I am buying a flat from an NRI, do I have to file Form 27Q?
Yes. Form 27Q is the quarterly return of tax deducted at source on payments to non residents, and a property purchase from a non resident seller is one of the payments it covers. The obligation sits with the buyer as payer, not with the seller, and it does not move because the seller offers to handle it. Two practical points follow. The deduction has to be organised before completion, because it comes out of the money passing to the seller. And the return has to describe the deduction accurately, since everything the seller relies on afterwards is built on what the buyer reported.
Do I file Form 27Q for rent paid to a landlord living abroad?
Rent to a non resident is within the payments the return covers, so the tenant or the managing agent who deducts is the person who has to report it quarterly. This catches people who do not think of themselves as being in business at all, which is why it is one of the most commonly missed of these obligations. The deduction and the return go together: deducting and not reporting leaves the landlord unable to show the tax was ever paid on their behalf, and reporting without deducting leaves the payer having reported a deduction they did not make.
Tax was deducted but does not show against my record, who fixes it?
The payer, by revising their own return. This is the single most important thing for a non resident to understand about this filing: the entry lives in the payer's quarterly return, and it cannot be repaired on the non resident's own return. If the identifier, the amount or the section under which the deduction was reported is wrong, the credit will not attach, and no amount of correspondence about the non resident's filing will attach it. So the request has to go back to the payer, with the correct particulars set out, and the revised return is what resolves it.
Does a treaty rate mean I do not have to file Form 27Q?
No. A treaty rate changes the amount deducted; it does not remove the return. In fact the return is where the reduced rate is recorded, so a treaty position applied at the till and never reported is a position with nothing behind it. That has consequences for both sides. The payer is left having deducted less than the domestic rate with no filed explanation of why. The non resident is left with a deduction that does not match either the domestic rate or a reported treaty claim, which is precisely the mismatch that stalls a refund claim later.
Do individuals have to file Form 27Q or only companies?
The obligation follows the payment and the deduction rather than the size or the nature of the payer, so an individual buying a flat or renting a house from a non resident can be filing the same quarterly return as a company paying royalties abroad. There is no small payer exemption to fall back on once the payment is of a kind the return covers. In practice the individual cases are the ones that go wrong, because a company has a payroll or finance function that files returns as a matter of routine and an individual is doing it once.
Which quarter does a payment to a non-resident belong in?
The return is quarterly and is keyed to the deduction, so the quarter to use is the one in which tax was deducted rather than the one in which the invoice was raised or the contract signed. Where a payment is made in instalments, each deduction sits in its own quarter and is reported there, which is what produces two or three entries for what the parties think of as one transaction. Keep the deduction dates with the payment records, because reconstructing which quarter a deduction belonged in is harder than recording it at the time.
Do non-residents pay US estate tax?
Yes, on US-situs assets — and with a far smaller exemption than a US citizen or domiciliary receives, which is why exposure can arise at values people assume are safe. US real property, tangible property located there and shares issued by US companies are generally in; foreign-issued securities and certain deposits generally are not. An estate tax treaty, where one exists, can improve the position considerably. See US estate tax for non-resident aliens.
What is Part XIII withholding tax in Canada?
Part XIII is the Canadian charge on certain amounts paid to non-residents — rent, dividends, interest, royalties, pensions and similar passive income. The payer withholds and remits it, and it is a flat charge on the gross payment rather than on profit, which is why a non-resident landlord can be withheld on far more than the net rental result. Treaties reduce the rate and elective returns recover the excess. See the section 216 return.
