TDS on Sale of Property by NRI: Form 27Q Explained Under Income Tax Rules

Paying a Non-Resident Indian is not just a transaction. This becomes especially relevant in cases involving TDS on sale of property by NRI under Form 27Q where tax deduction, reporting obligations and compliance risks are significantly higher. To navigate these requirements correctly, it is important to understand what is Form 27Q and when it applies to non-resident transactions.

Many people slip up here because TDS on NRI payments works differently from regular TDS. Missing a step in the TDS return filing process can lead to notices, penalties, or delays in the NRI receiving tax credit.

This guide explains Form 27Q in a clear and practical way. It covers who needs to file it, the details required for the TDS return, the filing timelines, and the consequences of late or incorrect filing.

What is Form 27Q?

Form 27Q is filed every quarter to report tax deducted on non-salary payments made to Non-Resident Indians and foreign entities. It applies when tax is deducted under Section 195 of the Income Tax Act.

Whenever you deduct TDS on a payment made to a non-resident, the tax department expects that deduction to be reported separately. Form 27Q serves this purpose. It tells the department who made the payment, who received it, and how much tax was deducted and deposited.

Form 27Q is important because it records the tax deducted and links it to the non-resident’s tax account. Filing it late or with errors can lead to penalties and make it harder for the deductee to claim their TDS credit.

For more clarity on Form 27Q and its relevance in NRI transactions, see our blog on “All You Need to Know about Form 27Q.” It offers extra details to help you better understand the form.

Who Needs to File Form 27Q?

Any individual, business, or entity that makes non-salary payments to a Non-Resident Indian or a foreign entity and deducts TDS is required to file Form 27Q.

Deductor (Payer)

The deductor is the person or entity in India making the payment to the non-resident. The deductor must:

• Deduct TDS before making the payment
• Deposit the deducted tax with the government
• File Form 27Q every quarter

Deductee (Payee)

The deductee is the NRI or foreign entity receiving the payment. Their residential status is determined as per Section 6 of the Income Tax Act.

To ensure correct TDS deduction, the deductee should provide their PAN. If PAN is not available, TDS may be deducted at a higher rate, as prescribed under the law.

Payments That Require Filing Form 27Q

Form 27Q applies to most income payments made to NRIs, including:

• Interest income (loans, fixed deposits)
• Rent received from property in India
• Professional or technical service fees
• Royalty payments
• Dividend income
• Capital gains
• Sale of property by an NRI

If the payee is a non-resident and TDS is deducted, Form 27Q becomes mandatory.

How Form 27Q Applies to TDS on Sale of Property by an NRI

In property transactions involving non-residents, TDS on sale of property by NRI under Form 27Q is a mandatory reporting requirement that buyers must comply with after deducting tax under Section 195.

When you purchase property from an NRI:

• TDS is deducted on the entire sale consideration, not just capital gains
• The rate depends on whether the gain is long-term or short-term
• Surcharge and health and education cess may apply

Because of these higher rates, buyers often apply for a lower or nil deduction certificate. But regardless of the rate applied, the TDS must still be reported through Form 27Q.

This is why Form 27Q for sale of property is closely tracked by the department.

Details Required in Form 27Q

Form 27Q collects specific details about the payer, the non-resident recipient, and the tax deducted. Keeping these details ready helps avoid errors during filing.

1. Deductor (Payer) Details

• Name of the deductor
• Address
• PAN
• TAN
• Contact details
• Financial year and assessment year
• Acknowledgement or receipt number of any earlier return filed for the same quarter, if applicable

2. Deductee (Payee) Details

• Name of the non-resident or foreign entity
• Complete address
• PAN (or other valid identification, if PAN is not available)
• Contact details such as phone number and email ID

3. Challan Details

• Challan serial number
• BSR code of the bank
• Date of tax deposit
• Mode of payment
• TDS amount deposited
• Surcharge and cess, if applicable
• Interest amount, if any
• Total tax deposited

4. Deduction Details

• Date of payment or credit
• Amount paid or credited
• TDS rate applied
• Amount of tax deducted
• Nature of remittance code

Entering these details accurately is important, as any mismatch can lead to rejection or notices later.

How to File Form 27Q Online

Filing Form 27Q involves using the prescribed TDS utilities and validation tools provided by the tax authorities.

Step 1: Visit the TIN website and download the e-TDS/TCS Return Preparation Utility (RPU). The utility is free and available directly on the site.

Step 2: Use the RPU to fill out Form 27Q. The tool walks you through each section. Keep details like your information, the NRI payee’s details, the tax deducted, and challan details handy before you start.

Step 3: Once the form is completed, run it through the File Validation Utility provided in the RPU. This helps check the return for any errors.

Step 4: After successful validation, submit the form at a TIN Facilitation Center (TIN-FC) set up by NSDL e-Gov.

Knowing the steps is one part of the process, but filing Form 27Q correctly often needs closer attention to details like validation, challan mapping, and error checks. Small mistakes here can delay compliance or lead to notices. For a clear, step-by-step explanation, refer to our detailed guide on how to file Form 27Q.

Due Dates for Filing TDS Return Form 27Q

Form 27Q is filed on a quarterly basis. The due date depends on the quarter in which the TDS is deducted. Filing on time is important, as delays can attract late fees and penalties.

Below are the applicable due dates:

Quarter	Period Covered	Due Date
Q1	April to June	31 July
Q2	July to September	31 October
Q3	October to December	31 January
Q4	January to March	31 May

If TDS is deducted in any quarter, Form 27Q must be filed by the due date for that quarter, even if the deduction happened towards the end of the period.

Consequences of Late Filing of TDS Return Form 27Q

If Form 27Q is not filed on time, it can lead to additional costs and compliance issues, even if the tax has already been deposited.

Late Filing Fee

A late fee is charged under Section 234E.

• ₹200 per day of delay
• Calculated until the return is filed
• The total fee cannot exceed the TDS amount

This fee applies automatically for delayed filing.

Penalty for Non-Compliance

In some cases, a separate penalty may be imposed under Section 271H.

• The penalty can range from ₹10,000 to ₹1,00,000
• It usually applies in cases of non-filing or incorrect filing

Impact on the Deductee

Delayed or incorrect filing can also prevent the non-resident from claiming TDS credit on time, which often leads to follow-ups and notices.

Final Takeaway

Form 27Q is not just another compliance form. It plays a critical role in NRI taxation, especially for high-value transactions like property sales. A small mistake in rates, remittance nature, or reporting can snowball into long-term tax issues. If you want your Form 27Q handled correctly and need support to file your TDS return on time, LegalWiz.in can take care of it end to end. From accurate TDS calculation to return filing and certificate support, it helps you stay compliant without the extra hassle.