Form 27Q: Complete TDS Return Filing Guide for Payments to NRIs

Any business or individual that deducts tax at source on a payment to a non-resident, whether that is interest on a loan, royalty, professional fees, or rent, has a filing obligation that goes beyond simply depositing the TDS. That obligation is Form 27Q, the quarterly return that reports the deduction to the Income Tax Department and, critically, is what allows the non-resident payee to eventually claim credit for that TDS in their own return. This guide covers who must file, the filing calendar, what the return contains, and the mistakes that most often cause it to be filed late or incorrectly.

What Form 27Q Covers

Form 27Q is the TDS return prescribed for reporting tax deducted under Section 195 (now Section 393(2) of the Income Tax Act 2025) on any payment made to a non-resident that is not salary. Salary paid to a non-resident is reported instead in Form 24Q, the same return used for resident employees. Form 27Q applies to a wide range of payment types:

• Interest paid to a non-resident, including on NRO deposits, loans, or debentures
• Professional or technical fees paid to a non-resident consultant or contractor
• Royalty or fees for technical services paid to a foreign entity
• Rent paid to a non-resident landlord (where the payment is not a property purchase)
• Any other sum chargeable to tax in the hands of a non-resident recipient

Property purchases from an NRI seller are a specific exception, covered separately below.

Who Must File

The obligation sits with the deductor, meaning whoever makes the payment, not the non-resident who receives it. This includes Indian companies paying interest or royalty abroad, individuals or firms engaging non-resident consultants, and any other payer who deducts TDS under Section 195. A prerequisite for filing is holding a Tax Deduction Account Number (TAN), obtained via Form 49B on the Protean (NSDL) portal, since Form 27Q cannot be filed on PAN alone the way Form 27QB can for property purchases.

Filing Calendar

Form 27Q is filed quarterly, on the same schedule used for the resident-payment returns Form 24Q and Form 26Q:

TDS itself must be deposited monthly, by the 7th of the following month (30 April for amounts deducted in March), independent of the quarterly return deadline. The return reports and reconciles all deductions made across the quarter.

Structure of the Return

Form 27Q is filed electronically through the TRACES/e-filing ecosystem using return preparation utilities, and broadly consists of:

• Deductor details: TAN, PAN, name, and address of the person making the payment
• Challan details: Each TDS deposit made during the quarter, matched to the relevant BSR code and challan serial number
• Deductee details: Each non-resident payee's name, country of residence, PAN (if available) or an alternative identification where the payee does not hold a PAN, the nature and amount of payment, and the TDS deducted, including any lower rate applied under a DTAA or a Form 13/197 certificate

Where a lower DTAA rate has been applied instead of the standard statutory rate, the return should reflect the treaty article relied upon, supported by the payee's Tax Residency Certificate and Form 10F on the deductor's file.

Issuing Form 16A After Filing

Once Form 27Q is filed, the deductor must download Form 16A (now Form 131) from TRACES within 15 days of the return due date and issue it to the non-resident payee. This certificate is what the payee needs to claim TDS credit in their own Indian income tax return; without a correctly filed Form 27Q and a matching Form 16A, that credit is not available.

Form 27Q vs Form 27QB: Not the Same Form

A common point of confusion is treating Form 27Q and Form 27QB as interchangeable. They are not:

If your payment to an NRI is specifically for buying property, see our dedicated guide on the TAN application process for property buyers and our full TDS on NRI property sale guide, and our side-by-side 26QB vs 27Q comparison for the resident-vs-NRI seller distinction. This guide focuses on Form 27Q for every other kind of payment to a non-resident.

Correcting a Filed Return

Errors are common, particularly around the deductee's PAN, the challan mapping, or the TDS amount. These are fixed by filing a correction statement on TRACES that references the original return's acknowledgment number. Until the correction is processed, the affected deductee's TDS credit in Form 26AS/AIS remains incorrect or missing, which can delay or block their ability to file their own Indian return and claim the credit.

Penalties for Late or Incorrect Filing

• Late filing fee (Section 234E): Rs 200 per day of delay, capped at the amount of TDS deductible for the quarter.
• Penalty for failure to file (Section 271H): Between Rs 10,000 and Rs 1,00,000, applicable if the return is not filed within one year of the due date, or if incorrect information is furnished. This penalty is generally not levied if the return is eventually filed correctly with the tax, interest, and late fee paid in full.
• Interest on late deposit: Separate from the return filing penalty, 1.5% per month applies for any period the deducted TDS was not deposited on time.

Common Mistakes Payers Make

• Filing Form 27QB instead of Form 27Q, or vice versa, based on confusing the two forms rather than the nature of the payment
• Not obtaining a TAN before making the first payment, which blocks timely filing
• Applying a DTAA rate on the payment without a valid Tax Residency Certificate and Form 10F on file to support it
• Mismatched challan and deductee mapping, which triggers TRACES defaults and holds up the payee's credit
• Forgetting to issue Form 16A after filing, leaving the non-resident payee unable to claim credit even though the return was filed correctly