I have a Acer laptop with windows 7 professional 32 bit and want to replace it with windows 8.1 64 bit. Do i have to format the local c drive ?

NO PC stated, just LAPTOP, (ACER has 1000s of them)
some PCs will not ever run w8 64bit and for sure w10 64bit, but no PC stated, so can't tell you.
no media stated,
you said w8 but MS.com does not sell W8 now.
that implies and not stated, you have DVD disk?
with w8 installer in it, by whom?
w8 comes in 3 forms, unstated, OEM, retail or upgrade or full version.
if you have w8 media tell the helper what the label reads, and MATTER BIG TIME THAT.
we have no idea all what you have, nor what w8 media you have, at all.
your PC has 3 names (acer.com look)
ACER + model series + model number.
like acer Aspire 12345

now I will answer format
yes and no
no if the disk is marked upgrade or full retail .
yes, other disks, some disk only install booted.
some disks while running w7 and you click on the w8 dvd disk setup.exe it sends a warning to the screen it says, cant run this way boot me.
so you boot the media.
then runs setup
then w8 PC setup tells you.
A: updates not support.
B; or tells you I can update this PC, and lets you.
C: or tells you unknown data in this HDD, so can not install at all, that means you must format it.

that is my nut sell simple install instructions
just for the format only question.
find your PCs here, and tell us what PC this IS?

https://www.acer.com/ac/en/US/content/support

The offered a free upgrade w8, but ask them not FixyaHELP NUMBER +1 833 272 0777( sometimes the box the new PC had card inside that shows, go here get free w8 upgraded
some have BIOS Page showing your windows license #
and shows,