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

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:

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
• Declaration.

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
• Declaration.

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 “₹”.