India’s TDS system doesn’t work on a single return type. It assigns a
separate quarterly type to each class of fee and payee. Wage
TDS
goes into Type
24Q. Non-salary funds to residents go into Type
26Q, whereas the identical funds, when made to a non-resident
Indian, an OCI cardholder, or a overseas firm, get reported by means of
Type 27Q.
Should you’re a part of an HR, finance, or payroll group, this kind turns into
related each time your group:
-
Remits curiosity on NRO accounts
-
Pays royalty or technical service charges to a overseas
entity -
Settles property sale proceeds with an NRI vendor
-
Distributes dividends to non-resident shareholders
All of those appeal to TDS below Part
195 of the Earnings Tax Act, 1961, and the deductor (that’s you,
not the NRI) should report them each quarter by means of Type 27Q.
One factor to notice: Below the brand new Earnings Tax Act,
2025, Type 27Q has been renumbered as Type 144, efficient 1
April 2026. The submitting course of and obligations keep the identical.
This information covers every part you’ll want to learn about Type 27Q,
together with its which means, applicability, TDS charges, due dates, the best way to file
it on TRACES,
penalties for non-compliance, and associated varieties similar to 15CA and
15CB.
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What’s Type 27Q in TDS?
Type 27Q is a quarterly TDS return that data the main points of tax
deducted at supply on non-salary funds made to non-resident Indians,
OCI cardholders, and overseas corporations. The deductor (the particular person or
entity making the fee) recordsdata it each quarter with the Earnings Tax
Division.
In follow, this kind captures how a lot you paid a non-resident,
what sort of revenue it qualifies as (curiosity, royalty, capital good points,
technical service charges, dividends), how a lot TDS you withheld, and
by means of which challan you
deposited it with the federal government. Each transaction will get its personal row,
linked to the related TDS part and the challan used to deposit the
tax.
Who Should File Type 27Q
Any particular person, whether or not resident or non-resident, who deducts TDS below
Chapter XVII-B of the Earnings Tax Act on funds to a non-resident
(aside from wage) should file Type 27Q. This covers people, HUFs,
companies, LLPs, corporations, trusts, and authorities our bodies.
Each authorities and non-government deductors have the identical core
obligations:
-
TAN is necessary: You want a Tax Deduction and
Assortment Account Quantity below Part 203A earlier than you possibly can deduct or
deposit TDS. -
Deposit by way of Challan 281: All TDS deducted should
go to the federal government by means of Challan ITNS 281, by the seventh of the month
following deduction. For March, the deadline is 30 April. -
Quarterly submitting: Each authorities and
non-government deductors file Type 27Q on the identical quarterly schedule
(July 31, October 31, January 31, and Might 31).
Type 27Q
vs Type 26Q vs Type 24Q: What’s the Distinction?
All three are quarterly TDS returns uploaded to the identical portal. The
distinction comes right down to who you’re paying and what you’re paying them
for. Getting the flawed type is a standard mistake, and it creates
mismatches on TRACES that take time to repair.
A comparability of Varieties 24Q, 26Q, and 27Q, displaying which TDS return
applies primarily based on the kind of fee and recipient
Type 26Q: TDS
on non-salary funds to residents
Type
26Q covers TDS on non-salary funds made to resident Indians.
Suppose contractor funds, skilled charges, lease, fee,
curiosity, insurance coverage fee, and every part else falling below
Sections 194A by means of 194S. If the payee is a resident, the fee is
non-salary, and TDS has been deducted, it goes into Type 26Q.
Below the Earnings Tax Act, 2025, Type 26Q has been renumbered as Type
140.
Type 24Q: TDS on
wage below Part 192
Type
24Q is what employers file for TDS deducted on salaries below
Part 192. It has two annexures.
-
Annexure I captures challan and deductee-level
deduction particulars and should be filed for all 4 quarters. -
Annexure II carries the complete wage breakup for
every worker, together with exemptions, deductions, and the ultimate tax
computation, and is filed solely with the This autumn return (January to
March).
The Earnings Tax Act, 2025 has changed Type 24Q with Type 138,
efficient 1 April 2026.
A fast comparability throughout the three:
| Characteristic | Type 24Q | Type 26Q | Type 27Q |
|---|---|---|---|
| Cost sort | Wage | Non-salary funds | Non-salary funds |
| Payee | Resident workers | Residents | Non-residents / NRIs / overseas corporations |
| Governing part | Part 192 | Sections 194A-194S | Part 195 |
| Annexures | Annexure I (all quarters) + Annexure II (This autumn solely) | Challan + deductee annexure | Challan + deductee annexure |
| New quantity below ITA 2025 | Type 138 | Type 140 | Type 144 |
| DTAA related | No | No | Sure |
| TDS certificates | Type 16 |
Type 16A |
Type 16A |
| Submitting frequency | Quarterly | Quarterly | Quarterly |
What Funds Are
Coated Below Type 27Q?
Type 27Q covers all non-salary funds made to non-residents that
appeal to TDS in India. In follow, most deductors run into 4 important
classes:
4 important Type 27Q fee classes: curiosity, royalty and
technical service charges, property gross sales, and companion funds below
Part 194T
1. Curiosity funds
Curiosity on NRO accounts is among the commonest Type 27Q entries.
Banks deduct TDS at 30% below Part 195 on NRO mounted deposit and
financial savings account curiosity, with no threshold restrict. Two concessional
charges exist: curiosity from infrastructure debt funds (Part
194LB) at 5%, and curiosity on foreign-currency borrowings or
long-term bonds by Indian corporations (Part
194LC) at 5%.
2. Royalty and technical
service charges
Royalty for the use or switch of copyrights, patents, or logos
paid to a non-resident attracts 20% TDS below Part 195. The identical price
applies to charges for technical companies and dividends paid to
non-resident shareholders, although dividend TDS can come down
considerably below a DTAA.
3. Sale of property
When a resident purchaser purchases property from an NRI vendor, the
purchaser deducts TDS below Part 195 and stories it in Type 27Q (not Type
26QB, which covers resident sellers). Lengthy-term capital good points appeal to
12.5% TDS for FY 2025-26, decreased from 20% after the Funds 2024
modifications. Quick-term capital good points below Part
111A are taxed at 20%.
4. Accomplice funds below
Part 194T
The most recent addition. Part
194T, efficient 1 April 2025, requires companies and LLPs to deduct
10% TDS on wage, remuneration, fee, bonus, and curiosity paid to
companions as soon as the mixture crosses ₹20,000 per monetary yr. The CBDT
has amended Type 27Q to incorporate Part 194T entries, so non-resident
companions receiving remuneration or curiosity on capital get reported
right here.
One caveat: the interplay between Part 194T and
Part 195 for NRI companions continues to be awaiting CBDT clarification, so
companies with non-resident companions ought to take particular recommendation.
TDS Charges
for NRI Funds Below Type 27Q (FY 2025-26)
These are the bottom charges below the Finance Act. Surcharge and 4%
well being and schooling cess apply on high of those. If a DTAA (The Double
Taxation Avoidance Settlement (DTAA)) price is on the market and extra
favorable, the NRI can go for that as a substitute (DTAA charges are utilized
with out surcharge and cess).
| Part | Nature of Cost | TDS Charge |
|---|---|---|
| 194E | Funds to non-resident sportsman/entertainer or sports activities affiliation |
20% |
| 194LB | Curiosity from infrastructure debt fund | 5% |
| 194LC | Curiosity on foreign-currency borrowings/long-term bonds by Indian firm |
5% |
| 195 | Funding revenue of NRI (curiosity/dividend) | 20% |
| 195 | Lengthy-term capital good points on listed shares (Part 112A) | 12.5% |
| 195 | Royalty and costs for technical companies | 20% |
| 195 | Quick-term capital good points below Part 111A | 20% |
| 195 | Every other revenue (NRO curiosity, lease, and so forth.) | 30% |
Fill Type 27Q On-line?
You can not sort Type 27Q instantly into an internet type. The method runs
by means of a downloadable, Java-based utility, validated by a second
utility, after which uploaded to the portal. Right here is the workflow:
Type 27Q submitting course of masking RPU obtain, challan and
deductee particulars, FVU validation, and TRACES add
Step 1:
Obtain the Return Preparation Utility (RPU)
Head to the Protean (previously NSDL) TIN web site and navigate to
Downloads → e-TDS/e-TCS → Quarterly Returns →
Common.
Obtain the most recent Return Preparation Utility (RPU). As of July
2026, the present model is RPU 6.0 for statements up
to FY 2025-26. For Tax 12 months 2026-27 onwards (below the Earnings Tax Act,
2025), a separate RPU model 1.1 applies.
The RPU is a Java-based offline instrument, so that you’ll want the Java Runtime
Atmosphere (JRE) put in in your machine.
As soon as downloaded, extract the zip file and run TDS_RPU.jar. When the
utility opens, choose Type Sort: 27Q and Return
Sort: Common.
You may also obtain the RPU by means of TRACES below Requested
Downloads, although the Protean TIN web site is the first supply.
Step 2: Fill in
deductor and challan particulars
Begin along with your group’s particulars: TAN, PAN, identify, tackle, and
the main points of the particular person chargeable for deduction.
Then enter the challan data for every TDS deposit made throughout
the quarter:
Choose the best challan sort: 0020 for firm
deductees, 0021 for non-company. Minor head must be
200 for normal TDS payable, or 400 if
you’re paying in opposition to a requirement raised by the division.
Every challan row should match precisely with the OLTAS (On-line Tax
Accounting System) report. Any mismatch and the return throws validation
errors.
Step 3: Fill deductee particulars
For every NRI payee, enter:
-
Identify, PAN, nation of residence, and tackle
-
If the NRI doesn’t have a PAN, use the suitable flag:
PANNOTAVBL (PAN not out there),
PANAPPLIED (PAN utilized for), or
PANINVALID (invalid PAN) -
Nature of fee: choose the proper part code (195, 194E,
194LC, and so forth.) -
Quantity paid or credited, TDS deducted, TDS deposited, and
relevant price
Should you’re making use of a DTAA price, additionally enter the related treaty
article, TRC quantity, and Type 10F reference. If a decrease deduction
certificates below Part 197 exists, enter the certificates quantity so
the decreased price is correctly justified within the return.
Step 4:
Validate by means of the FVU and add to TRACES
As soon as all entries are full, click on “Validate” in
the RPU. This runs the information by means of the File Validation Utility (FVU),
at present model 9.5 for statements as much as FY 2025-26.
The FVU checks TAN and PAN codecs, challan particulars, part codes, and
the file’s structural integrity.
-
Validation passes: The utility generates a
.fvu file. -
Validation fails: You get an error report
itemizing what wants fixing, row by row. Repair the errors within the RPU and
re-validate till you get a clear file.
Add the .fvu file by means of the revenue tax e-filing portal
(Statements/Funds → Add TDS Assertion) and
authenticate utilizing both a DSC (Digital Signature
Certificates) or EVC (Digital Verification Code).
On profitable add, the system generates an
acknowledgement/token quantity. Put it aside. You’ll want it
for any correction filings or conso-file requests later.
The submitting steps above assume the NRI has a PAN. Once they don’t, the
course of modifications.
File Type 27Q With out
PAN?
It’s not unusual for NRI payees to not have an Indian PAN,
particularly overseas corporations and non-residents who’ve restricted dealings
in India. Type 27Q can nonetheless be filed with out one, however the TDS
implications change considerably.
Increased TDS price below
Part 206AA
Part 206AA kicks in when the payee doesn’t furnish a sound
PAN to the deductor. In that case, TDS should be deducted on the highest
of three charges: the speed specified within the related provision of the
Finance Act, the speed in pressure, or 20%. For many NRI funds below
Part 195, this successfully means 20% or larger.
Within the RPU, mark the PAN area as PANNOTAVBL
so the system accepts the return with out rejecting it for a lacking PAN.
If the NRI has utilized for a PAN however hasn’t acquired it but, use
PANAPPLIED as a substitute.
Different
documentation: Rule 37BC exemption
The upper price below Part 206AA could be averted. Rule 37BC
offers a particular exemption for non-residents who furnish the
following paperwork to the deductor:
-
Identify, e mail tackle, and phone quantity
-
Tackle of their nation of residence
-
Tax Identification Quantity (TIN) issued by their nation of
residence -
Tax Residency Certificates (TRC) from the overseas
authorities
If the TRC doesn’t comprise all required particulars, the NRI should
additionally submit Type
10F, a self-declaration that fills within the
gaps.
As soon as all Rule 37BC paperwork are on file, the deductor can
apply the traditional treaty price below DTAA or the usual Part 195
price, whichever is extra useful, as a substitute of the default 20%. This
makes an actual distinction. An NRI incomes curiosity revenue might go from
20% TDS (no PAN, no documentation) to as little as 10-15% below a
beneficial DTAA, just by submitting the best paperwork
upfront.
Obtain Type 27Q
from TRACES
You’ll have to obtain Type 27Q from TRACES for correction filings,
issuing Type 16A, or reconciling TDS credit. Right here’s how:
Obtain the consolidated
file
-
Log in to TRACES at tdscpc.gov.in utilizing your TAN, person ID, and
password -
Navigate to Statements/Funds → Request for Conso
File -
Choose the Monetary 12 months, Quarter, and Type Sort (27Q)
-
Full KYC validation by getting into the token quantity from the
initially filed return and the PAN of the accountable particular person -
As soon as the standing reveals “Obtainable” below Requested
Downloads, obtain the zip file. It accommodates the .tds file
you’ll import into the RPU for corrections
Type 27Q PDF obtain and
TXT codecs
-
PDF: Password-protected (TAN in uppercase + date
of beginning/incorporation in DDMMYYYY format). Used for viewing and
record-keeping. -
TXT: Machine-readable format used for importing
into the RPU for corrections.
Justification report
Earlier than submitting any correction, obtain the Justification Report from
Statements/Funds → Justification Report. It lists
each default the system present in your return: PAN mismatches, quick
deduction flags, challan errors. Use it as your correction
guidelines.
Type 27Q Correction and
Revision
Filed a Type 27Q with the flawed PAN, a mismatched challan, or a
lacking deductee? You don’t have to panic. TRACES permits correction
returns, and you’ll file them as many instances as wanted. Every correction
submitting replaces the earlier model solely.
Correction varieties
Each correction falls into a particular class, and also you’ll
want to pick out the best one within the RPU earlier than making
modifications:
| Correction sort |
What it covers |
|---|---|
| C1 | Deductor particulars: identify, tackle (not the TAN itself) |
| C2 | Challan particulars: BSR code, deposit date, quantity |
| C3 | Deductee particulars: identify, quantity, and different particulars (excluding PAN) |
| C4 | Wage particulars (related just for Type 24Q, This autumn) |
| C5 | PAN correction for deductees |
Want so as to add a very new challan or deductee row that was
lacking from the unique return? That’s dealt with by means of a C9
correction, which some sources bundle below C5. All the time verify
the precise sort your RPU model helps earlier than submitting.
Submitting a correction
return by way of TRACES
The method builds on the consolidated file obtain coated in
the earlier part. Import the conso file (.tds) into the RPU, choose
“Correction” because the return sort, and decide the related correction
class. Make your modifications within the affected rows, run FVU validation,
repair any errors, and add the corrected .fvu file to TRACES with DSC or
EVC authentication.
One sensible tip: don’t file corrections
primarily based on guesswork. Obtain the Justification Report
first, determine the precise defaults, after which right solely these rows.
Blanket modifications throughout the return can introduce new errors.
Condonation of delay
Should you filed the unique return after the due date, the
Part 234E payment (₹200/day) is already locked in and non-negotiable. However
the Part 271H penalty (₹10,000 to ₹1,00,000) can probably be
averted.
No penalty below Part 271H is levied if all three circumstances
are met: TDS has been deposited with the federal government, curiosity and the
Part 234E payment have been paid, and the return was filed inside one
yr of the due date.
To request condonation, go to Statements/Funds →
Condonation Request on TRACES, choose the related quarter, and
submit. This doesn’t assure a waiver, but when the three circumstances
above are happy, the penalty is often not imposed.
Late Submitting Penalty for Type
27Q
Three separate penalties can hit you for non-compliance, and so they
stack. Understanding which one applies when is necessary as a result of most
deductors confuse the payment, the penalty, and the curiosity, and find yourself
underpaying.
1. Part 234E: Payment for Late
Submitting
Should you file Type 27Q after the due date, a compulsory payment of ₹200 per
day applies from the due date till the date you really file. The payment
is capped on the whole TDS quantity for that quarter, so it will probably by no means
exceed what you deducted.
Instance: You deducted ₹50,000 in TDS throughout Q2 however
filed the return 20 days late. The payment works out to twenty × ₹200 = ₹4,000.
Since ₹4,000 is effectively throughout the ₹50,000 cap, you pay the complete
₹4,000.
This payment will not be discretionary. The division doesn’t waive it, and
it’s essential to pay it earlier than you possibly can file the belated return.
2. Part
271H: Penalty for Late or Incorrect Submitting
Over and above the Part 234E payment, the Assessing Officer can levy a
penalty between ₹10,000 and ₹1,00,000 below Part 271H. This is applicable
to each late submitting and submitting with incorrect data (flawed PAN,
flawed part code, mismatched challan particulars, and so forth.).
The necessary carve-out: no penalty below Part
271H is levied if all three circumstances are met:
-
TDS has been deposited with the federal government
-
Curiosity and the Part 234E late submitting payment have already been
paid -
The return is filed earlier than the completion of 1 yr from the
due date
Miss any one in every of these and the AO has the discretion to impose the
penalty.
3. Part 201(1A):
Curiosity on Late TDS Deposit
This one is separate from the submitting penalties and applies to the
deposit aspect.
-
Non-deduction: Should you didn’t deduct TDS when
it’s best to have, curiosity applies at 1% per thirty days (or a part of a month)
from the date the tax was deductible to the date you really deducted
it. -
Late deposit: Should you deducted TDS however didn’t
deposit it on time, curiosity applies at 1.5% per thirty days (or a part of a
month) from the date of deduction to the date of deposit.
Part 201(1A) curiosity and Part 234E payment are unbiased of every
different. You may owe each on the similar time: the payment for submitting the return
late, and the curiosity for depositing the tax
Getting Type 27Q Proper
The compliance chain for Type 27Q is straightforward to state: deduct TDS
below Part
195 when the fee is made or credited, deposit it by the seventh
of the next month, file the quarterly return by the due date, and
subject Type 16A to the NRI payee inside 15 days.
The place groups run into hassle will not be the method itself however the
particulars round it. Making use of the flawed price as a result of the NRI didn’t submit
their TRC on time. Lacking a DTAA profit as a result of no one collected Type
10F. Letting 1 / 4 slip as a result of just one small fee went to a
non-resident.
These gaps value actual cash: ₹200/day below Part
234E, penalties as much as ₹1,00,000 below Part 271H, and Part
201(1A) curiosity working in parallel.
The repair is constructing documentation into the fee workflow, not the
submitting workflow. Gather the TRC and Type 10F earlier than you launch the
fee. Affirm the part code and price on the time of deduction. And
in case you haven’t already, replace your inner checklists and software program
from Type 27Q to Type 144 for Tax 12 months 2026-27 onwards, as per the
Earnings Tax Act, 2025.
In case your group is managing a number of NRI deductees throughout quarters,
Keka’s payroll and
compliance platform may also help you automate your TDS compliance
and keep on high of quarterly deadlines.
E book your demo
at present
Often Requested Questions
1. What occurs if the
NRI payee has no PAN?
Below Part 206AA, TDS should be deducted on the larger of the speed
specified within the Finance Act, the speed in pressure, or 20%, whichever is
highest. In Type 27Q, mark the PAN area as PANNOTAVBL so the return is
accepted by the system whereas making use of the upper deduction price.
2.
How can an NRI keep away from the upper 20% price once they don’t have a PAN?
Rule 37BC exempts non-resident payees from the upper Part 206AA
price in the event that they furnish particular documentation to the deductor: their identify,
e mail, and phone quantity; their tackle within the nation of residence;
their Tax Identification Quantity (TIN); and a Tax Residency Certificates
(TRC) from the overseas authorities. If the TRC doesn’t comprise all
required particulars, the NRI should additionally submit Type 10F as a supporting
self-declaration. With all Rule 37BC paperwork in place, TDS is deducted
on the regular treaty price or Part 195 price as a substitute of the 20%
default.
Word: Some sources label these classes
otherwise (for example, itemizing C4 and C5 as a substitute of C5 and C9).
All the time verify the precise correction sort in opposition to your RPU model earlier than
submitting.
3.
What are the steps to file a correction return on TRACES?
Begin by downloading the consolidated file from TRACES below
Statements/Funds → Request for Conso File, deciding on the related
Monetary 12 months and Quarter, and finishing KYC validation. As soon as
downloaded, import the file into the RPU and choose the suitable
correction sort. Make the required modifications within the related rows, then
run FVU validation and repair any errors that come up. After getting a
clear .fvu file, add it to TRACES and authenticate utilizing DSC or
EVC.
4. Is Type
27Q required when property is offered BY an NRI?
Sure. When a resident purchaser purchases property from an NRI vendor, the
purchaser should deduct TDS on the sale proceeds below Part 195 and report
it in Type 27Q for that quarter. That is totally different from shopping for property
from a resident vendor, which works by means of Type 26QB.
5. Can DTAA charges be
utilized in Type 27Q?
Sure. If the NRI offers a sound Tax Residency Certificates (TRC) and
Type 10F, the deductor can apply the relevant DTAA price and replicate it
in Type 27Q. The DTAA price is usually decrease than the usual home
price below Part 195.
