Taxation is the central facet of the economy of India. A collection of taxes at various levels of purchases permits the culpability of the products and services brought helping in generating revenue for the Indian government.
There are numerous taxes imposed on goods and services termed differently. One such tax is Tax collected at source (TCS). Specified in Section 206C (1) of IT Act, this tax is collected from the customer of goods.
TCS includes taxation on the sale of goods. However, under some conditions, this tax is neglected for which Form 27C comes into existence.
The Form 27C is document authorised by income tax department of India, which helps one get an exemption from tax collected at source. This is a form used by the buyers and sellers for goods applicable for exemption by the income tax act.
The buyer of the goods intending for manufacture, production or further processing of the same into articles can use the same. If goods are bought for trading, the seller will not get any tax exemption.
The vendors that deal in form 27C include central and state government, local authorities, statutory corporations, forms, companies, co-operative societies, and HUF U/S 44AB.
Buyers on the other hand who can deal in form 27C are any entity who gets the goods in a sale, tender, auction or any other mode excluding the private sector companies, central and state government, the embassy of high commission, clubs, or a trade representation of a foreign state.
The goods covered by this form are alcoholic liquor for human consumption, scrap material during manufacturing or mechanical working, licensing a parking lot, toll plaza, mining and quarrying, timber procured for forest lease or not for forest lease, tendu leaves, or any other forest produce.
The form 27D relates to TCS while form 13 refers to the rebate of the same. Form 27C specifies the total exemption in TCS. The buyer has to submit a duplicate form that declares the fact that goods are meant for manufacturing or processing and not trading.
The declaration will be submitted to the seller or anyone collecting tax which will further present the copy to the authorities concerned before the 7th day of the subsequent month.