Income Tax Form 127: Buyer Declaration to Avoid TCS on Goods for Manufacturing Use

Form No. 127 is a declaration furnished by a resident buyer to a seller under section 394(2) of the Income-tax Act, 2025 to obtain specified goods without collection of tax at source (TCS), provided such goods are intended for manufacturing, processing, production, or generation of power and not for trading purposes. The form contains Part A (buyer’s declaration) and Part B (seller’s confirmation). It is optional but must be submitted on or before the date of transaction to claim exemption from TCS. A valid PAN is mandatory; otherwise, the declaration is invalid and TCS must be collected. Once received, the seller must report the declaration details on the e-filing portal by the 7th of the following month and include such transactions in TCS returns. The form cannot be amended or withdrawn after submission. Proper compliance ensures avoidance of unnecessary TCS and reduces refund claims.

Income Tax Department
Ministry of Finance, Government of India

FAQs on Income Tax Form 127 (Earlier Form No. 27C): Declaration under section 394(2) of Income-tax Act, 2025 to be made by a buyer for obtaining goods without collection of tax

Declaration under section 394(2) of the Income-tax Act, 2025 to be made by a buyer for obtaining goods without collection of tax

Q1. What is Form No. 127 and its purpose?

Ans: Form No. 127 is a declaration furnished by a resident buyer to the seller stating that the goods purchased are intended to be used for manufacturing, processing, or producing articles or things, and not for trading purposes. On receipt of a Form No. 127, the seller is not required to collect Tax Collected at Source (TCS) on sale of specified goods.

Q2. What are the different parts of the Form No. 127?

Ans: Form No. 127 has two parts, viz. Part A and Part B.

Part A is a declaration filed by the Buyer seeking exemption from TCS and it includes his own particulars, nature of goods under consideration, its utilisation and value of such goods.

Part B is a declaration filed by the seller confirming the transaction involving sell of goods without TCS including the value of such goods and the date of declaration filed by the buyer.

Q3. Who is required to furnish Form No. 127?

Ans: Form No. 127 may be furnished by a resident buyer to the seller of scrap, tendu leaves, timber, coal, lignite, iron ore, or any other notified goods for not collecting the tax on purchase of such goods since the goods so purchased will be utilized-for the purpose of manufacturing, processing, or producing articles or things or for generating power and not for trading purposes.

Q4. What is the duty of seller once the declaration has been submitted by the buyer?

Form No. 127 (Earlier Form No. 27C)

Ans: Once the declaration in Form No. 127 is received by the seller, he is required to furnish the particulars of such declarations on the e-filing portal of the Income-tax Department by the 7th day of the following month.

Q5. Is filing of Form No. 127 mandatory?

Ans: No, this form is optional. It is required only if the buyer seeks exemption from TCS on purchase of specified goods.

Q6. Is PAN mandatory for filing of Form No. 127?

Ans: Yes, quoting of PAN is a mandatory requirement for submission of declaration in Part A of Form No. 127 by the declarant. In the absence of PAN, the declaration is invalid and the

seller is required to collect TCS at the applicable rate as per Income-tax Act, 2025.

Q7. What is the time limit for furnishing Form No. 127 to the seller?

Ans: The buyer must furnish the declaration in Form No. 127 to the seller on or before the date of transaction.

Q8. Can Form No. 127 be furnished electronically?

Ans: Part A of the Form No. 127 may be furnished to the seller in physical or electronic form by the buyer. On the other hand, the seller is required to furnish the Form No. 127 to the Income-tax Department through the e-filing portal.

Q9.Can a mistake in Form No. 127 be amended or rectified? Can a declaration once filed be withdrawn?

Ans: The Income-tax Act, 2025 does not provide for any kind of amendment in Form No. 127. Once filed, Form No. 127 cannot be amended. Therefore, it should be filled carefully. Also, declaration once filed cannot be withdrawn.

Q10. Are the sellers required to report the transactions on which tax is not collected as a result of receipt of a declaration?

Ans: Yes. The seller is required to report the details of such transactions in the quarterly TCS statement in Form No. 143.

Guidance Note on Income Tax Form 127 (Earlier Form No. 27C): Declaration under section 394(2) of Income-tax Act, 2025 to be made by a buyer for obtaining goods without collection of tax

Form No. 127: Declaration u/s 394(2) of the Income-tax Act, 2025 to be made by a buyer for obtaining goods without collection of tax

Purpose:

Form No. 127 is a declaration furnished by a buyer to the seller stating that the goods purchased are to be used for manufacturing, processing or producing articles or things, and not for trading purposes, thereby allowing the seller not to collect tax at source (TCS) under Section 394(2) of the Income-tax Act, 2025.

The declaration is governed by Rule 212 of the Income-tax Rules, 2026. Who Should File:

1. Buyer (Declarant)

A buyer who:

• Purchases goods such as scrap, tendu leaves, timber, coal, lignite, iron ore, or any other notified goods, and
• The goods will be used for:

> Manufacturing, processing, or production, or

> Generation of power.

• Goods will not be used for trading purposes

2. Seller (Collector of TCS)

A seller receiving a valid Form No. 127 should:

• Ensure completeness and correctness of the declaration.
• Forward the declaration to the Chief Commissioner / Commissioner of Income-tax as required.

Frequency & Due Dates:

Form No. 127 (Earlier Form No. 27C)

Structure of Form No. 127:

Part A – Particulars of the Buyer (Declarant)

• Name, Address, PAN, Residential Status, Email id and Contact Number
• Nature of Business/Occupation
• Nature of goods purchased under section 394(1)[Table: Sl. No. 1 to 5] of the Income-tax Act, 2025.
• Purpose of utilization of goods (manufacturing/processing/production or Generation of power)
• Estimated amount of payment for which declaration is being made for no collection of tax

Part B – Particulars of the Seller (Person to whom the declaration is furnished)

• Seller’s Name, Address, PAN, TAN, Status (Individual/Company/Firm/etc.), Email id and Contact Number
• Date on which declaration is furnished
• Date of debit or receipt of the amount payable by the buyer
• Estimated amount of payment for which declaration is being made for no collection of tax

Documents/details required to file the Form No. 127:

1. PAN or Aadhaar of Buyer (If PAN not available)

2. PAN/TAN of Seller

3. Details of goods being purchased

4. Proof of business activity (manufacturing/processing/power generation) if seller requests

5. Purchase order / invoice details for internal verification

Process flow of filing Form No. 127:

A. Buyer (Declarant)

1. Check Eligibility

• Goods must be used for manufacturing/processing/production
• Goods must not be used for trading purposes

2. Obtain Form No. 127

• Download from Income-tax Department website or obtain from seller
• Some sellers offer online filing interfaces

3. Fill in the Declaration

• Personal and entity details
• Details of goods purchased and intended use
• Self-declaration confirming non-trading use

4. Submit to Seller

• Provide signed form in paper or electronic form on or before the purchase / payment event

B. Seller (Collector)

1. Receive and Verify

• Validate buyer’s PAN
• Confirm intent of manufacturing/processing/production/generation of power
• Verify completeness and correctness of buyer details

2. Upload Monthly Statement

• File statement of Form No. 127 via the e-filing portal (TAN login) on or before 7th of next month.
• Forward the declaration to the Chief Commissioner / Commissioner of Income-tax.

Outcome of Processed Declarations:

For Sellers

• Accurate validation of declarations
• Reduced liability for incorrect TCS omission
• Lower penalty exposure

For Buyers

• Prevents unnecessary TCS collection
• Reduces refund claims and improves cash flow

Common Changes Made Across Forms:

1. To make Forms system-friendly and enable e-filing and uploading, certain anomalies found due to grouping of Name, Designation, Address and PAN have been separated into different boxes.

2. Assessment / Financial / Previous year or years have been replaced with Tax year or years, wherever appearing in the Form/Annexure.

3. Changes in Sections, Clauses and Schedules have been aligned as per the Income-tax Act, 2025.

4. Currency symbol “Rs.” has been replaced with “₹”.