TDS return on payments to non-residents: Form 144 (formerly Form 27Q)

When is Form 144 needed?

Any person, resident or not, paying a non-resident a sum chargeable to tax in India must deduct tax before payment. Common examples are an Indian startup paying a foreign software vendor for licences, royalty to an overseas brand owner, interest on an external commercial borrowing, or fees to a foreign consultant for technical services. These deductions now sit in section 393(2) of the 2025 Act.

Tax deducted up to 31 March 2026 was reported in Form 27Q under the 1961 Act. From 1 April 2026, it is reported in Form 144. Salary paid to non-resident employees is reported in the salary return, Form 138, not here.

Rates, treaties and documents

The rate under the Act applies unless a tax treaty gives a lower rate and the payee qualifies. To use a treaty rate, collect a tax residency certificate, the prescribed self-declaration form and, usually, a declaration that the payee has no permanent establishment in India. Where the Act rate applies, surcharge and cess are added; treaty rates are generally applied without them.

If the non-resident has no PAN, the higher 20% rate can apply unless it provides prescribed alternative details, including name, email, contact details, tax identification number and residency certificate. Getting these documents before the first payment avoids deducting at a high rate and arguing later.

Remittance forms 145 and 146

Before remitting money abroad, the payer generally files an online information form, now Form 145 (formerly Form 15CA). For remittances above the prescribed limit that are taxable, a chartered accountant's certificate in Form 146 (formerly Form 15CB) is obtained first, certifying the rate and treaty position.

Banks ask for the Form 145 acknowledgement, and Form 146 where required, before processing the remittance. Data in both forms is later matched with your Form 144, so values, dates and rates must agree across all three.

What data do you need?

Each line in Form 144 carries more information than a resident TDS return, because rates and treaty positions vary by country and type of payment. Keep the following for every remittance made during the quarter.

• Payee name, address, country of residence and PAN or alternative details
• Nature of payment, amount in rupees, and date of payment or credit
• Rate applied and whether under the Act or a treaty, with the treaty article
• Tax residency certificate and self-declaration on file
• Form 145 acknowledgement and Form 146 certificate references
• Challan details for each deposit

Late fee, errors and consequences

Due dates, late fee and interest match other TDS returns: ₹200 a day, capped at the TDS in the statement, plus interest at 1% a month for late deduction and 1.5% a month for late deposit. Failure to deduct can make the payer liable for the tax and lead to disallowance of the expense.

Common errors include treating a payment as not taxable in India without analysis, using a treaty rate without a valid residency certificate, wrong currency conversion, and mismatches with Form 145. Certificates in Form 131 are issued to the non-resident after processing. Refogo's partner professionals can handle non-resident TDS and remittance certificates for Indian subsidiaries.

Step by step

1. 1Determine taxability

   Check whether the payment is taxable in India under the Act and the relevant treaty.

2. 2Collect payee documents

   Obtain PAN or alternative details, residency certificate and declarations.

3. 3Deduct and deposit

   Deduct at the correct rate and deposit through ITNS 281N, using the non-resident option.

4. 4File Forms 146 and 145

   Get the CA certificate where required and file the online remittance form before paying.

5. 5File Form 144

   Prepare, validate and upload the quarterly statement through TAN login.