TDS Returns

A TDS return is a quarterly statement of the tax paid on the income during that particular quarter. The statement is submitted by the deductor to the Income Tax Department of India. The TDS return includes details like

  • PAN number of both the parties
  • TDS challan information
  • Details about the TDS paid
The due dates of filing the TDS of the year are as follows:
Quarter 1 July 31
Quarter 2 October 31
Quarter 3 January 31
Quarter 4 May 31

Because the liability of paying TDS is upon the payer, the deductor needs to deduct TDS, file the returns and submit the supporting documents every quarter on time. The type of TDS form depends upon the nature of income for which the deductor is filing the return. There are 4 types of TDS return forms – 24Q, 26Q, 27Q and 27EQ.


Form 27Q

Form 27Q is the statement of the return for the non-salary payments done to an NRI. The Indian buyer is required to submit the form 27Q at every quarter before the due date. As per the Financial Budget of 2016, on-Resident Indians who do not have a PAN number are not supposed to pay a higher rate of TDS. Form 27Q comprises of the details in regards to the payments made to a non-resident in that quarter by the payer.


Parties involved

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

  • Payer: The payer is an individual, organization, HUF, etc. who makes the payment to the NRI and is responsible for deducting TDS before transferring the amount to the Non-Resident Indian.
  • Payee: The payee is the individual who receives the income. The residential status of the payee should be according to Section 6 of the I.T Act.

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


Rates for deducting TDS

TDS is deducted on 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

Rate of TDS

194E Payment made to Sports association or an NRI sportsman 20%
194LB Payment made as to interest on the infrastructure debt fund 5%
194LC Payment made as to interest by any Indian company or trust for the money borrowed in foreign currency as a loan or long-term bonds 5%
195 Payment made on the investment made by a non-resident Indian citizen 20%
  Payment made to non-resident Indian citizen for investments on assets other than mentioned among the specified assets in the form of long-term capital 10%
  Payment made to non-resident Indian citizen for unlisted shares and securities of a non-public company 10%
  Payment made to non-resident Indian citizen which forms their income through long-term capital gains as mentioned under section 112A 10%
  Payment made to non-resident Indian citizen which forms their income through short-term capital gains as mentioned under section 111A 15%
  Any other payment made to non-resident Indian citizen which forms a part of their income as long-term capital gains. 20%
  Payment made in the form of interest by the government of India or an Indian company on the amount borrowed as loan or debt 20%
  Royalty paid to the non-resident Indian citizen by the Indian government or Indian company for the transfer of copyright or other such agreement. 10%
  Fees paid for availing technical services by the Indian Government or Indian company 10%
  Any other form of payment 30%
196B Payment made to an offshore fund 10%
196C Payment to non-resident Indian citizen in the form of Indian Company’s Shares or foreign currency bonds 10%
196D Payment made to foreign investors in the form of securities 20%

The exchange rate for TDS return is set by the RBI (Reserve Bank of India). The exchange rate of that day is considered on the day of deduction.


Details Required to be filled in Form 27Q

The details of the payer, payee, challan, and deduction are required to be filled in the Form 27Q. The details are as given below:

  • The Payer
    1. Name of the Payer
    2. Address
    3. PAN Number
    4. TAN Number
    5. Contact Details
    6. Financial Year
    7. The Year of Assessment
    8. An Original Statement or Receipt Number of the return already filed previously in the same quarter
  • The Payee
    1. Name of the Payee
    2. The branch of the division for collection
    3. Complete Address
    4. Contact number
    5. PAN Number
    6. Telephone number
    7. Email ID
  • Challan
    1. The Serial number of Challan
    2. TDS amount
    3. Surcharge amount
    4. BSR Code
    5. Education Cess amount
    6. Amount of Interest
    7. The Total of Tax Deposit
    8. The number of Demand Draft or Cheque (if applicable)
    9. The collection code
    10. The tax deposit date
    11. Method of TDS deposition
  • Deduction
    1. Name of the Tax Collector
    2. PAN Number
    3. Amount paid to the Payee
    4. Amount of TDS deducted

If the PAN number of the NRI is not available, then the details such as TIN (Tax Identification Number), country of residence, permanent address, contact details, and email ID should be mentioned in Form 27Q.


Time Schedule for Form 27Q

Quarter Duration of Quarter Due Date of Quarter
Quarter 1 April 1 to June 30 July 31
Quarter 2 July 1 to September 30 October 31
Quarter 3 October 1 to December 31 January 31
Quarter 4 January 1 to March 31 May 31

The Classification of Form 27Q

Form 27Q consists of three main sections, which include the statistics of the voucher, payment details, and the deduction details. Statistics of Voucher:

The statistics of the voucher, records all the transactions and categorizes them into correct transactions, adequate transactions, and incorrect transactions.

Included Transactions

These transactions are considered correct and form a part of the form 27Q. These transactions as are called ‘Included’ for creating form 27Q.

  • Booking entries with or without TDS deduction
  • Entries of TDS deduction
  • Advance payment made
  • Adjustment entries of TDS made towards government entities
  • TDS reversals accounting entries
  • TDS deductions for escalation and reductions

Excluded Transactions

The transactions mentioned below do not require TDS deduction and hence will be excluded while generating the form.

  • Entries where TDS is not applicable
  • Entries made while using the given below voucher types
    1. Inventory vouchers
    2. Contra
    3. Sales order
    4. Payment voucher
    5. Debit note
    6. Purchase note
    7. Credit note
    8. Payroll vouchers
    9. Optional vouchers

Uncertain Transactions

Uncertain transactions are transactions which are not eligible for either included or excluded transactions. The transactions in which Masters and Transactions parts have insufficient information filled in are listed as uncertain transactions.

1. Deduction details

The deduction details section showcases the type of deduction under which all included transactions are categorized. They are classified as follows:

  • Deduction made at Normal Rate
  • Lower Rated Taxable Expense
  • Deduction made at Higher Rate
  • Under Limit of Exemption
  • Taxable Expense at Zero Rate
  • Except instead of PAN Available

This section categorizes the tax deducted, deductible tax and assessable value in the above categories and mentions them in the form.

2. Payment details

This section of the form contains all the details of TDS payments that are available in the records up to the most recent entry. It contains only those entries which are relevant to the present period of TDS return filing. Any other entries that are not of this period or those which are not TDS payment entries will not be mentioned here. This area will show the payments made against included and excluded transactions.


Procedure forTDS deduction under form 27Q

TDS needs to be deducted while the payment is done to an NRI. The particulars of the TDS subtracted as well as the rate at which it is deducted has to be stated in the sales deed made between the buyer and the NRI seller. As cited above, the TDS should be deducted by the buyer and is then deposited by a challan on or before the 7th of the next month. This deposit should also be done by the payer. After the deposition of TDS, the payer needs to fill form 27Q and submit the TDS return before the due date of filing for that quarter.


Filing TDS returns with Form 27Q

The TDS return can be prepared only by using the NSDL e-Gov e-TDS/TCS Return Preparation Utility (RPU) which is available for free download from the website of TIN. The return, once prepared, needs to be submitted to any of the TIN FCs which have been established by NSDL e-Gov.

Once the return is filed, the taxpayer can check the status of the TDS return on the website of NSDL. For opening the return status, the taxpayer needs to enter PAN and the provisional receipt number or the token number on the website.


Late filing of TDS returns with form 27Q

TDS Deduction

If the TDS is not deducted on time, then 1% interest needs to be paid by the taxpayer. This 1% interest is levied on a monthly basis or for the days spent between the due date of deduction and the actual date of deduction.

Similarly, if the TDS is not deposited, interest at the rate of 1.5% per month or part of the month spent between the actual date of deduction and the actual date of deposition is levied.

Late filing of 27Q

Under section 234E, late filing of form 27Q attracts a minimum penalty of Rs. 200/day until the date of filing and a maximum penalty of an amount equal to the TDS deducted.

Under section 271H, the non-filing of form 27Q attracts a penalty of minimum Rs. 10,000 and a maximum of Rs. 1,00,000.

Under section 271H, no penalty is levied if the following conditions are met:
  • The TDS is deposited to the government
  • The interest and fees of late filing are already deposited
  • Return is filed before the completion of 1 year from the due date.

How to download Form 27Q

An individual or the organization filing the TDS return with form 27Q can download and save the form for future use. It can be done from the official TIN website - https://www.tin-nsdl.com/.

On the website, go to the 'downloads tab' and choose quarterly returns. From there you will be directed to another page. From this page, select the form you want to download.


TDS Certificate

After the TDS returns are filed, the payer can issue the Form 16A or a TDS certificate to the non-resident. This TDS certificate needs to be delivered to the non-resident seller within 15 days from the last date of filing TDS returns for the respective quarter.


Conclusions

Hopefully, the information given above will help you understand the Form 27Q properly and will help you get it done without making any mistakes. No matter what, filing TDS return on time is very important. As a responsible citizen who wants to contribute to the growth and development of India, you must make sure to pay your taxes on time. After all, a responsible citizen is what our country deserves.

Frequently Asked Questions

Q- Are the online forms used for e-TDS return same as the physical copies?

Ans. Yes the form for online and offline returns are the same.


Q- Where should an individual go to file TDS/TCS returns?

Ans. Taxpayer need to login to the Traces site or visit TIN Facilitation Centers, which are managed by NSDL e-Gov.


Q- What are the costs to be incurred for filing e-TDS/TCS return with TIN-FCs?

Ans. No. of deductee records in e-TDS/TCS return Upload charges (exclusive of GST) * GST as applicable
Returns having up to 100 records ?42.37
Returns having 101 to 1000 records ?178.00
Returns having more than 1000 records ?578.50


Q- What happens if the PANs of the deductees are not available?

Ans. All transactions liable for TDS will have tax deduction at a higher percent of 20% if the Permanent Account Number (PAN) of the payees is not available.


Q- What should a deductor do if he or she finds it difficult to file e-TDS return?

Ans. It can be filed manually.


CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.