Section 206C (1) of the Income Tax Act 1961 (“Act”) requires the collection of tax at source (“TCS”) by sellers dealing in the sale of alcoholic liquor for human consumption, tendu leaves, timber, any other forest produce, scrap and minerals, whether coal or lignite or iron-ore.
Sub-section (1A) of the said section provides that the seller shall not collect TCS from a resident buyer who furnishes a declaration to the effect that the specified goods are to be utilised for the purposes of manufacturing, processing, or producing articles or things or for the purposes of generating power and not for trading purposes. The format of the declaration to be furnished by the buyer is provided in Part-I of Form 27C.
Sub-section (1B) of the said section provides that the seller who receives such a declaration from the buyer shall file a copy of such a declaration with the Principal Commissioner / Commissioner, on or before the 7th day of the next following month in which such a declaration is furnished to him by the buyer.
Recently, the Income Tax authorities have released FAQs to clarify the procedure involved in filing Form 27C by the seller.
The FAQ clarifies that:
- It is the responsibility of the seller to file Form 27C on the E-filing portal.
- The buyer is required to manually fill Part-I of Form 27C and submit it to the seller.
- For the filing of Form 27C on the E-filing portal, the seller should have an active TAN and it should be registered on the E-filing portal.
- The procedure to be followed by the seller while filing Form 27C is as under:
- Login to the Income Tax Portal (incometax.gov.in) using the TAN as the user ID.
- Navigate to e-file >> Income Tax Forms >> File Income Tax Forms >> Persons not dependent on any Source of Income (Source of Income not relevant) >> Form 27C.
- Fill the details in “Part I: Details of the Buyers” and “Part II: Details of the Seller, Attachments, and Verification.”
- The seller shall scan, and upload Part-I of the form as received from buyers as attachments under “Part II- Details of seller, Attachments and Verification” of the online form before filing Form 27C.
- Following documents/details are required to file Form 27C:
- Details of the buyers (Name, PAN/Aadhar, Address, Status, Email Id, Mobile No, Nature of Business, Nature of Goods and Purpose of utilizing the Goods) shall be provided for each Buyer
- Date on which a declaration is furnished
- Date of debiting of the amount payable by the buyer to the account of the buyer or receipt of the amount payable from the buyer in cash or by issue of a cheque or draft or by any other mode
- Self-certified copies of the declaration made by the buyers stating that the goods purchased are not to be used for trading purposes.
FMA Comment: The above FAQs provide much-needed procedural clarity to buyers and sellers in fulfilling their statutory obligations w.r.t. filing Form 27C under the extant provisions of Sec. 206C (1A & 1B).