The Income Tax Act of 1961 mandates individuals and entities to deduct tax at source before making certain payments. Once the Tax Deduction at Source (TDS) is complete, the individuals or entities must file a return, specifying the details of the payment, in the applicable form with the Income Tax Department (ITD).
One of the many TDS return forms that individuals and entities must file with the income tax authorities is Form 27Q. In this comprehensive guide, we will explore the meaning of the 27Q TDS return, the parties involved, and its components. Additionally, we will look at how to file the Form 27Q return and the consequences of not filing it on time.
What is 27Q?
Form 27Q is a TDS return statement that pertains to non-salary payments made to non-resident Indians (NRIs) and foreigners, including foreign entities. If you make any such payments during a particular quarter of a financial year, then you must file Form 27Q for the said quarter within the stipulated due date.
The primary purpose of Form 27Q is to ensure that the appropriate amount of tax is deducted at source from payments made to non-residents and promptly deposited with the government. It serves as a mechanism for the tax authorities to track cross-border transactions and verify tax compliance.
What Sections of the Income Tax Act, 1961 Does Form 27Q Cover?
Form 27Q TDS return statement must be filed if you deduct tax under the following sections of the Income Tax Act of 1961.
- Section 194E
- Section 194LB
- Section 194LC
- Section 194LD
- Section 194LBA
- Section 194LBB
- Section 195
- Section 196A
- Section 196B
- Section 196C
- Section 196D
What Types of Payment Does Form 27Q Cover?
If you make the following types of payments to non-resident Indians, foreigners, or foreign entities during the quarter of a financial year, you must file Form 27Q TDS return statement with the Income Tax Department.
- Interest payments
- Dividend payments
- Commission payments
- Royalty payments
- Fees for technical services
- Fees for included services
- Income from investments
- Long-Term Capital Gains (LTCG)
- Short-Term Capital Gains (LTCG)
- Payments to sportspersons and artists
- Winnings from horse races
- Winnings from lottery, crossword puzzles, card games, and other games
- Other income not listed in the list above
Who are the Parties Involved in Form 27Q?
Form 27Q TDS returns involve the following two parties: the payer (also known as the tax deductor) and the payee (also known as the tax deductee). Here is a quick overview of the two parties.
- Payer (Deductor)
The payer or deductor refers to an Indian entity or individual making payments to non-resident Indians, foreigners, or foreign companies. The deductor is responsible for deducting TDS from the payments and filing Form 27Q within the stipulated due date.
- Payee (Deductee)
The payee or deductee refers to non-resident Indians, foreigners, or foreign companies receiving payments from India. The deductee’s details are reported in Form 27Q.
What Details Need to Be Filled in Form 27Q?
Form 27Q returns require the deductor to specify comprehensive information about themselves, the deductee, and the details of the transactions. Here are the key sections and information that need to be filled out in the form.
- Details of the Deductor
The deductor’s details, such as their Tax Deduction and Collection Account (TAN) number, PAN, and name and address, must be filled out.
- Details of the Deductee
The deductee’s details, such as the deductee code, PAN, name as per PAN, and the country to which the remittance was made, must be entered.
- Details of the Tax Deducted
Tax deduction details, such as the date and amount of payment, the date and amount of tax deducted (including surcharge and cess), the rate of deduction, and the nature of remittance, must be entered in the form.
- Details of the Tax Deposit Challan
The amount of tax deposited, surcharge, education cess, interest, fee, penalty, mode of deposit, BSR code or receipt number, challan serial number, date of deposit, and the minor head of the challan must be entered.
How to File Form 27Q?
Filing Form 27Q is a straightforward process. All you need to do is follow the steps outlined below.
- Step 1: Visit the website of Protean eGov Technologies Limited.
- Step 2: Under the ‘Services’ tab, click ‘e-TDS/e-TCS’.
- Step 3: In the new webpage, click the ‘e-TDS/e-TCS RPU’ and download the Return Preparation Utility (RPU).
- Step 4: Using the RPU, prepare Form 27Q in the prescribed file format.
- Step 5: Once the Form 27Q is prepared, verify the same using the File Validation Utility (FVU). You can download the utility from the website of Protean eGov Technologies Limited.
- Step 6: If there are any errors or omissions, the FVU will notify you. In that case, rectify the errors and verify the form once again.
- Step 7: Once the form is successfully verified, submit it along with Form 27A generated by the FVU to a TIN facilitation centre near you.
What is the Due Date for Filing Form 27Q?
The due dates for the filing of Form 27Q TDS return statements are as follows:
| For the Quarter | Due Date for Filing Form 27Q |
| April to June | July 31 |
| July to September | October 31 |
| October to December | January 31 |
| January to March | May 31 |
What are the Consequences of Not Filing Form 27Q?
If you do not file Form 27Q within the due dates mentioned above, a penalty of ₹200 per day will be levied from the due date of filing until the actual date of filing. The maximum penalty, in this case, can go up to the amount of TDS deducted.
Section 271H of the Income Tax Act of 1961 also levies a penalty for late filing of Form 27Q. In this case, the penalty can range anywhere from ₹10,000 to ₹1,00,000.
Conclusion
Form 27Q is one of the most important TDS return statements for transactions involving non-resident Indians and foreigners. The timely filing of the form helps the government keep a close watch on cross-border transactions and assists in effective tax collection and compliance. If you are a deductor, you must ensure that you file the Form 27Q TDS return within the stipulated due dates. Any failure to do so can attract significant monetary penalties.
FAQs
Who is required to file Form 27Q?
Any individual or entity making non-salary payments to non-resident Indians (NRIs) and foreigners, where Tax Deduction at Source (TDS) is applicable, must file Form 27Q with the Income Tax authorities.
How often should Form 27Q be filed?
Form 27Q is a quarterly return, which means it must be filed four times a year, corresponding to each quarter of a financial year.
How to file Form 27Q manually?
All TDS returns, including Form 27Q, must mandatorily be filed electronically. There is no provision to file the form manually.
What happens if I miss the deadline for filing Form 27Q?
If you miss the deadline for filing Form 27Q, a minimum penalty of ₹200 per day is levied from the due date of filing until the actual date of filing. The maximum penalty can go up to the entire amount of TDS deducted.
Can Form 27Q be revised after submission?
Yes. In the case of any errors or mistakes in the original form, a revised Form 27Q can be filed at any time after the submission of the original form.
