Rule 212 of the Income-tax Rules, 2026

Where this rule sits

Rule 212 gives effect to Section 394 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.

← Rule 211  ·  Rule 213 →

What this rule does

Sub-rule (1) prescribes the declaration under section 394(2). A buyer's declaration 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 in that Form.

Sub-rule (2) requires the declaration to be furnished in duplicate to the person responsible for collecting tax. Sub-rule (3) requires that person to deliver, or cause to be delivered, one copy of the declaration to the Chief Commissioner of Income-tax or the Commissioner of Income-tax on or before the 7th day of the month succeeding the month in which the declaration is furnished to him. Sub-rule (4) identifies which Chief Commissioner or Commissioner that is: the one to whom the Assessing Officer having jurisdiction to assess the collector is subordinate.

Why it is there

Section 394 collects tax at source on the sale of the goods listed in its Table, on the assumption that the buyer is trading in them. Section 394(2) lifts the collection where the buyer is a manufacturer using the goods as inputs, but that exemption rests on a fact only the buyer knows. The rule turns that fact into a verified declaration in a fixed form, gives the collector a document to justify not collecting, and routes a copy to the Department within a short deadline so the claim can be checked against the buyer's own affairs.

Who it applies to

• A buyer of goods referred to in section 394(1) [Table: Sl. Nos. 1 to 5] who will use them for manufacturing, processing or producing articles or things
• The person responsible for collecting tax, who receives the declaration and forwards a copy
• The Chief Commissioner or Commissioner of Income-tax to whom the Assessing Officer having jurisdiction over the collector is subordinate

The figures, and what each one turns on

The forms it prescribes

• Form No. 127 — buyer's declaration under section 394(2) that the goods are to be utilised for manufacturing, processing or producing articles or things and not for trading purposes

What this means in practice

The declaration is narrow in two ways. It certifies a use — manufacturing, processing or producing articles or things — and it certifies a negative, that the purchase is not for trading purposes, so a buyer who intends to resell part of the consignment is not making a true declaration merely because he manufactures with the rest. It also covers only the goods in section 394(1) [Table: Sl. Nos. 1 to 5]. The obligations then split: the buyer's is to furnish Form No. 127 in duplicate, verified as the Form indicates, and the collector's is a separate monthly obligation to deliver one copy by the 7th of the following month to a specifically identified authority, the one to whom his own Assessing Officer is subordinate. A collector who takes the declaration and does not forward it has answered the first requirement and not the second.

An example

A manufacturer buys goods of a kind listed in section 394(1) [Table: Sl. No. 3] as inputs for its plant and furnishes Form No. 127 in duplicate to the seller in April, verified in the manner the Form indicates. The seller does not collect tax at source on that sale, and must deliver one copy of the declaration on or before the 7th of May to the Chief Commissioner or Commissioner to whom the Assessing Officer assessing the seller is subordinate.

Where you meet this rule

The buyer meets it as the Form No. 127 he signs at the time of purchase; the collector meets it as the copy he must send by the 7th of the following month, and as the document he produces when asked why tax was not collected on that sale.

The words themselves

What people get wrong

• Furnishing a single copy. Rule 212(2) requires the declaration in duplicate to the person responsible for collecting tax.
• Giving the declaration where part of the goods will be resold. Rule 212(1) requires certification that the goods are not for trading purposes.
• Treating receipt of the declaration as the end of the collector's duty. Rule 212(3) requires one copy to be delivered by the 7th day of the succeeding month.
• Sending the copy to the buyer's Commissioner or to the Assessing Officer. Rule 212(4) identifies the Chief Commissioner or Commissioner to whom the Assessing Officer having jurisdiction to assess the collector is subordinate.
• Using Form No. 127 for goods outside the listed entries. Rule 212(1) confines it to goods referred to in section 394(1) [Table: Sl. Nos. 1 to 5].