The tax collected from the citizens of a country is the major source of income for any government. To facilitate this, the government levies multiple taxes on the products and services in the country. One such tax levied on the people is the Tax Collected at Source(TCS). The Section 206C(1) of the Income Tax Act, states that this tax is collected from the buyer of goods and services. There are certain conditions in which this tax can be negated using Form 27C.
In this blog, we will take a look at the meaning and use of Form 27C and the other factors associated with the same.
What is Form 27C?
Form 27C which is an accepted document which can help in tax exemptions with regards to tax collected at source and is authorised as such by the Income Tax Department. This form can be used by both buyers and sellers of goods as stated under the Income Tax Act.
Who Needs to Use Form 27C?
The Form 27C is to be used by the individual purchasing the goods only if the goods are meant for production or the further processing of goods. If the goods are being purchased with the purpose of trading, the buyer cannot claim an exemption using Form 27C. Given below are the list of sellers, buyers and goods which fall under the TCS provision:
Accepted Sellers
Given below are some of the admissible sellers as stated in the Income Tax Act:
- Individuals/Hindu Undivided Families
- Central and State Governments
- Local Municipal Authorities
- Statutory authorities
- Companies
- Firms
- Co-operative societies
Accepted Buyers
The buyer procuring the goods in a sale or auction should be from one of the following:
- Central or State Governments
- Public Companies
- Any clubs, like sports clubs, associations, etc.
- Embassies, High Commission, Consulate, and other such trade representatives.
Goods
Given below is the list of goods that may fall in the TCS taxation spectrum:
- Alcohol meant for individual consumption.
- Tendu leaves
- Timber obtained from a forest lease.
- Timber obtained through any other means.
- Licensing or leasing of parking lots, toll plazas, etc.
- Mining or quarrying activities
Form 27C Details
The Form 27C is an approved document that can be used to claim TCS exemptions with respect to the approved list of goods. The buyers are eligible to use this form only if the goods purchased are meant for manufacturing, production, processing, or other such activities.
The form is divided into two sections. Both the buyer and seller have to duly fill the form.
In the first part of the form, you have to provide the buyer’s details like address, PAN number, list of goods, and the purpose of buying the goods.
The second part 2 of the form is for the seller’s details. Details like PAN, TAN, address, and category of the seller have to be mentioned here.
Frequently Asked Questions (FAQs)
How to submit Form 27C?
The buyer is required to submit Form 27C to the Chief Commissioner/Commissioner through a declaration for the tax collected.
When should the tax be deposited?
The deadline for depositing the tax is a week from the last working day of the previous month.
When should the return forms be submitted?
The seller who is responsible for depositing the tax, is required to submit Form 27EQ for each quarter.
What is the relation between Form 27C, Form 27D and Form 13?
All three forms are related to TCS transactions. Form 27D is more of a TDS certificate. Form 13 is regarding the rebate available on this tax. Form 27C is regarding the TCS exemptions of some goods as stated in the Income Tax Act.
