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.
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.
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
The Parties Involved in Form 27Q
Under Section 195 – there are two parties involved in TDS payment:
- Payer
The payer is an individual, the organization, HUF, and more who makes the payment to an NRI and is responsible for deducting TDS before transferring the amount to the non-resident Indian. - Payee
The Payee is the individual who gets the income. The residential status of the Payee needs to be according to Section 6 of the I.T. Act.
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.
Rates for Deducting TDS
| Section | Payment Type | Rate of TDS |
|---|---|---|
| 194E | Payment made to a 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 citizens for investments in assets other than mentioned among the specified assets in the form of long-term capital | 10% | |
| Payment made to non-resident Indian citizens 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 citizens that 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 is paid to non-resident Indian citizens 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 citizens 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% |
Details Required to be Filled in Form 27Q
The Payer
- Name of the Payer
- Address
- PAN Number
- TAN Number
- Contact Details
- Financial Year
- The Year of Assessment
- An Original Statement or Receipt Number of the return already filed previously in the same quarter
The Payee
- Name of the Payee
- The branch of the division for collection
- Complete Address
- Contact number
- PAN Number
- Telephone number
- Email ID
Challan
- The Serial number of Challan
- TDS amount
- Surcharge amount
- BSR Code
- Education Cess amount
- Amount of Interest
- The Total of Tax Deposit
- The number of Demand Drafts or Cheques (if applicable)
- The collection code
- The tax deposit date
- Method of TDS deposition
Deduction
- Name of the Tax Collector
- PAN Number
- Amount paid to the Payee
- 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.
FAQs
What is TDS Certificate?
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.
The Process to File TDS with Form 27Q?
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.
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