The tax deducted at source (TDS) is an essential mechanism for collecting tax. It ensures that the government receives tax payments at the source itself. Form 27Q is specifically for the quarterly return of TDS on payments made to Non-Resident Indians (NRIs) or foreign companies, such as payments for interest, royalties, and fees for technical services.
What is Form 27Q?
Form 27Q is a quarterly return that must be filed by businesses or individuals who deduct TDS on payments made to NRIs and foreign companies, as well as to residents for certain specified incomes. It contains details about the TDS deducted and the payments made during a particular quarter.
The form is filed online through the Income Tax Department’s e-filing portal. You need to submit the form by the 30th of the month following the end of the quarter. For example, July 30th is the due date for the return for the first quarter (April–June).
Form 27Q requires what Information?
The form captures the following details:
- Deductor details: Name, TAN, address, and contact information.
- Deductee Details: The form also requires information about the non-resident or foreign company receiving the payment. This includes their name, country of residence, and PAN if available.
- Payment details: Name and PAN of the recipient, type of payment, TDS rate applied, and the amount of TDS deducted.
- Quarterly summary: A summary of TDS deducted in the respective quarter.
Example of Filing:
Let’s assume an Indian company makes a payment of ₹1,00,000 as interest to a non-resident with a TDS rate of 10%. The company thus deducts ₹10,000 (10% of ₹1,00,000) as TDS.
In Form 27Q, the company will enter:
- Deductor’s details: The Indian company’s name, TAN, and address.
- Deductee’s details: The non-resident’s name, country of residence, and PAN.
- Payment details: The payment made (₹1,00,000), the nature of the payment (interest), and the TDS deducted (₹10,000).
After filing the form, the company then remits ₹10,000 to the government on behalf of the non-resident.
Who Needs to File Form 27Q?
This form is to be filed by:
- Individuals or entities who are responsible for deducting TDS on payments such as interest, rent, commission, royalties, etc., to non-residents or foreign companies.
- It is also required for payments made to residents, for example, commission or fees paid to contractors.
Conclusion:
Form 27Q is crucial for reporting TDS on payments made to non-residents in India. Filing this form correctly ensures compliance with tax laws and helps non-residents claim the TDS credit in their home country. Proper and timely filing avoids penalties and maintains transparency in the taxation system.
– Ketaki Dandekar (Team Arthology)
Read more about Form 27Q here – https://groww.in/p/tax/27q