Form 27Q – TDS on Payments to Non-Residents

Expert Form 27Q Filing Services for TDS on Payments to NRIs and Foreign Companies

Form 27Q is the quarterly TDS return filed by deductors for Tax Deducted at Source on all payments made to non-residents (excluding salary) — including NRIs and foreign companies. It covers TDS under Section 195 (payments to non-residents), Section 196A (income of foreign institutional investors), Section 196B (income from offshore funds), Section 196C (income from foreign currency bonds), Section 196D (dividends paid to FIIs), and other sections applicable to non-resident payees. TDS rates on NRI payments may be reduced under applicable Double Taxation Avoidance Agreements (DTAA) when the NRI provides a valid Tax Residency Certificate (TRC).

Form 27Q requires additional information compared to Form 26Q — including the non-resident's country of residence, TRC details, nature of payment, and applicable DTAA article and rate where a treaty benefit is claimed. Our professionals provide complete Form 27Q compliance, connecting with our TDS Return Filing, TDS on Property Purchase, Form 26Q, and Lower Tax Deduction Certificate services.

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Section 195 TDS Computation

Computation of TDS under Section 195 on payments to non-residents — covering interest, royalties, technical fees, capital gains, dividends, and other income — applying domestic law rates or applicable DTAA rates.

Form 27Q Quarterly Filing

Quarterly preparation and filing of Form 27Q — with correct section codes, non-resident payee details, country of residence, DTAA rate applied, and TRC reference where treaty benefits are claimed.

DTAA Rate Advisory

Expert advisory on applicable DTAA provisions for specific payment types — identifying the correct treaty article, the reduced withholding rate, and the documentation required (TRC, Form 10F, self-declaration) for DTAA benefit.

TRC & Form 10F Management

Assistance in obtaining and validating the NRI's Tax Residency Certificate (TRC) from their country of residence and filing Form 10F on the income tax portal — required for claiming DTAA reduced rates.

Form 15CA / 15CB Coordination

Coordination of Form 15CA (remitter's declaration) and Form 15CB (CA's certificate) required before remitting payments to non-residents — ensuring all pre-remittance and post-remittance compliances are completed.

Nil TDS Certificate Assistance

Assisting NRI payees in obtaining a nil or lower TDS deduction certificate under Section 197 from their Assessing Officer — and advising Indian payers on applying the reduced rate specified in the certificate.

Key Facts About Form 27Q

Covers TDS on payments to non-residents under Sections 195, 196A, 196B, 196C, 196D and related sections
Same quarterly due dates as Form 26Q: 31st July, 31st October, 31st January, 31st May
DTAA benefits can reduce TDS rates — NRI must provide Tax Residency Certificate (TRC) in Form 10F
TDS deducted at rates applicable under domestic law or DTAA — whichever is more beneficial to the NRI
Form 15CA/15CB is separately required before remittance — Form 27Q covers TDS reporting only
Late filing fee: ₹200 per day under Section 234E — same as other TDS returns

Frequently Asked Questions

What types of payments require TDS under Form 27Q?

Form 27Q covers TDS on all non-salary payments to non-residents including: interest on loans, bonds, and debentures; royalties for use of patents, trademarks, or intellectual property; fees for technical and management services; dividends; capital gains on sale of assets in India; income from business connections in India; rental income from Indian properties; fees for professional services rendered in India; and all other payments specified under Section 195. Salary payments to non-resident employees are covered under Form 24Q, not Form 27Q.

How do DTAA provisions affect TDS rates on NRI payments?

India has DTAA (Double Taxation Avoidance Agreements) with over 90 countries. Where a DTAA exists and the NRI payee is a resident of that country (proven by a valid TRC), the deductor can apply the DTAA withholding rate instead of the domestic TDS rate — if the DTAA rate is lower. For example, India's DTAA with the USA provides for a 15% withholding rate on dividends and 10% on royalties, while domestic rates can be higher. To claim DTAA benefits, the NRI must provide a valid TRC, Form 10F, and a self-declaration.

What is Form 15CA and how is it related to Form 27Q?

Form 15CA is a declaration filed by the Indian remitter (payer) on the income tax portal before making any remittance to a non-resident. It certifies that TDS has been correctly deducted and the remittance complies with FEMA and Income Tax Act provisions. For payments above ₹5 lakh, Form 15CB (a certificate from a Chartered Accountant) is also required. Form 27Q is the quarterly TDS return filed after the remittance — it reports all non-resident payments and TDS deducted during the quarter. Both Form 15CA/15CB (pre-remittance) and Form 27Q (post-remittance) are separate but related compliance requirements.

Can TDS on NRI payments be reduced to nil?

Yes. A non-resident can apply to their Assessing Officer under Section 197 for a lower or nil TDS deduction certificate (Form 13) — where their actual tax liability in India is lower than the TDS rate. The AO issues Form 13 specifying the applicable rate; the Indian payer then deducts TDS at that lower rate. Alternatively, if the DTAA provides for zero withholding on a specific payment type (e.g., business income where the NRI has no permanent establishment in India), no TDS needs to be deducted — but proper documentation including TRC and self-declaration must be maintained.

What are the consequences of not deducting TDS on NRI payments?

Failure to deduct TDS on payments to non-residents under Section 195 results in: (1) the Indian payer being treated as an 'assessee in default' under Section 201 — liable to pay the TDS amount themselves along with interest at 1.5% per month; (2) disallowance of the payment as a business expense under Section 40(a)(i) — until TDS is deducted and deposited; (3) penalty under Section 271C equal to the TDS amount; and (4) prosecution under Section 276B. Foreign remittances where TDS was not deducted may also face regulatory issues under FEMA.

Making Payments to Non-Residents? Ensure Form 27Q TDS Compliance.

Our professionals compute NRI TDS, apply DTAA benefits, file Form 27Q, and manage Form 15CA/15CB for all your non-resident payments.

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F.A.Q.

What is GSTR-9 and why is it required?

GSTR-9 is an annual GST return that summarizes all transactions reported during the financial year. It is required to ensure proper reconciliation and compliance with GST laws.

Who is required to file GSTR-9?

All regular GST-registered taxpayers are required to file GSTR-9, except composition dealers, casual taxable persons, and non-resident taxpayers.

What is the due date for filing GSTR-9?

The due date is generally 31st December following the end of the relevant financial year, unless extended by the government.

What details are included in GSTR-9?

It includes details of outward supplies, inward supplies, input tax credit claimed, taxes paid, and adjustments made during the year.

Is GSTR-9 mandatory for all taxpayers?

GSTR-9 is mandatory for most regular taxpayers, but certain small taxpayers may get exemptions based on turnover thresholds notified by the government.

What happens if GSTR-9 is not filed on time?

Late filing may result in penalties and late fees, along with potential compliance issues or notices from GST authorities.