Form No. 127: Buyer's Declaration Under Section 394(2) of the Income-tax Act, 2025 for TCS Exemption on Specified Goods
Overview and Background
With the introduction of the Income-tax Act, 2025, several existing forms and provisions have been restructured and renumbered to align with the updated legislative framework. One such form is Form No. 127, which replaces the earlier Form No. 27C under the Income-tax Rules, 1962. This form plays a critical role in ensuring that resident buyers engaged in manufacturing, processing, or power generation activities are not subjected to unnecessary Tax Collected at Source (TCS) on their purchases of specified goods.
The table below provides a quick reference for the corresponding provisions across the old and new frameworks:
| Parameter | Old Framework | New Framework |
|---|---|---|
| Form Name | Form No. 27C | Form No. 127 |
| Rules Reference | Rule 37C (I.T. Rules, 1962) | Rule 212 (I.T. Rules, 2026) |
| Statutory Provision | Section 206C(1A) (I.T. Act, 1961) |
Section 394(2) (I.T. Act, 2025) |
This guide is presented in a question-and-answer format followed by a detailed guidance note, providing clarity to both buyers and sellers on the purpose, structure, filing process, and compliance obligations associated with Form No. 127.
Frequently Asked Questions (FAQs) on Form No. 127
Q1. What is Form No. 127 and what purpose does it serve?
Form No. 127 is a formal declaration submitted by a resident buyer to the seller, affirming that the goods being procured are intended exclusively for use in manufacturing, processing, or production of articles or things — and not for trading or resale. Upon receiving a valid Form No. 127, the seller is legally relieved from the obligation of collecting Tax Collected at Source (TCS) on the sale of such specified goods.
This declaration mechanism under
Section 394(2)of the Income-tax Act, 2025 is designed to avoid cash flow disruptions for genuine industrial buyers who would otherwise be required to claim TCS refunds.
Q2. What are the structural components of Form No. 127?
Form No. 127 is divided into two distinct parts:
Part A – Buyer's Declaration: This section is completed by the buyer (declarant) and contains the buyer's personal and business details, the category of goods being purchased, the intended use of such goods, and the estimated transaction value for which TCS exemption is being sought.
Part B – Seller's Confirmation: This section is filled in by the seller and contains the seller's particulars, confirmation of the transaction, the declared value of goods sold without TCS collection, and the date on which the buyer's declaration was received.
Q3. Who is eligible to furnish Form No. 127?
Form No. 127 may be submitted by any resident buyer who purchases the following categories of specified goods from a seller:
- Scrap
- Tendu leaves
- Timber
- Coal
- Lignite
- Iron ore
- Any other goods notified by the Central Government
The key eligibility condition is that the goods so purchased must be used for any of the following purposes:
- Manufacturing, processing, or production of articles or things
- Generation of power
Important: The goods must not be procured for trading purposes. If the buyer intends to resell the goods, Form No. 127 cannot be validly furnished.
Q4. What obligation does the seller have after receiving a declaration in Form No. 127?
Once a valid Form No. 127 is received from the buyer, the seller is required to:
- Upload the particulars of all such declarations received during the month onto the e-filing portal of the Income-tax Department
- This submission must be completed on or before the 7th day of the month immediately following the month in which the declaration was received
Failure to comply with this obligation may expose the seller to penalties and compliance risks under the Income-tax Act, 2025.