Form 127 Income Tax Rules 2026 pdf download and Key points
FORM NO. 127
[See rule 212]
Declaration under section 394(2) to be made by a buyer for obtaining goods without collection of tax
Under the new Income-tax Rules, 2026, Form No. 127 replaces the old Form 27C. It is governed by Section 394(2) of the Income-tax Act, 2025, and Rule 212 of the Income-tax Rules, 2026.
Here are all the key points regarding Form No. 127:
1. Purpose of the Form Form 127 is a declaration furnished by a resident buyer to a seller to obtain specified goods without the collection of Tax Collected at Source (TCS). The buyer uses this form to declare that the goods purchased are intended strictly for manufacturing, processing, producing articles or things, or generating power, and not for trading purposes.
2. Applicability (Who is involved)
- The Buyer (Declarant): Must be a resident buyer purchasing notified goods such as scrap, tendu leaves, timber, coal, lignite, or iron ore. Filing this form is optional and is only required if the buyer seeks a TCS exemption.
- The Seller (Collector): The seller receives this declaration, verifies its completeness and the buyer’s intent, and is then exempt from collecting TCS on that transaction.
3. Timelines and Mode of Filing There is a two-step filing process for this form:
- Step 1 (Buyer to Seller): The buyer must furnish the declaration (Part A) to the seller before or at the time of the transaction. This can be submitted to the seller in either physical paper form or electronically.
- Step 2 (Seller to Department): Once the seller receives the valid declaration, they must upload the details of all such Form 127 declarations to the Income-tax Department’s e-filing portal (using their TAN login) on or before the 7th of the following month. The seller also forwards the declaration to the Chief Commissioner or Commissioner of Income-tax.
4. Structure of the Form The form is divided into two main parts representing the two parties:
- Part A (Particulars of the Buyer): Contains the buyer’s Name, Address, PAN, Residential Status, Contact details, Nature of Business, Nature of the goods purchased, the specific purpose of utilization (manufacturing/power generation), the estimated amount of payment, and a signed declaration.
- Part B (Particulars of the Seller): Filled by the seller upon receiving the form. It contains the seller’s Name, Address, PAN, TAN, Status, Contact details, the date the declaration was furnished, the date of debit/receipt of the amount, and the estimated payment amount.
5. Strict Rules and Consequences
- PAN is Mandatory: The buyer must quote their Permanent Account Number (PAN) in Part A. Without a PAN, the declaration is considered invalid, and the seller is legally obligated to collect TCS at the applicable rate.
- No Amendments or Withdrawals: Once filed, Form 127 cannot be amended or rectified. Furthermore, a declaration once filed cannot be withdrawn.
- Mandatory Reporting by Seller: Even though no tax is collected, the seller is still required to report these exempted transactions in their regular quarterly TCS statement (Form No. 143).
6. Key Updates in the 2026 Rules
- Sections, clauses, and schedules have been updated to align with the new Income-tax Act, 2025.
- The terms “Assessment/Financial/Previous year” have been replaced universally with “Tax year“.
- The currency symbol “Rs.” has been replaced with “₹”.