FORM 27Q

Who Needs to File Form 27Q?

Any individual, organization, or Hindu Undivided Family (HUF) that makes payments (other than salary) to an NRI or a foreign company is required to deduct TDS and file Form 27Q. This includes various scenarios, such as paying rent to an NRI landlord or making payments to an NRI when purchasing property. The payer is responsible for deducting the tax at the source before transferring the remaining amount to the non-resident Indian. The payee, the individual receiving the income, must have their residential status align with Section 6 of the Income Tax Act.

What Payments are covered?

Form 27Q covers a wide range of income types paid to non-residents, excluding salary income. While the provided content mentions that it does not include dividend payments to NRIs or interest income under specific sections (195LB/LC/LD), other sources indicate that it does cover interest and dividends.

To clarify, Form 27Q generally covers:

·       Interest income 

·     Bonus 

·        Rent 

·       Income from securities for Foreign Institutional Investors (FII) 

·        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 

·        Income generated from investment in securitization trusts 

·        Income from long-term capital gains (LTCG) under Section 112 or 112A 

·        Income from short-term capital gains (STCG) mentioned in Section 111A 

Other sums payable to non-residents 

It's important to note that TDS must be subtracted from payments made to NRIs, and the sales agreement between the buyer and the NRI seller should specify the TDS details and rate.

Key Details Required in Form 27Q

To accurately complete Form 27Q, several details about the payer, payee, and the transaction itself are required:

Payer Details:

·        PAN (Permanent Account Number) 

·        TAN (Tax Deduction and Collection Account Number) 

·        Name and Address 

·        Contact Details (Telephone number, Email ID) 

·        Financial Year and Assessment Year 

·        Original Statement or Receipt Number of any previously filed return for the same quarter

Payee Details:

·        PAN (if available) 

·        Name and Complete Address 

·        Contact Number and Email ID  

·        Branch or Division 

·        If PAN is unavailable, the NRI's Tax Identification Number (TIN) in their home country, permanent address, and contact details are required.

Challan Details:

·        TDS Amount 

·        BSR Code (Banker's Sort Code) and Collection Code 

·        Tax Deposit Date and Method

·        Education Cess Amount and Interest Amount 

·        Total Tax Deposit

·        Cheque or Demand Draft Number (if applicable)

Deduction Details:

·        PAN 

·        TDS Amount Deducted 

·        Name of the Tax Collector

·        Amount Paid to the Payee

Filing Process and Due Dates

The process of filing Form 27Q involves several steps:

1.     Deduct TDS: The payer must deduct TDS from payments to NRIs at the specified rate.

2.     Deposit TDS: The deducted TDS must be deposited with the government using a challan. This must be done on or before the 7th of the following month. For TDS deducted in March, the due date is April 30th. Payments can be made electronically through authorized banks.

3.     File Form 27Q: After depositing the TDS, the payer must complete and submit Form 27Q. This is a quarterly statement. While direct online filling isn't available, a downloadable utility (Return Preparation Utility - RPU) from the TIN website can be used to prepare the form electronically. The prepared file is then validated using the File Validation Utility (FVU) and submitted to a TIN Facilitation Center or uploaded to the income tax website.

4.     Issue TDS Certificate (Form 16A): After filing Form 27Q, the payer must provide Form 16A (TDS certificate) to the NRI payee. This certificate must be issued within 15 days of the due date for filing the TDS returns for the relevant quarter.

The due dates for filing Form 27Q quarterly are:

-       April to June: By July 31

-       July to September: By October 31

-       October to December: By January 31

-       January to March: By May 31

Consequences of Late Filing

Failing to file Form 27Q on time can lead to penalties:

1.     Late Filing Fee (Section 234E): A minimum penalty of 200 per day until the filing date, with a maximum penalty equal to the total TDS deducted.

2.     Non-Filing Penalty (Section 271H): A penalty ranging from a minimum of 10,000 to a maximum of 1, 00,000.

3.     Interest for Late Deduction (Section 201(1A)): If TDS is not deducted on time, 1% interest per month or part of the month is levied from the date TDS was deductible to the actual date of deduction.

4.     Interest for Late Deposit (Section 201(1A)): If TDS is deducted but not deposited on time, 1.5% interest per month or part of the month is levied from the date TDS was deducted to the date of payment.

In summary, Form 27Q is a vital part of India's tax framework, ensuring that taxes on income earned by non-residents are properly accounted for and remitted to the government. Adhering to the filing requirements and deadlines is crucial to avoid penalties and maintain tax compliance