Form 27C is a document that can help in getting tax exemption from the tax deducted at the source. Both buyers and sellers can use this for all the goods specified in the Income Tax Act.
Tax is a central aspect to the economy of India. Collection of tax at various levels of purchase and procurement allows for accountability of the services and products availed and helps in revenue generation for the government of India. There are multiple taxes levied on products and services and every one of them is termed differently. One such tax is Tax Collected at Source (TCS). As specified in Section 206C (1) of the Income Tax Act, tax is to be collected from the buyer of goods. Tax Collected at Source thus includes taxation done on the sale of goods. Under a few specific conditions, such tax can be negated and Form 27C exists for the same purpose.
What is Form 27C?
Form 27C is a admissible document which can aid in exemption of tax collected at source (TCS) and Authorised by the Income Tax Department of India. Form 27C can be used by sellers and buyers for goods as specified by the Income Tax Act.
Who can Use Form 27C?
Form 27C can be utilised by the buyer of goods only if the goods that are being purchased are intended for production, manufacturing or processing of further goods, articles or things. In case the goods are being purchased for the sake of trading, Form 27C cannot be used for the sake of tax exemption. The admissible buyers, sellers and list of goods which might come under the provision of tax collected at source and can deal with Form 27C are mentioned as below:
- Central Government
- State Government
- Local authorities
- Statutory corporation or authorities
- Co-operative societies
- Individual or Hindu Undivided Family under Section 44AB
Any entity obtaining goods or rights to receive goods in any sale, auction, tender or any other mode, excluding the following)
- Public Sector Companies
- Central Government
- State Government
- Embassy of High Commission, Consulate and other Trade Representation of a Foreign State
- Any Club, such as social clubs, sports clubs and the like
- Alcoholic liquor for human consumption (also Indian Made Foreign Liquor (IMFL))
- Tendu leaves
- Timber procured through a forest lease
- Timber procured through any means other than a forest lease
- Any other forest produce except Timber or Tendu
- Scrap (Waste and scrap from the manufacture or mechanical working of materials, usable as such because of breakage, cutting up, wear and tear or other reasons)
- Licensing or leasing of Parking Lot, Toll Plaza
- Mining and quarrying
Tax Collected at Source Forms
Form 27D relates to the certificate of collection of tax at source, while Form 13 allows for a rebate on the same tax. Form 27C allows for a total exemption in the tax collected at source and has to be submitted by the buyer in a duplicate form through a declaration of the fact if the goods are meant for the purpose of manufacturing and/or processing and not trading. This declaration is to be submitted to the seller (the person collecting the tax), who in turn, has to furnish the copy to the authorities concerned on or before the seventh day of the following month.
TCS Form 27C Details and Documents Required
Form 27C is a pretty simple document and has two sections that need to be duly filled in and signed by the buyer and the seller.
Part I of the document needs to be filled in with the details of the buyer, complete with address details, PAN number, list of goods being procured and the purpose towards which the purchase is intended for.
Part II of the document needs to be filled in with details of the seller, including address details, PAN and TAN numbers and category of seller as mentioned in the document itself.
Apart from the necessary government authorised identity numbers such as PAN and TAN, sale receipt of the goods in question also needs to be furnished.