Form explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Form No. 127 is the declaration a buyer gives a seller so that tax is not collected at source on certain goods that the buyer will use for making things, not for trading. It has a buyer's part and a seller's part. This guide explains the form as printed in the Income-tax Rules, 2026 (G.S.R. 198(E), notified on 20 March 2026), read with the amending notifications issued up to 22 September 2026.
Under rule 212, the buyer's declaration that goods under section 394(1) (Table, serial numbers 1 to 5) are to be used for manufacturing, processing or producing articles or things and not for trading is made in Form No. 127, in duplicate, to the person responsible for collecting tax. That person delivers one copy to the Chief Commissioner or Commissioner of Income-tax on or before the 7th day of the month succeeding the month in which the declaration is furnished to him. The form's Notes warn that a false statement is liable to prosecution under section 482.
The section and the rule
Section 394(1) of the Income-tax Act, 2025 requires the seller (or other person in column C of its Table) to collect tax at source on listed receipts. Serial numbers 1 to 5 of the Table cover the sale of alcoholic liquor for human consumption, tendu leaves, timber and other forest produce obtained under a forest lease, scrap, and minerals being coal, lignite or iron ore. The rates are in the Act and in the post on section 394; they are not repeated here.
Rule 212(1) says a declaration under section 394(2), certifying that goods bought as referred to in section 394(1) (Table, serial numbers 1 to 5) are to be used for manufacturing, processing or producing articles or things and not for trading, is in Form No. 127 and is verified as the form indicates. Sub-rule (2) requires it in duplicate to the person responsible for collecting tax. Sub-rule (3) requires that person to deliver one copy to the Chief Commissioner or Commissioner of Income-tax on or before the 7th day of the month succeeding the month in which the declaration is furnished. Sub-rule (4) says this officer is the one to whom the Assessing Officer having jurisdiction over the collector is subordinate. See rules 212 and 221 for the rule.
If you buy these goods and want to be sure the declaration is correct before you give it, our TCS compliance team can help you review the facts and prepare the form.
Part A: particulars of the buyer
| Row | What it asks |
|---|---|
| 1 to 6 | Name, address, PAN, residential status (resident, non-resident, or resident but not ordinarily resident, Note 3), email ID, contact number |
| 7 | Nature of business or occupation |
| 8 | Nature of goods, referred to in section 394(1) (Table, serial numbers 1 to 5) |
| 9 | Purpose of utilisation, to be selected: manufacturing, processing or production of articles or things, or generation of power |
| 10 | Estimated amount of payment for which the declaration is made for no collection of tax |
The declaration says, to the declarant's knowledge and belief, that what is stated is correct, complete and truly stated, that the goods in row 8 will not be used for trading, and that the declarant is resident in India within the meaning of section 6. The declarant gives name, PAN and capacity (for a Hindu undivided family, association of persons, firm or company, the capacity in which the declaration is furnished) and signs.
Row 9 offers "generation of power" next to manufacturing, processing and production. The rule itself speaks only of manufacturing, processing or producing articles or things; the form is printed as it is and the buyer should check how the two fit.
Part B: particulars of the seller
Part B is marked "For use by the person to whom the declaration is furnished".
| Row | What it asks |
|---|---|
| 1 to 7 | Name, address, PAN, Tax Deduction and Collection Account Number, status (ten options in Note 3), email ID, contact number |
| 8 | Date on which the declaration is furnished |
| 9 | Date of debit or receipt of the amount payable by the buyer |
| 10 | Estimated amount of payment for which the declaration is made, as per row 10 of Part A |
The seller's part also records the Chief Commissioner or Commissioner of Income-tax to whom the declaration is forwarded. The person responsible for collecting tax declares, to his or her knowledge and belief, that what is stated is correct, complete and truly stated, giving name, PAN and designation.
Notes
- Notes 1 to 3: names in full; address elements; the statuses.
- Note 4: the declaration is furnished in duplicate.
- Note 5: before signing, the declarant should satisfy himself that the information is true, correct and complete in all respects; a person making a false statement is liable to prosecution under section 482.
- Notes 6 and 7: some information is pre-filled; amounts are in rupees.
The steps in order
| Step | Who | What the text says |
|---|---|---|
| 1 | Buyer | Fills Part A and signs the declaration in duplicate |
| 2 | Seller | Receives both copies and fills Part B |
| 3 | Seller | Delivers one copy to the Chief Commissioner or Commissioner on or before the 7th day of the following month |
An example
Harbour Steel Forgings Private Limited buys iron ore and wants no tax collected on the purchase. Its authorised director fills Part A: row 8 names iron ore (a serial number in section 394(1)), row 9 selects manufacturing, row 10 gives the estimated amount of payment, and the declaration says the ore will not be used for trading. The seller, Dhanbad Minerals Limited, fills Part B, notes the date it received the declaration and the date of debit of the amount, and forwards one copy to the Commissioner on or before the 7th day of the next month.
Need help with a TCS declaration?
An incorrect declaration can expose the buyer to prosecution under the section the Notes name, and the seller must forward its copy on time. Our TCS compliance team can help you check the goods, the purpose and the dates before the form is signed.
Key takeaways
- Form No. 127 is the buyer's declaration under section 394(2) for goods in section 394(1), Table serial numbers 1 to 5.
- It states that the goods are for manufacturing, processing or producing and not for trading.
- It is furnished in duplicate; the seller sends one copy to the Chief Commissioner or Commissioner by the 7th day of the following month.
- Part A is for the buyer and Part B for the seller.
- A false statement is liable to prosecution under section 482, as Note 5 says.
Read next
- Rules 212 and 221: buyer declaration, Form No. 127 and accountant certificate
- Form Nos. 125 and 126: specified senior citizen declaration and certificate of no deduction
- Form Nos. 149 and 150: accountant's certificate for a deductor or collector not to be an assessee in default
- Form No. 143: quarterly statement of tax collected at source
Disclaimer: Based on the Income-tax Rules, 2026 (G.S.R. 198(E), notified on 20 March 2026), read with the amending notifications issued up to 22 September 2026, as consulted on 4 October 2026. It explains the words of the forms and rules only; later notifications, the forms and utilities on the e-filing portal, circulars and the way the tax authorities apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.