Introduction
Have you heard about TDS returns? Let me introduce you with TDS returns as we all are aware under Income tax act 1961, there are certain transactions & nature of expense on which there is a requirement of deduction of TDS (Tax Deducted at source) while making payment or crediting the party as the case may be.
However, what is the procedure after deducting TDS? Let's talk precisely about the basic process from deduction of TDS to Filling of returns.
Basic Process of TDS
Once an Assesse has deducted the TDS he needs to deposit the same within specified due dates as notified i.e. TDS in any month, tax must be paid on or before 7th of the next month. However, the TDS deducted in the month of March can be deposited till 30th April.
After deposition of tax by using e filling portal an Assessee has to furnish a Quarterly return comprising the details of deductees& tax deducted against each deductee in specified forms for specific transactions as below
- Form 24Q: The quarterly statement for tax deducted at source (TDS) from "Salaries."
- Form 26Q: The quarterly statement for tax deducted at source in respect of all payments except 'salaries.'
- Form 27Q: Quarterly statement of deduction of tax from interest, dividend, or other sum payable to non-residents or foreign companies.
- Form 27QB: Statement of TDS deducted against the payment made for immovable property.
- Form 26QC: challan cum statement of deduction of tax u/s 194-IB against the tax deducted on the rent of the property.
- Form 27EQ: Quarterly statement of collection of tax at source (TCS)
Let's talk about one of the forms deeply i.e. 27Q (NRI Payments)
Form 27Q& it's due dates
Form 27Q is a quarterly statement of deduction of tax u/s 200(3) of the income tax act in respect of payments other than salary made to non-residents and foreigners for the quarter ended.The income sources on which TDS is deducted include interest income, bonus, and other sums owed to an NRI.
Due dates of filling form 27Q
| Quarter | Due Dates |
| 1st Quarter (Apr 24 to Jun 24) | 31st Jul 2024 |
| 2nd Quarter (Jul 24 to Sep 24) | 31st Oct 2024 |
| 3rd Quarter (Oct 24 to Dec 24) | 31st Jan 2024 |
| 4th Quarter (Jan 25 to Mar 25) | 31st May 2025 |
Parties involved
Basically, there are two parties involved under section 195
- Payer:The payer is an individual, organization, HUF, etc., who makes the payment to the NRI and is responsible for deducting TDS before transferring the amount to the Non-Resident Indian.
- Payee: The payee is the individual who receives the income & whose residential status is non- resident in purview of section 6 of IT Act
Details required to be filled
In TDS return details about following must be fulfilled,
(i) Payer
- Name
- Address
- PAN Number
- TAN Number
- Financial & Assessment Year
- Contact details
(ii) Payee
- Name
- Address
- Contact number & Email ID
(iii) Challan details
- Serial Number of Challan
- TDS amount
- Interest Amount if any
- Surcharge Amount
- BSR Code of challan
- Education cess amount
- Collection Code
Nature of payments & Rates
Form 27Q basically related to section 195 of income tax act i.e. TDS on payment to non-residents.
Following table will provide broad view of transactions & rates covered under form 27Q
|
Sections |
Nature of payments |
Rates |
|
194E |
Payments to non-resident Sportsmen/ Sports Associations |
20% |
|
194LB |
Payment of interest on infrastructure debt fund |
5% |
|
194LC |
Payment of interest by an Indian Company or a business trust in respect of money borrowed in foreign currency under a loan agreement or by way of issue of long-term bonds (including long-term infrastructure bond) |
5% |
|
195 |
Other sums payable to Non-residents |
|
|
(i) |
Payment in respect of investment made by a Non-resident Indian Citizen |
20% |
|
(ii) |
Payment to Non-resident Indian Citizen in respect of Investments from assets other than specified assets in form of long-term capital gains |
10% |
|
(iii) |
Payment to non-resident Indian Citizens in respect of unlisted securities or shares of the company other than a public company. Capital gains in respect of such asset as computed without giving effect to the first and second proviso to section 48; |
10% |
|
(iv) |
Payment made to non-residents that forms part of their income by way of long-term capital gains as referred to in Section 112A |
15% |
|
(v) |
Payment made to non-residents that forms part of their income by way of short-term capital gains referred to in Section 111A |
20% |
|
(vi) |
Any other payment made to non-residents that forms part of their income by way of long-term capital gains [not being long-term capital gains referred to in section 10(33), 10(36) and 112A |
20% |
|
(vii) |
Payment of interest by Government or an Indian concern on money borrowed or debt incurred by Government or the Indian concern in foreign currency (not being income by way of interest referred to in Section 194LB or Section 194LC) |
20% |
|
(viii) |
Payment of royalty by Government or an Indian concern in relation with the transfer to rights of copyrights, computer software, and other agreements. |
10% |
|
(ix) |
Payment of fees for technical services by the Government or an Indian concern |
10% |
|
(x) |
Any other income |
30% |
|
196B |
Payments in respect of units to an offshore fund |
10% |
|
196C |
Payment to non-residents in respect of foreign currency bonds or shares of Indian Company |
10% |
|
196D |
Payment to foreign institutional investors in respect of securities (not being dividend or capital gain arising from such securities) |
20% |
How to fill Form 27Q Online
You cannot directly fill out Form 27Q online. However, you can use a downloadable tool to prepare the form electronically and then submit it. Here's how to prepare Form 27Q for submission:
- Step 1: Download the e-TDS/TCS return preparation utility (RPU) which is free to download from the TIN Website
- Step 2: Prepare form 27Q in the RPU which will guide you to fill the form electronically.
- Step 3: Validate the forms after completion using File Validation Utility to ensure there is no error
- Step 4: Submit the form to a TIN Facilitation Center established by NSDL e-Gov
consequences of late filing of TDS returns with form 27Q
While filling TDS returns there can be two types of error either it can be late deduction or late payment & due to which interest liability us 201(1A) may arise like,
- 1% interest needs to be paid by the taxpayer, if the TDS is not deducted on time. This 1% interest is levied for per month or part of the month from date on which TDS is deductible to actual date of deduction
- 1.5% interest is liable to bepaid by the taxpayer, if the TDS is not deposited on time. This 1.5% interest is levied for per month or part of the month from the date on which TDS deducted to the date of payment.
Late Filling of 27Q
- Under section 234E, late filing of form 27Q occurs a minimum penalty of Rs. 200/day until the date of filing and a maximum penalty of an amount equal to the TDS deducted.
- Under section 271H, the non-filing of form 27Q occurs a penalty of minimum Rs. 10,000 and a maximum of Rs. 1,00,000.
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