following specified goods:

• Indian Made Foreign Liquor (liquor for human consumption)
• Tendu leaves
• Timber acquired through forest lease
• Timber acquired without forest lease
• Quarrying and mining products
• Scrap
• Forest produce other than timber and tendu leaves
• Licensing or leasing of parking facilities or toll plazas

Form 27C, also called the TCS declaration form, is required for determining if a buyer qualifies for TCS exemption. By manually filing Part I of Form 27C, the buyer informs the seller that the transaction in specified goods meets the eligibility parameters for securing a TCS exemption. The TCS declaration form, Form 27C, acts as tangible proof that the purchase of specified goods is for the sole purpose of manufacturing or production.

Prerequisites to File Form 27C

According to the Income Tax Act, the following prerequisites are mandatory when filing the TCS declaration form, Form 27C:

• The seller of the specified goods should have a TAN .
• The seller’s TAN should be active and registered on the e-Filing portal.

According to the Income Tax laws, Form 27C must be filed by the seller on the e-Filing portal . If you are a seller, you must follow these steps to file the TCS declaration form online: Step 1: Log into the Income Tax Department’s e-Filing Portal using your TAN and password. Step 2: Click on ‘Income Tax Forms’ under the ‘e-File’ option. Step 3: Navigate to ‘File Income Tax Forms’ and select ‘Persons not dependent on any Source of Income’ and choose Form 27C Step 4: Fill-in the details of the buyer in Part I and the seller in Part II Step 5: Scan and upload Part I of Form 27C (filled by the buyer) as attachment in Part II Step 6: Once all the details are filled and attachments uploaded, you can submit Form 27C.

Details and Documents Needed to File Form 27C

Sellers are required to enter specific details relating to the sale when filing Form 27C. Additionally, they must also submit a few documents to verify the TCS declaration form. Here’s the list of details and documents needed for Form 27C:

• Details of the buyer including name, status, address, PAN / Aadhar , mobile number, email ID, nature of business, nature of goods, purpose of goods utilisation. This will be included in Part I of Form 27C.
• Date of furnishing the declaration.
• Date on which the payment was made - either debited from the buyer’s account or paid in cash or via a demand draft/cheque.
• Self-certified copies of the declaration made by the buyer in which the person states that the goods purchased will not be used for trading.

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Here’s a few things to keep in mind when submitting the TCS declaration form:

• The buyer must manually fill Part I of Form 27C and submit two duplicates of the same to the seller.
• As per Income Tax laws, the seller bears the responsibility of filing Form 27C on the e-Filing Portal.
• The seller has to submit Form 27C on or before the 7th day of the month following the month when the declaration was received.
• All details mentioned in Part I and Part II of the TCS declaration form must be thoroughly checked before submission. You will need to restart the entire process from scratch if there are errors in details.

Understanding Form 27C of the Income Tax Act is essential for both buyers and sellers of specified goods. As a buyer, knowing all about the TCS declaration form can help you submit a declaration on time and claim a TCS exemption. As a seller, you can ensure declarations are collected and filed within the stipulated time frame to facilitate a TCS exemption for the buyer.Ready to make the most of your money? Start your tax planning journey now!