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Form 27Q: TDS Return Detailing the Payments Made to Non-Residents Other Than Salary
According to the Income Tax Law, every individual or organization has to pay Tax Deducted at Source (TDS). These are the taxes on their earnings before the money goes into their account. TDS is deducted by the payer before giving the balance amount to the recipient. The Central Board of Direct Taxes (CBDT) issues the rules and regulations to run this system. The income taxed under TDS may be regular or irregular and from diverse sources, such as income, salary, rent, commission, interest, etc. In this article, we will provide a comprehensive overview of TDS return on payments to NRIs with Form 27Q.
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Form 27Q
Form 27Q is the statement of TDS return for the non-salary payments made to non-resident Indians (NRIs) and foreigners. While making such payments to these individuals, Indian payers must furnish Form 27Q every quarter before the due date. It includes details of payments and TDS deducted on them made to NRI by the deductor. As per Section 195, a TDS payment involves the following party:
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A payer is an individual, HUF, or organization making the payment to the NRI and responsible for deducting TDS before sending the payment to them
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A payee is the individual receiving the income, with their residential status according to Section 6 of the IT Act
Under Form 27Q, TDS returns do not include payments like salary, dividend, and interest paid to NRI as mentioned under sections 195LB/LC/LD.
Details in Form 27Q
Here are the details to be included in Form 27Q:
Entity | Details |
|---|---|
Deductor | PAN, TAN, Name, Address, Contact Details, Financial Year, Year of Assessment, an Original Statement or Receipt Number of the return already filed previously in the same quarter |
Payee | Name, PAN, Address and contact details, branch of the division for collection |
Challan | Challan serial number, BSR Code, TDS, Surcharge, Education Cess paid, Amount of Interest, total of tax deposit, the number of Demand Draft or Cheque, collection code, tax deposit date, method of TDS deposition |
Deduction | Deductee name, PAN, Amount paid or credited, TDS deducted and deposited |
In case of non-availability of the PAN number of the NRI, details such as country of residence, permanent address, contact details, TIN (Tax Identification Number), and email ID should be mentioned in Form 27Q.
What are the Rates for Deducting TDS?
TDS is deducted from the entire amount being paid. The final amount is increased because of the addition of education cess and surcharge. The rates at which TDS is levied corresponding to the reason for payment are as follows:
Section | Payment Type | TDS Rate |
|---|---|---|
194E | Payment to an NRI sportsman or a sports association | 20% |
194LB | Payment as interest on the infrastructure debt fund | 5% |
194LC | Payment as interest by any Indian company or trust for the borrowing in foreign currency as long-term bonds or a loan | 5% |
195 | Payment on the investment by an NRI citizen | 5% |
195 | Payment on the investment by an NRI citizen | 20% |
Payment to non-resident Indian citizens for investments in assets besides those mentioned among the specified assets in the form of long-term capital | 10% | |
Payment to non-resident Indian citizens for unlisted securities and shares of a non-public company | 10% | |
Payment to non-resident Indian citizens forming their income through long-term capital gains under section 112A | 10% | |
Payment to non-resident Indian citizens forming their income through short-term capital gains under section 111A | 15% | |
Any other payment to non-resident Indian citizens forming a part of their income as long-term capital gains. | 20% | |
Payment as interest by an Indian company or the government of India on the amount borrowed as debt or loan | 20% | |
Royalty to the non-resident Indian citizen by an Indian company or the Indian government for the transfer of copyright or similar agreement. | 10% | |
Fees availing technical services by an Indian company or the Indian Government | 10% | |
Any other form of payment | 30% | |
196B | Payment to an offshore fund | 10% |
196C | Payment to non-resident Indians as Indian Company’s Shares or foreign currency bonds | 10% |
196D | Payment to foreign investors in the form of securities | 20% |
Time Schedule for Form 27Q
The due date for TDS payments deducted from salary monthly is the seventh of the next month. The due date for filing the Form 27Q quarterly is as follows:
Entity | Details |
|---|---|
Deductor | PAN, TAN, Name, Address, Contact Details, Financial Year, Year of Assessment, an Original Statement or Receipt Number of the return already filed previously in the same quarter |
Payee | Name, PAN, Address and contact details, branch of the division for collection |
Challan | Challan serial number, BSR Code, TDS, Surcharge, Education Cess paid, Amount of Interest, total of tax deposit, the number of Demand Draft or Cheque, collection code, tax deposit date, method of TDS deposition |
Deduction | Deductee name, PAN, Amount paid or credited, TDS deducted and deposited |
Classification of Form 27Q
Form 27Q has three main sections, including the statistics of the voucher, payment details, and deduction details.
Statistics of Voucher
These include transaction records and categorize them into transactions (correct, adequate, and incorrect).
Included Transactions
These are considered correct and are called ‘Included’. The details include booking entries with or without TDS deduction, TDS deduction entries, adjustment entries of TDS made towards government entities, advance payment made, TDS deductions for escalation and reductions, and TDS reversal accounting entries.
Excluded Transactions
As the name suggests, these are the transactions not requiring TDS deduction. These include the entries where TDS is not applicable. Entries include voucher types like inventory vouchers, Contra, payment vouchers, sales orders, debit notes, credit notes, purchase notes, payroll vouchers, and optional vouchers.
1. Uncertain Transactions
Uncertain transactions are not eligible for included or excluded transactions. These are the ones with insufficient information in the Masters and Transactions parts.
2. Payment details
In this section, there are the details of TDS payments available in the records up to the latest entry. These include the entries that are relevant to the present TDS return filing period. Entries that are not of this period or not related to TDS payment are not included here.
TDS deduction under form 27Q
When a payment is made to an NRI, TDS needs to be deducted. The sales deed between the buyer and the NRI seller has to include the particulars of the TDS subtracted and the rate at which it is deducted. It should be deducted by the buyer and deposited by a challan on or before the seventh of the subsequent month. After depositing the TDS, the payer must fill out Form 27Q and submit the return before the due date of filing for a specific quarter.
How to download Form 27Q
When filing the TDS return with form 27Q, an individual or the organization can download and save the form from the official TIN website. It can be saved for future use as well. Here are the steps to download the form:
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Access the website https://www.tin-nsdl.com/
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Go to the 'downloads tab'
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Choose quarterly return
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You will be directed to another page, where you can select the form you want to download
Filing TDS returns with Form 27Q
To prepare the TDS return, one has to use the NSDL e-Gov e-TDS/TCS Return Preparation Utility (RPU) available for free download from the TIN website. Once prepared, you can submit the return to any of the TIN FCs established by NSDL e-Gov. After filing the return, it is possible to check its status on the NSDL website. To open the return status, you must enter your PAN and the token number on the website or the provisional receipt number.
Late filing of TDS returns with form 27Q
Failing to Deduct TDS
Failing to deduct the TDS on time makes the taxpayer liable to pay 1% interest levied on a monthly basis or for the days between the due date and the actual date of deduction. The interest rate is 1.5% per month or part of the month between the actual date of deduction and the date of deposition if the TDS is not deposited.
Late filing of 27Q
According to Section 234E, late filing of Form 27Q leads to a minimum penalty of Rs. 200 per day until the date of filing. The maximum penalty may be the amount equal to the TDS deducted. As per 271H, the non-filing of Form 27Q can lead to a penalty of Rs. 10,000 to Rs. 1,00,000. This section applies if:
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The TDS is deposited to the government
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Also, the interest and fees of late filing are deposited
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Return is filed before 1 year is completed from the due date
TDS Certificate
After filing the TDS returns, the payer can issue a TDS certificate or the Form 16A to the NRI. It has to be delivered to them within 15 days from the last date of filing for the respective quarter. Filing returns for the payments made to NIRs can be a challenging task. However, you can seek guidance from an expert to make it a seamless process. The last date for filing returns is 31st July, so you must get your TDS certificate ready on time.
Frequently asked questions
Q
What is Form 27Q?
A
Form 27Q is essentially a statement of tax deduction under Section 200(3) of the IT Act, 1961. It reports TDS deductions for payments made to NRIs and foreign entities.
Q
Who is required to fill out Form 27Q?
A
Any individual or organization deducting TDS from payments done to NRIs has to file Form 27Q.
Q
What is Form 27Q for the sale of property?
A
Form 27Q is the statement of the TDS return for the non-salary payments made to an NRI. This includes payments for the sale of a property owned by an NRI because it does not come under the category of salaries.
Q
How to file 27Q without PAN?
A
It is possible to file Form 27Q without the PAN number of the NRI in case it is not available. Details such as TIN (Tax Identification Number), permanent address, contact details, country of residence, and email ID can be mentioned in Form 27Q in case of non-availability of PAN.
Q
What is the purpose of Form 27Q?
A
Form 27Q includes the details of the payments made and the TDS deducted on the payments given to an NRI by the deductor.
Q
Where should you file TDS/TCS returns?
A
You can file TDS/TCS returns by logging in to the Traces site. Alternatively, you can visit TIN Facilitation Centers managed by NSDL e-Gov.
Prachi Jain
Chartered Accountant
Prachi Jain is a Chartered Accountant with a passion for simplifying finance and tax-related matters through her insightful and informative blogs. With a background in finance and a deep understanding of tax regulations, Prachi has established herself as a trusted source of financial wisdom. Prachi is committed to empowering her readers with the knowledge they need to make informed financial decisions. Her expertise and dedication shine through in every blog post, helping her audience navigate the intricacies of finance and taxes with confidence. Follow Prachi Jain's blog for practical insights and guidance on managing your finances effectively.
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