Rule 212: Buyer declaration for no TCS on goods for manufacturing (Form 127)
Rule 212 sets the form and procedure for a buyer's declaration under section 394(2) that goods covered by section 394(1) [Table: Sl. Nos. 1 to 5] will be used for manufacturing, processing or producing articles or things and not for trading. The declaration is made in Form No. 127, in duplicate, to the person responsible for collecting tax. That person must send one copy to the jurisdictional Chief Commissioner or Commissioner by the 7th day of the following month.
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Rule 212 - Declaration by a buyer for no collection of tax at source under section 394(2)
(1) A declaration under section 394(2), certifying that the goods being purchased as referred to in section 394(1) [Table: Sl. Nos. 1 to 5] are to be utilised for the purposes of manufacturing, processing or producing articles or things and not for trading purposes, shall be in Form No. 127 and shall be verified in the manner indicated therein.
(2) The declaration referred to in sub-rule (1) shall be furnished in duplicate to the person responsible for collecting tax.
(3) The person referred to in sub-rule (2) shall deliver or cause to be delivered to the Chief Commissioner of Income-tax or the Commissioner of Income-tax, one copy of the declaration referred to in sub-rule (1), on or before the 7th day of the month, succeeding the month in which the declaration is furnished to him.
(4) For the purposes of sub-rule (3), the Chief Commissioner of Income-tax or the Commissioner of Income-tax means the Chief Commissioner of Income-tax or Commissioner of Income-tax to whom the Assessing Officer, having jurisdiction to assess the person referred to in sub-rule (2), is subordinate.
Rule breakdown
The declaration — Rule 212(1) and (2)
The declaration under section 394(2) certifies that goods purchased, of the kinds in section 394(1) [Table: Sl. Nos. 1 to 5], are to be used for manufacturing, processing or producing articles or things and not for trading purposes. It is made in Form No. 127 and verified as the form indicates.
It is furnished in duplicate to the person responsible for collecting tax.
Section 394(1) [Table: Sl. Nos. 1 to 5] of the Act covers sale of alcoholic liquor for human consumption, tendu leaves, timber and specified forest produce, scrap, and coal, lignite or iron ore. Section 394(2) applies to a buyer resident in India and also refers to goods used for generating power.
Copy to the Department — Rule 212(3) and (4)
The collector must deliver one copy of the declaration to the Chief Commissioner of Income-tax or Commissioner of Income-tax on or before the 7th day of the month following the month in which the declaration was furnished.
That authority is the Chief Commissioner or Commissioner to whom the Assessing Officer having jurisdiction over the collector is subordinate.
Key takeaways
Form No. 127 in duplicate
The buyer gives the declaration in duplicate to the collector.
7th of next month
The collector sends one copy to the jurisdictional Chief Commissioner or Commissioner.
Goods in Sl. Nos. 1 to 5 only
The declaration route applies to the goods in section 394(1) [Table: Sl. Nos. 1 to 5].
Practical checklist
- Buyers: give Form No. 127 in duplicate before the sale where possible.
- Sellers: send one copy to the jurisdictional authority by the 7th of the following month.
- Sellers: keep the second copy on record.
Avoid
- Do not use Form No. 127 for goods outside section 394(1) [Table: Sl. Nos. 1 to 5].
- Do not give the declaration for goods intended for trading.
FAQs
Which form does a buyer use to avoid TCS on goods for manufacturing?
Form No. 127, under Rule 212(1).
How many copies are given?
Two. Rule 212(2) requires the declaration in duplicate.
What must the seller do with it?
Deliver one copy to the jurisdictional Chief Commissioner or Commissioner of Income-tax by the 7th day of the following month.
Does the declaration cover goods bought for trading?
No. It certifies that the goods are not for trading purposes.
Glossary
- Form No. 127
- Buyer's declaration under section 394(2).
- Collector
- The person responsible for collecting tax at source.