Form 27Q - TDS Return for NRI Payments
Form 27Q - TDS Return for NRI Payments
The Indian Taxation Code guides every individual or organisation to pay a sum as taxes before the earnings are credited into their account. This type of tax is known as Tax Deducted at Source (TDS).
The provisions of TDS allow the government to formulate earnings. The methodology is governed by the rules and regulations laid down by the Central Board of Direct Taxes (CBDT) under the Income Tax Act 1961.
Another section of the Income Tax Act mandates every person to deduct tax while paying Non-Resident Indians (NRIs). Such a person must report the transactions made with the NRI and file Form 27Q TDS with the income tax department.
In this post, let’s learn the definition of 27Q TDS, the filing of 27Q for what purpose, the parties involved, the payments covered and other essential information.
27Q TDS Return Meaning
Form 27Q refers to the TDS return statement under Section 206C of the Income Tax Act 1961. It provides information about TDS deducted on payments, other than salary, made to NRIs. The income deductible at source includes bonus, interest, and any additional income or sum owed to foreigners or NRIs.
Form 27Q must be filed every quarter on or before the due date. The 2016 Budget made it mandatory for NRIs to have a Permanent Account Number (PAN) should they have to pay a higher TDS rate subject to prescribed conditions.
What is the Purpose of Form 27Q?
Form 27Q helps the government fulfil its goal of collecting taxes in advance by withholding money as taxes while paying NRIs. It aims to avoid tax evasion and ensures the Indian government receives the income tax payable on earnings within the country.
The Payer and Payee in Form 27Q TDS
Two parties are involved in TDS payments under Section 195.
Payer: The person, organisation, or HUF paying the NRI is the payer. He or she must pay TDS before sending the payment to the NRI.
Payee: The payee is the payment receiver. For Form 27Q TDS, the payee’s residential status must fulfil the eligibility criteria of Section 6 of the Income Tax Act.
Which Payments Come Under Form 27Q?
Every payer or deductor must deduct TDS from the payment made to an NRI. There is a prescribed rate of deduction based on the payment type. A list of the payments that fall under Form 27Q is given below.
Income of Foreign Institutional Investors (FII) from securities
Interest income on Government Securities and individual bonds
Payments to non-resident sportsmen and sports associations
Income relating to non-resident units
Payments concerning offshore fund units
Income from Indian company shares or foreign currency bonds
Interest income from infrastructure debt fund
Income generated from investment in the securitisation trust
Interest income from an Indian company involved in a specific business
Payment of the provident fund balance, taxable in the hands of the employee
Investment fund generating an income for the unit holder
Income from long-term capital gains (LTCG) under Section 112 or 112A
Income from short-term capital gains (STCG) mentioned in Section 111A
Other amounts payable to non-residents
What is The Form 27Q TDS Return Due Date?
TDS deducted from salary is paid on the seventh of the next month. In the case of March, it is April 30 in the next financial year. Here’s the 27Q TDS return due date for every quarter.
| Quarter | Duration | Due Date |
|---|---|---|
| Q1 | April 1 - June 30 | On or before July 31 |
| Q2 | July 1 - September 30 | On or before October 31 |
| Q3 | October 1 - December 31 | On or before January 31 |
| Q4 | January 1 - March 31 | On or before May 31 |
How to File TDS with Form 27Q?
A payer must subtract the TDS from payments made to NRIs. The deduction and payment details, along with the TDS rate, must be mentioned in the sales agreement executed between the buyer and the NRI seller.
After deducting the TDS, the buyer must deposit it via a challan. The payer must also fill out Form 27Q and file the TDS return before the deadline for that quarter.
Payers can file Form 27Q online by visiting the official income tax website and filling in the required details, such as payment information, TDS amounts, and PAN.
Useful Links:
NSDL Procedure for Preparation of Return and Form Download
Conclusion
Form 27Q TDS provides information on payments and deductions made by a payer to an NRI. It must be filed every quarter before the due date. Moreover, once returns are filed, the buyer can issue a TDS certificate (Form 16A) to the NRI, which must be issued within 15 days from the due date.
Health Insurance and Their Tax Benefits for NRIs
NRIs paying tax in their foreign country of residence are eligible for a GST refund on their annual health insurance policy premiums paid in India. For NRIs that do not have taxable income in their residence country and still pay tax back in India, they can claim annual deductions of up to ₹₹25,000 under Section 80D of the ITA.
The plans are not only tax-efficient but also help secure your medical costs. So, if you’re an NRI looking for a good way to secure yourself or your family against emergency medical expenses, look no further than Tata AIG.
At Tata AIG, you can buy health insurance online and choose from various plan options like critical illness insurance, maternity covers, top-up plans, etc. We also offer online purchases and policy renewals with minimal paperwork!
Moreover, our cashless mediclaim services allow you to claim cashless services at any hospital in India.
Disclaimer / TnC
Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.
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