Form 27Q - TDS Return in Case of Payments to NRI

Based on the Indian Taxation Code, every individual or organization is supposed to pay an amount as the Tax on the earnings before the money is actually credited to their account. The form of tax is called TDS, and with this methodology, the government can formulate earnings through the provisions of the TDS.

It is governed by the rules and regulations formulated by the Central Board of Direct Taxes. The income could be regular or irregular; the Tax would be deducted at the source in both cases.

TDS, as the name says it - is applicable to various sources of income: salary, rent, interest, commission, etc. TDS is deducted by the payer, that is, the person making the payment before the balance amount is given to the receiver.

27Q TDS Return Meaning

Form 27Q is a TDS return or Statement that has the details of Tax Deducted at Source deducted on the payments other than the salary that is made to Non-resident Indian and foreigners.

Form 27Q TDS is needed to furnish on a quarterly basis on or before the due date. Form 27Q has the details of the payments that are made and the TDS deducted on the payments made to the NRI by the deductor.

The Parties Involved in Form 27Q

Under Section 195 - there are two parties involved in TDS payment:

  • Payer
    The payer is an individual, the organization, HUF, and more who makes the payment to an NRI and is responsible for deducting TDS before transferring the amount to the non-resident Indian.

  • Payee
    The Payee is the individual who gets the income. The residential status of the Payee needs to be according to Section 6 of the I.T. Act.

TDS returns under Form 27Q do not include payments like the dividend paid to NRI, salary, and interest income as mentioned under sections 195LB/LC/LD.

Details that Have to be Filled in the Form 27Q

The details of the payer, Payee, challan, and deduction are needed to be filled in Form 27Q. The details are mentioned below:

1) The Payer 

  • PAN Number
  • TAN Number
  • Contact Details
  • Name of the Payer
  • Address
  • Financial Year
  • The Year of Assessment
  • Original Statement or the Receipt Number of the return that is already filed previously in the same quarter

2) The Payee

  • PAN Number
  • Telephone number
  • Email ID
  • Complete Address
  • Contact number
  • Name of the Payee
  • Branch of the division

3) Challan

  • TDS amount
  • BSR Code
  • The collection code
  • The tax deposit date
  • Method of TDS deposition
  • Education Cess amount
  • Amount of Interest
  • The Total Tax Deposit
  • Number of Demand Draft or Cheque

4) Deduction

  • PAN Number
  • Amount of TDS deducted
  • Name of the Tax Collector
  • Amount paid to the Payee

The TIN (Tax Identification Number), country of residence, permanent address, contact information, and email I.D. should all be listed in Form 27Q if the NRI's PAN number is not readily available.

The Process to File TDS with Form 27Q

TDS must be subtracted from payments made to NRIs. The sales agreement formed between the buyer and the NRI seller must specify the specifics of the TDS deducted as well as the rate at which it is deducted.

The TDS must be deducted by the buyer and deposited via a challan on or before the seventh of the following month, as stated above. The payer should also make this deposit. The payer must complete Form 27Q and submit the TDS return before the filing deadline for that quarter after the deposition of TDS.

TDS Certificate

The payer may give the non-resident the Form 16A or a TDS certificate following the filing of the TDS returns. Within a period of 15 days of the deadline for filing TDS returns for the relevant quarter, this TDS certificate must be sent to the non-resident seller.

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