Form 27BA is the mirror image of Form 26A. Same logic, other side of the transaction: you failed to collect tax at source, but the buyer declared the income and paid the tax anyway.
The first proviso to section 206C(6A) says you are not in default. Form 27BA is how you demonstrate it.
At a glance
- What it does
- Stops a collector being treated as an assessee in default
- Provision
- First proviso to section 206C(6A), read with Rule 37J
- Form
- Form 27BA, with the accountant’s certificate in the annexure
- Who signs
- A Chartered Accountant in practice
- Filed through
- The TRACES portal, by the collector
- Does not remove
- Interest under section 206C(7)
- Under the 2025 Act
- Section 398
Where TCS bites
Tax collection at source applies to sellers of specified goods and to certain transactions — scrap, timber, minerals, motor vehicles above the threshold, overseas tour packages, and remittances under the Liberalised Remittance Scheme, among others.
It catches businesses that do not think of themselves as tax collectors at all. A scrap sale by a manufacturer, or a high-value vehicle sale by a dealer, creates a collection obligation that is easy to overlook until a TRACES default notice arrives.
The four conditions
Relief applies where the buyer or licensee:
- is a resident,
- has furnished a return of income under section 139,
- has taken the relevant amount into account in computing income in that return, and
- has paid the tax due on the income declared.
The collector must then furnish a certificate from an accountant to that effect, in the prescribed form. Rule 37J prescribes Form 27BA.
Interest still runs. Section 206C(7) interest applies from the date the tax was collectible to the date the buyer furnished their return. Form 27BA removes the principal demand, not the interest — and the longer the buyer took to file, the larger that bill.
How it differs from Form 26A
| Basis | Form 26A | Form 27BA |
|---|---|---|
| Applies to | TDS — failure to deduct | TCS — failure to collect |
| Provision | First proviso to section 201(1) | First proviso to section 206C(6A) |
| Rule | Rule 31ACB | Rule 37J |
| Counterparty | The payee or deductee | The buyer or licensee |
| Interest that survives | Section 201(1A) | Section 206C(7) |
| 2025 Act section | Section 398 | Section 398 |
The structure is deliberately parallel, and both are filed through TRACES in much the same way.
The filing sequence
- Identify the transaction — buyer, PAN, amount, the TCS provision engaged, and the year.
- Obtain the buyer’s documents — return acknowledgement, computation showing the amount included, and evidence tax was paid.
- The CA prepares the annexure to Form 27BA certifying the four conditions.
- The collector raises the request on TRACES and tags the CA by membership number.
- The CA completes and digitally signs the annexure, quoting the UDIN.
- The collector approves, and the form reaches the Assessing Officer.
The buyer holds the key. As with Form 26A, the certificate depends entirely on the counterparty’s own filing. In TCS cases this is often harder, because the buyer may be a one-off purchaser with no ongoing relationship with the seller. Start the conversation as soon as the default is identified.
UDIN on Form 27BA
The annexure is a certificate signed by a practising Chartered Accountant, so the Certificates category applies — UDIN mandatory since 1 February 2019.
Sixty calendar days from upload. A form uploaded without a UDIN and left un-updated past that point is treated by the CBDT as invalid with all due consequences of law. Here that means the proviso is not established and the original default demand revives. Revocation closes at 48 hours, and each buyer needs its own certificate and its own UDIN.
See our guide to UDIN generation.
Section 206C under the Income-tax Act, 2025
| Subject | 1961 Act | 2025 Act |
|---|---|---|
| Consequences of failure to deduct or pay, or collect or pay | Sections 201 and 206C | Section 398 |
| Deduction or collection at source, and advance payment | Sections 190, 199, 206C | Section 390 |
The 2025 Act merges the two defaults. Where the 1961 Act dealt with TDS default in section 201 and TCS default in section 206C(6A), the new Act handles both in a single section — 398, “Consequences of failure to deduct or pay or, collect or pay”. Expect the distinction between the two reliefs to become a matter of which limb applies rather than which section.
Frequently asked questions
What is Form 27BA for?
To establish that a buyer has declared the amount and paid the tax, so the collector is not treated as an assessee in default for failing to collect TCS.
Which rule prescribes it?
Rule 37J of the Income-tax Rules, 1962.
How is it different from Form 26A?
Form 26A covers TDS defaults under section 201(1). Form 27BA covers TCS defaults under section 206C(6A). The logic and process are otherwise parallel.
Does the buyer have to be resident?
Yes. The proviso applies where the buyer or licensee is a resident.
Do we still pay interest?
Yes — section 206C(7) interest from the date the tax was collectible to the date the buyer filed their return.
Where is it filed?
On the TRACES portal. The collector initiates and tags the CA, who completes and signs the annexure.
Who signs the annexure?
A Chartered Accountant in practice.
Do we need one form per buyer?
Yes — and a separate UDIN for each certificate.
Which transactions attract TCS?
Specified goods and transactions including scrap, timber, minerals, motor vehicles above the threshold, overseas tour packages and LRS remittances, among others.
Which section replaces 206C(6A) under the new Act?
Section 398, which now covers both TDS and TCS default consequences.
In short
Form 27BA does for TCS what Form 26A does for TDS, and it fails for the same practical reason: the counterparty controls the evidence. If you have a TCS default, identify the buyers and approach them immediately, because their return acknowledgement is the whole case. Then plan for the section 206C(7) interest, which survives the relief.
Micro Advisor assists collectors with TCS defaults, Form 27BA certification and TRACES compliance.
References
Disclaimer. General information, not professional advice. Relief depends on the facts of the transaction and the buyer’s own filing position.