The Income Tax Department mandates the use of Form 144 for quarterly reporting of tax deducted at source on payments to non-residents, replacing Form 27Q from 2026, with detailed filing procedures and penalties outlined for non-compliance.
Form 144 is now the quarterly return used to report tax deducted at source on non-salary payments made to non-residents under the Income-tax Act, 2025. The form replaces the older Form 27Q for transactions governed by the new framework from April 1, 2026, while earlier periods continue to be handled under the previous law. Official guidance from the Income Tax Department says the return covers payments such as interest, professional fees, technical services and royalty where tax must be withheld.
The filing obligation falls on any deductor making a taxable payment to a non-resident, including companies, firms, LLPs, government bodies, individuals, HUFs and other entities. The exact reporting requirement depends on the nature of the payment, the applicable tax rule and any treaty relief that may be available. Industry guides note that a payment to a non-resident does not automatically trigger a filing; the deductor must first determine whether tax deduction actually applies.
The return must be filed each quarter, with due dates of July 31, October 31, January 31 and May 31 for the four reporting periods. The official user manual confirms these deadlines. Before filing, deductors are expected to ensure the tax has been deposited correctly and that PAN, challan, payment and deductee details match the records used to prepare the statement.
The filing process is electronic. Users are required to prepare the statement with the latest Return Preparation Utility, validate the file, generate the FVU output and upload the zipped return through the e-filing portal using the deductor’s TAN. The Income Tax Department also requires supporting details such as the deductee’s PAN where available, country of residence, payment information, TDS rate, challan particulars and any Tax Residency Certificate or treaty documents if lower withholding is claimed.
Corrections are allowed, but only within two years from the end of the tax year in which the original statement was due. For example, a correction linked to the first quarter of tax year 2026-27 may be filed until March 31, 2029. Officials and practitioners say errors should be fixed as soon as they are found to avoid credit mismatches for the deductee and further compliance work.
Late or incorrect filing can lead to financial consequences. According to the guidance, a daily fee of ₹200 may apply for delay, subject to the amount of tax deductible or collectible, while penalties for delayed filing or incorrect information can range from ₹10,000 to ₹1,00,000. A further daily penalty may also apply in some cases. The department says filing may escape one penalty if the tax, fee and interest have been paid and the statement is submitted within one month of the due date, subject to the law’s conditions.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
