Form 27Q – TDS Return for Payments Made to Non-Residents
Complete guide to Form 27Q filing requirements, due dates, and compliance
What is Form 27Q?
Filing Form 27Q is a statutory requirement for any entity or organisation that deduct tax (TDS) on payments to non-residents or foreign entities that are subject to tax deduction (TDS) in India. These payments include interest (other than interest on securities), royalty, technical service fees, commission or brokerage, contract payments, professional service fees and similar transactions made to non-resident parties. Any other sum (excluding salary) liable to deduct (TDS) under Section 195 and it is applicable even if tax is deducted at a rate prescribed by Double Taxation Avoidance Agreements (DTAA). The form is submitted quarterly and provides essential details to the Income Tax Department to ensure accurate reporting of TDS activity on non-salary payments.
The return includes the details of the TDS deducted along with the challan details for the amount deposit. Form 27Q requires quarterly reporting of deductee-level TDS data along with corresponding challan details. Each entry must be linked with the applicable TDS section and should reflect the nature and amount of the payment.
Popular TDS Sections for Form 27Q
| Section Code | Nature of Payment |
|---|---|
| 195 | Payment of any other sum to a non-resident |
| 194E | Payment to non-resident sportsmen or sports associations |
| 192A | Premature withdrawal from Employees Provident Fund (EPF) |
| 194LB | Interest paid by infrastructure debt funds to non-residents |
| 194LBA | Income from business trust payable to non-resident unit holders |
| 194LC | Interest on loans from a foreign company |
| 194LD | Interest on bonds/Government securities payable to FIIs |
| 196D | Income of Foreign Institutional Investors (FIIs) from securities |
| 196B | Income of Units held by Off-shore Fund |
Note: Section 195 is broad-based and the most commonly used section for Form 27Q as it covers all payments to non-residents not specifically covered under other sections.
What are the details to be filled in Form 27Q?
Form 27Q contains a single annexure used to report all TDS transactions with NRIs, Foreign Companies and other Non-Resident entities. The following information is required:
Deductor Details:
- Name, PAN, TAN, address and other details
Challan Details:
- BSR code, date of deposit, challan serial number, and TDS amount
Deductee Details:
- Name
- PAN (if available)
- Country of Residence
- Date
- Amount of Payment
- TDS Rate
- Tax Amount
- Remarks for lower / no deduction
- Applicable TDS Rate – DTAA or Regular
- Remittance Code
Additional info – if PAN not available and TDS Rate <20%
- Contact No.
- Address
- Tax Identification No.
What are DTAA – TDS Rates and how is it determined?
DTAA refers to Double Taxation Avoidance Agreement which is typically signed between two countries that help in avoiding double taxation on the same income at both countries. India has such DTAA treaties with around 90 countries. Typically, DTAA addresses payments related to Royalty, Dividend, Technical Services and Interest. The scope may cover more such heads.
For taxation purposes, with each country for the specified payment / remittance type, the percentage is defined. Based on the payment made, TDS will accordingly apply.
What is Section 195?
Apart from other sections that is applicable for Form 27Q, Section 195 is highly significant as 99% of all TDS related to NRIs / Foreign entities.
Section 195, is broken up into multiple 'Remittance' types – such as Royalty, Interest, Technical Services, Dividend, etc. For each of these a standard TDS rate is defined. For DTAA cases, for each 'Country' there may be separate taxation rates (TDS). This implies that for DTAA there is matrix of TDS rates for each 'Country' under different 'Remittance' type.
In cases where TDS is not deducted or deducted at a lower rate, valid reasons or exemption codes must be specified.
Details about reasons for lower/no deduction
What are the filing due dates for Form 27Q?
| Quarter | Due Date |
|---|---|
| April – June (Q1) | 31st July |
| July – September (Q2) | 31st October |
| October – December (Q3) | 31st January |
| January – March (Q4) | 31st May |
What is the TDS rate when PAN Is not available?
If the valid PAN is not furnished or is incorrect, tax deduction (TDS) is at a higher rate – typically 20% or as per the provisions of the Income Tax Act.
This rule is enforced under Section 206AA and applies even if the applicable TDS rate is lower. Certain relaxations under Rule 37BC may apply, subject to conditions.
How is interest calculated for late deduction or payment of TDS?
Interest for Non-Compliance:
- Non-deduction of TDS: 1% per month from the date the tax was deductible to the actual date of deduction
- TDS deducted but not deposited: 1.5% per month from the date of deduction to the date of actual deposit
Interest is calculated on a monthly basis, even for part of a month.
What are the Penalties for late filing of Form 27Q?
Late Filing Fee – Section 234E
A fee of ₹200 per day is applicable until the return is filed, capped at the told amount of TDS deducted within the Return.
Fees for Late Filing of TDS Returns
Penalty – Section 271H
Penalty between Rs. 10,000 and Rs. 1,00,000 may be levied for incorrect or delayed filing.
Understanding of Section 271H
Waiver of Penalty under 271H
No penalty if:
- TDS is deposited in full
- Late fee and interest are paid
- Return is filed within 1 year of due date
Prosecution for Non-Deposit of TDS
If deducted TDS is not deposited, the offence is punishable with rigorous imprisonment from 3 months to 7 years, along with a fine.