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.
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.
Under Section 195 - there are two parties involved in TDS payment:
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.
The details of the payer, Payee, challan, and deduction are needed to be filled in Form 27Q. The details are mentioned below:
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.
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.
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.