Form 27Q: TDS Return on Payments to NRIs

What is TDS Return?

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 & TAN number of the employee & the employer, sequentially.
• TDS challan information
• Details about the TDS paid

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27Q TDS Return Meaning

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 every quarter before the due date. Non-resident Indians who do not hold a PAN card are required to pay TDS at a higher rate of 20%. Form 27Q comprises of the details in regard to the payments made to a non-resident in that quarter by the payer.

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Parties Involved in TDS Payment

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. In other words, a payee is the person whose TDS is deducted.

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

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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:

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.

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Non-resident Indians (NRIs) can apply for a lower TDS rate or complete exemption

If you're an NRI receiving income in India subject to TDS (Tax Deducted at Source) under Section 195, you can request a reduced TDS rate or even no TDS deduction at all. To do this, you'll need to submit Form 13 to the assessing officer.

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Details Required to be Filled in Form 27Q

The details of the payer, payee, challan, and deduction are required to be filled in Form 27Q. The details are 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 Drafts or Cheques (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.

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27Q TDS Return Due Date

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The Classification of Form 27Q

Form 27Q consists of three main sections, which include the statistics of the voucher, payment details, and 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 a TDS deduction and, hence, will be excluded when 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 a 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 that are not TDS payment entries will not be mentioned here. This area will show the payments made against included and excluded transactions.

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Procedure for TDS Deduction Under Form 27Q

TDS needs to be deducted while the payment is made to an NRI. The particulars of the TDS subtracted, as well as the rate at which it is deducted, have 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 made 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.

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How to Fill Form 27Q Online

You cannot directly fill out Form 27Q online. However, you can use a downloadable tool to prepare the form electronically and then submit it. Here's how to prepare Form 27Q for submission:

1. Download the e-TDS/TCS Return Preparation Utility (RPU): This utility is free to download from the TIN website https://www.protean-tinpan.com/services/etds-etcs/etds-rpu.html.
2. Prepare Form 27Q in the RPU: The RPU will guide you through filling out the form electronically. You'll need information about the payer (you), the payee (the NRI), the challan details (tax payment challan), and the tax deducted.
3. Validate the Form: Once filled, use the File Validation Utility (FVU) provided by the RPU to ensure there are no errors in your form.
4. Submit the Form: The prepared form (in a specific format) needs to be submitted to a TIN Facilitation Center (TIN-FC) 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.

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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 a minimum of 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 the late filing have already been deposited
• Return is filed before the completion of 1 year from the due date.

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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.

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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.

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