Form 27Q – NRI TDS Returns

Payer and Payee

The responsibility of deducting TDS falls on the payer, regardless of their status, such as HUF, individual, or firm, when making payments to a non-resident. The payee, in this case, is a non-resident whose residential status is determined as per the Income Tax Act.

Payments Covered under Form 27Q

Every deductor who disburses payments of a specific nature to Non-Resident Indians must deduct TDS from such payments at the prescribed rate. The following are the types of payments covered in Form 27Q:

• Payments to non-resident athletes and sports associations
• Other payments due to Non-Residents
• Earnings of Foreign Institutional Investors from securities
• Earnings related to Units held by Non-Residents
• Interest income on individual bonds and Government Securities
• Payments concerning Units to an Offshore Fund
• Interest income from infrastructure Debt funds
• Returns from Foreign Currency Bonds or Shares of Indian Companies payable to Non-Residents
• Interest income from Indian companies engaged in specific business activities
• Disbursement of the accrued balance of the provident fund, subject to taxation in the employee’s hands
• Income distributed by an investment fund to a unitholder
• Returns on investment in the securitization trust

Details Required for Filing Form 27Q

Following features are required to file Form 27Q:

If an NRI’s PAN is not available, additional details such as Tax Identification Number (TIN), Permanent Address, Country of residence, Email, and Contact details must be provided in Form 27Q.

Due Date for Filing Form 27Q

The due date for payment of TDS deducted on salary for each month is the seventh of the following month. For March, it is April thirtieth of the subsequent year. The due date for filing Form 27Q for each quarter is as follows:

Sections of Form 27Q

Form 27Q consists of three sections: Statistics of Voucher, Deduction Details, and Payment Details.

Statistics of Vouchers

All transactions, regardless of their accuracy, completeness, or correctness, will be documented and classified in Form 27Q as follows:

Included Transactions

Transactions that are considered for inclusion in generating Form 27Q are mentioned below:

• Booking entries with or without TDS deduction
• TDS deduction entries
• Advance payments made to parties
• TDS adjustment entries for government entities
• Entries reflecting TDS reversals and deductions related to escalations and de-escalations

Excluded Transactions

Transactions that are excluded from generating Form 26Q are detailed below:

• Entries where TDS is not applied
• Entries recorded using the following Voucher Types:
  • Payment
  • Contra
  • Inventory Vouchers
  • Sales Order
  • Purchase Order
  • Debit Note (for purchases without TDS implications)
  • Credit Note (entries without TDS implications)
  • Optional Vouchers
  • Payroll Vouchers

Uncertain Transactions

Transactions that do not meet the criteria for the included or excluded categories will be listed as Uncertain when there is insufficient information entered in:

• Masters
• Transactions

Deduction Details

This section indicates the type of deduction under which each of the included transactions is categorized. 

The deduction details are classified into the following types:

– Deduction at Normal Rate

– Deduction at Higher Rate

– Lower Rated Taxable Expense

– Zero Rated Taxable Expense

– Under Exemption Limit

– Except instead of PAN Available

The tax-deductible amount, assessable value, and the tax deducted for transactions categorized in the above groups are presented here.

Payment Details

This will encompass the statistics of all TDS payments (deemed or actual) recorded in the data up to the present date. It will exclude any payment entries unrelated to the current period, including those other than TDS payments.

This section will display the payments against two fields:

• Included Transactions
• Excluded Transactions

Procedure to Deduct TDS

TDS must be deducted at the time of making the payment to the Non-resident Indian (NRI). The details regarding the TDS deduction and the applicable rate should be specified in the sale deed between the NRI seller and the buyer. As stated earlier, the TDS deducted by the buyer must be remitted through challan for TDS payment on or before the 7th of the following month in which the TDS is deducted. The deposit needs to be made by the buyer.

After depositing the TDS, the buyer is required to file a TDS return by submitting Form 27Q. TDS returns are filed quarterly, within 15 days of the end of the quarter.

Once the TDS returns are filed using Form 27Q, the buyer can issue a TDS certificate (Form 16A) to the NRI seller. This TDS certificate should be issued to the seller within 15 days from the due date of TDS returns for the quarter.