Form 27Q is the quarterly TDS return Indian deductors file to report tax deducted on payments to non-residents and foreign companies under Section 195 of the Income Tax Act.
Form 27Q is the statutory quarterly return through which Indian deductors report Tax Deducted at Source (TDS) on payments made to non-residents (including non-resident Indians) and foreign companies. Filed under Section 195 and other non-resident provisions of the Income Tax Act, 1961, Form 27Q covers cross-border payments of interest, royalty, fees for technical services, dividends, capital gains, professional fees and any other India-sourced income payable to a person outside India.
Form 27Q sits alongside Form 24Q (salary) and Form 26Q (non-salary, residents) as one of the three primary TDS returns. Its scope is unique: any payment that crosses the Indian border to a non-resident or foreign company and is chargeable to tax in India falls within Form 27Q.
The legal trigger is Section 195(1) of the Income Tax Act, which states that any person responsible for paying any sum chargeable under the Act (other than salary covered by Section 192) to a non-resident or foreign company shall, at the time of credit or payment whichever is earlier, deduct income tax at the rates in force. The rate in force is the lower of the rate prescribed in the Finance Act and the rate under the applicable DTAA — provided the non-resident furnishes the documents required to claim the treaty rate.
Form 27Q is filed quarterly on the same due dates as Form 24Q and Form 26Q:
| Quarter | Period Covered | Due Date |
|---|---|---|
| Q1 | April — June | 31 July |
| Q2 | July — September | 31 October |
| Q3 | October — December | 31 January |
| Q4 | January — March | 31 May |
Common payment types reported in Form 27Q:
The TDS must be deposited via challan ITNS-281 by the 7th of the following month, except for March deductions which are due 30 April.
Section 195 doesn’t prescribe rates directly. The applicable rate is the lower of the rate from Part II of the First Schedule to the Finance Act and the DTAA rate, subject to documentation requirements. Common rates for FY 2026-27:
| Income Type | Section / Rate (Act) | Typical DTAA Range |
|---|---|---|
| Interest (non-bank) | 195 / 20% | 10–15% |
| Royalty | 195 / 20% | 10–15% |
| Fees for Technical Services | 195 / 20% | 10–15% |
| Dividends | 195 / 20% | 5–15% |
| Long-term capital gains (shares) | 112A / 12.5% | varies |
| Long-term capital gains (other) | 112 / 12.5% | varies |
| Short-term capital gains (shares) | 111A / 20% | varies |
To claim a DTAA rate, the non-resident must provide:
Without these, Section 206AA applies and the rate defaults to the higher of the Act rate or 20%.
The two forms are often confused because both cover non-salary payments, but the deductee universe is different:
| Feature | Form 26Q | Form 27Q |
|---|---|---|
| Deductee | Resident (individual, firm, company) | Non-resident or foreign company |
| Primary section | 193, 194 series, 194Q | 195 (and 192/194LB/194LC for specific NR cases) |
| DTAA application | No | Yes — most common reason for rate variation |
| TRC / Form 10F required | No | Yes, to claim treaty rate |
| Country of deductee captured | No | Yes, with country code |
| Form 15CA/15CB linkage | Not applicable | Required at remittance stage |
| Certificate generated | Form 16A | Form 16A (with non-resident details) |
A company that pays both Indian vendors and an overseas consultant must file Form 26Q for the Indian payments and Form 27Q for the overseas one — never the same form for both.
Form 27Q is more error-prone than Form 26Q because of the cross-border documentation chain. Frequent issues:
An Indian SaaS company pays its US-based developer agency for white-label software in Q1 of FY 2026-27. The agency provides a US Tax Residency Certificate, e-filed Form 10F, PAN, and a no-PE declaration.
The company files Form 15CA (Part C) and Form 15CB at the remittance stage, deducts TDS via challan ITNS-281 by 7 May 2026, and reports the deduction in Form 27Q for Q1 by 31 July 2026. The deductee row in Annexure I captures: PAN of the agency, country code US, address abroad, section 195, rate 15%, gross ₹42,50,000, TDS ₹6,37,500. Form 16A is then issued to the agency within 15 days.
If the agency had not provided the TRC and Form 10F, the rate would default to 20% under the Act (higher than the DTAA rate), increasing the withholding to ₹8,50,000.
For employers that hire international contractors or pay overseas vendors, Omnivoo handles the full Section 195 chain — collecting the TRC, validating Form 10F e-filing acknowledgement, applying the lower of the Act and DTAA rate, generating Form 15CA/15CB at the remittance event, and aggregating every quarter’s deductions into a pre-validated Form 27Q file. For more on related TDS infrastructure, see Tax Deducted at Source (TDS), Form 26Q and Non-Resident Indian (NRI).
Form 26Q is the quarterly TDS return Indian deductors file to report tax deducted on non-salary payments to residents such as contractor fees, professional fees, rent, interest and commission.
A Non-Resident Indian is an Indian citizen or person of Indian origin whose physical presence in India is below the thresholds set under Section 6 of the Income Tax Act, making them taxable in India only on Indian-sourced income.
A fixed place of business in a foreign country that triggers corporate tax liability for the parent entity under tax treaty provisions.
TDS is the income tax an employer withholds from an employee's salary each month and deposits with the government on their behalf.
Stop worrying about Indian payroll and compliance terms. Omnivoo manages everything — PF, ESI, TDS, professional tax, and more — across all 28 states.
Get started