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Mistakes To Avoid When Filing Form 27Q: NRI TDS Returns

If you’re trying to understand 27Q TDS Return meaning, all you need to know is that when tax is deducted and deposited while making payments (other than salary) to non-residents, Form No. 27Q, a TDS return statement, must be filed.

All payers (even HUF, companies, trusts etc.) are responsible for deducting the TDS if payment is made to a non-resident. A payee is considered a non-resident when his residential status does not qualify as the stipulations prescribed under the Income Tax Act.

The TDS return can only be created using the NSDL e-Gov e-TCS / TDS Return Preparation Utility (RPU), which can be downloaded for free from the TIN website. The completed return must be delivered to one of the TIN FCs established by NSDL e-Gov.

Once the TDS return has been filed, the taxpayer can monitor its status on the NSDL website. To verify the status of his or her refund, the taxpayer must input their PAN and the provisional receipt number or token number on the website.

Form 27Q NRI TDS Returns: Due Date 

Quarter 1 July 31
Quarter 2 October 31
Quarter 3 January 31
Quarter 4 May 31

 

Form 27Q NRI TDS Returns: Penalty on Late Filing

Under section 271H, failure to file Form 27Q is punishable by a fine of up to Rs. 1,000,000. For filing Form 27Q late, ₹200 per day up to the filing date is levied, and a the maximum fine which is equivalent to the amount of TDS deducted under section 234E can also be imposed

Details Required to Fill Form 27Q

  • Temporary  Account Number (TAN)
  • Permanent Account Number (PAN)
  • Financial Year for which the return has been filed
  • Name, TAN & Address of the deductor
  • Name, PAN & Address of the deductee 
  • Details of the tax amount deducted and paid to the government
  • Name, PAN, address and contact details of responsible person
  • Challan serial number, BSR Code, TDS, surcharge and education cess paid
  • Verification statement signed by the deductor.
  • Breakdown of TDS by deductee in the separate appendix for each deductee

NRI TDS Requirements: Things to Remember

  • Any payments made to non-resident Indians must be excluding TDS. 
  • Information on the rate and TDS deductions should be included in the selling agreement between the NRI seller and the buyer. 
  • TDS deducted by the buyer is required to be paid by challan no later than the seventh day of the next month in which the TDS is deducted, as was previously specified.
  • Once the TDS has been deposited, the buyer must file Form 27Q in order to submit a TDS return. TDS returns for each quarter must be submitted within 15 days.
  • A buyer can issue the NRI seller a TDS certificate (Form 16A) once the TDS returns have been filed using Form 27Q.  
  • Within 15 days of the TDS returns: https://incometaxindia.gov.in/Pages/Deposit_TDS_TCS.aspx for the quarter being due, the seller must get this TDS certificate.

TDS Rates and Corresponding Payments Covered under Form 27Q

Every deductor is required to deduct TDS at the prescribed rate on certain payments made to non-resident Indians. The following are the sorts of payments covered by Form 27Q and the corresponding rates levied on them:

Section Payment Made TDS Rate
194E To Sports association or an NRI sportsman 20%
194LB As interest on infrastructure debt fund 5%
194LC As interest by any Indian company or trust for the money borrowed in foreign currency as a loan or long-term bonds 5%
195 On the investment made by a non-resident Indian citizen 20%
  To non-resident Indian citizen for investments on assets other than those mentioned among the specified assets ias long-term capital 10%
  To non-resident Indian citizen for unlisted shares and securities of a non-public company 10%
  To non-resident Indian citizen which forms their income through long-term capital gains as mentioned under section 112A 10%
  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 which forms a part of their income as long-term capital gains. 20%
  In the form of interest by the government of India or an Indian company on the amount borrowed as a loan or debt 20%
  Royalty paid to the non-resident Indian citizen 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 An offshore fund 10%
196C Non-resident Indian citizen in the form of Indian Company’s Shares or foreign currency bonds 10%
196D To foreign investors in the form of securities 20%

 

In the event that an NRI does not have a PAN, Form 27Q must also include other information about the NRI, such as their Tax Identification Number (TIN), permanent address, country of residency, email and contact information.

For more help understanding Form 27Q of ITR get in touch with the experts at Vakilsearch right away!

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