An attempt has been made to create a mini guide for professionals to understand nuisances of new tax audit reporting as far as TDS compliance is concerned. All opinions/view are author's personal view and exact law must be referred to before reaching to any conclusion.

1. TDS compliance reporting in new
tax audit report
DK Bholusaria | dk@bholusaria.com

2. New v/s old clause – Clause 21
Brief description of clause New Clause # Old
Clause #
Changes
Amounts inadmissible under
section 40(a)
(TDS portion)
21(b)(i)
and 21(b)(ii)
17(f)
&
27 (b)(i)
&
27 (b)(iv)
Various scattered
clauses clubbed under
one clause
23/09/2014DK BHOLUSARIA

3. New v/s old clause – Clause 34
Brief description of clause New
Clause #
Old
Clause #
Changes
Whether the assessee is required* to
deduct or collect tax as per the
provisions of Chapter XVII-B or XVII-
BB. If yes, Tax auditor to provide kind
of TDS compliance statement in a
specified table format
34 (a) 27(a)
&
27
(b)(ii)
TCS also added
Back door entry of form
24C after 5 years*.
If the assessee has not furnished the
TDS/TCS return within the due date,
provide complete list of all such
returns
34 (b) - New clause*
Stringent requirements
of reporting
If assessee is liable to pay interest u/s
201(1A) or section 206C(7), tax
auditor to furnish details of interest
and its payment
34 (c) 27
(b)(iii)
New clause*
23/09/2014DK BHOLUSARIA

4. Icons for reference in succeeding slides
Icon Represents
What clause says?
What to look for?
What to collect / documentation?
What / how to report?
This is a new requirement

23/09/2014DK BHOLUSARIA

5. TDS compliance
reporting

6. TDS compliance tree and tax audit reporting
Default
reporting
Clause 34(a)
TDS not
deducted
Clause 21
(b)(i)(A) or
21(b)(ii)(A)
TDS deducted
TDS Deducted
/ Deposited late
Clause 34(c)
Not paid before
due date u/s
139(1) / 200(1)
Clause
21(b)(i)(B) or
21(b)(ii)(B)
TDS return
reporting
All returns filed
on time
Nothing to
report
Any return filed
late or not
filed?
Clause 34(b)
Not
Applicable
Nothing to
report
Deduction part
reporting
TDS / TCS
Provisions
applicable
TDS/TCScompliancetree
23/09/2014DK BHOLUSARIA

7. Case study on
applicability of TDS
provisions

8. Case study # 1 on applicability of TDS/TCS provisions
 Individual assessee
 Business start date: 15-06-2013
 Nature of business: Manufacturing of spare parts
 Turnover of FY 2013-2014: ₹ 60 Lakhs
 Total income: ₹ 4.5 Lakhs
 Expenses include:
 Salary & wages: ₹ 15 Lakhs (all below threshold limit)
 Audit Fees: ₹ 30,500
 Fees to consulting engineers: ₹ 3 lakhs (above threshold limit)

9. Case study # 2 on applicability of TDS/TCS provisions
 Individual assessee
 Business start date: 01-01-2014
 Nature of business: Consultancy / Outsourcing
 Turnover of FY 2013-2014: ₹ 90 Lakhs
 Total income: ₹ 6 Lakhs
 Major expenses:
 Salary & wages: Nil, Computer rentals: ₹ 3 Lakhs, Office Rent: ₹ 12
Lakhs
 Payment to outsourced manpower supplier: ₹ 40 Lakhs (above
threshold limit)
 Audit Fees: ₹ 70,000
 Payment to CA for service tax / other legal compliances: ₹ 1.5 lakhs
(above threshold limit)

10. Case study # 3 on applicability of TDS/TCS provisions
 Individual assessee
 Business start date: 01-01-2014
 Nature of business: Consultancy / Outsourcing
 Turnover of FY 2013-2014: ₹ 120 Lakhs
 Total income: ₹ 6 Lakhs
 Major expenses:
 Salary & wages: Nil, Computer rentals: ₹ 3 Lakhs, Office Rent: ₹ 12
Lakhs
 Payment to outsourced manpower supplier: ₹ 40 Lakhs (above
threshold limit)
 Audit Fees: ₹ 70,000
 Payment to CA for service tax / other legal compliances: ₹ 1.5 lakhs
(above threshold limit)

11. Clause 21(b)(i)/(ii)
Disallowance under section 40(a)

12. Clause 21 (b)(i)(A) / 21(b)(ii)(A) – TDS not deducted
(b) Amounts inadmissible under section 40(a):-
(i) as payment to non-resident referred to in sub-clause (i)
(A)Details of payment on which tax is not deducted:
i. date of payment
ii. amount of payment
iii. nature of payment
iv. name and address of the payee
…
…
(ii) as payment referred to in sub-clause (ia)
(A)Details of payment on which tax is not deducted
i. date of payment
ii. amount of payment
iii. nature of payment
iv. name and address of the payee
23/09/2014DK BHOLUSARIA

13. Clause 21 (b)(i)(B) / 21(b)(ii)(B) – TDS deducted but not deposited
(b) Amounts inadmissible under section 40(a):-
(i) as payment to non-resident referred to in sub-clause (i)
(A) Details of payment on which tax has been deducted but has not been
paid during the previous year or in the subsequent year before the
expiry of time prescribed under section 200(1):
i. date of payment
ii. amount of payment
iii. nature of payment
iv. name and address of the payee
v. amount of tax deducted
…
(ii) as payment referred to in sub-clause (ia)
(A) Details of payment on which tax has been deducted but has not been
paid on or before the due date specified in sub- section (1) of
Section 139
i. date of payment
ii. amount of payment
iii. nature of payment
iv. name and address of the payee
v. Amount of tax deducted
vi. Amount out of (v) deposited, if any
23/09/2014DK BHOLUSARIA

14. Clause 34(b)
TDS returns compliance

15. Clause 34(b) – TDS returns compliance
whether the assessee has furnished the statement of tax deducted or
tax collected within the prescribed time. If not, please furnish the
details:
(1) Tax deduction and collection Account Number (TAN)
(2) Type of Form
(3) Due date for furnishing
(4) Date of furnishing, if furnished
(5) Whether the statement of tax deducted or collected contains
information about all transactions which are required to be reported
a. Make a list of all TANs assessee has.
b. Make a list of all returns (for each TAN and quarter), assessee is
required to file, with due date and actual date of filing. NIL returns are
not required to be filed!
c. Do not forget to take copy of all PRs from assessee as audit evidence.
d. Wherever returns are filed late, report in clause 34(b)

23/09/2014DK BHOLUSARIA

16. Clause 34(b) – TDS returns compliance
SL # TAN Type of Form Due date
for
furnishing
Date of
furnishing, if
furnished
Whether the statement of
tax deducted or collected
contains information
about all transactions
which are required to be
reported
1 DELD01234F 24Q 15/12/2013 17/12/2013 Yes
2 DELD01234F 26Q 15/12/2013 17/12/2013
No. Transporter details on
which TDS was not
deducted u/s 194C (6) were
not reported
3 RTKD9765X 27Q 15/05/2014 - NA
4 MUMD9211F 27EQ 15/05/2014 18/05/2014 Yes
Sample reporting
23/09/2014DK BHOLUSARIA

17. Clause 34(c)
Interest payable u/s 201(1A)/206C(7)

18. Clause 34(c) – Interest payable u/s 201(1A)/206C(7)
Whether the assessee is liable to pay interest under section 201(1A) or
section 206C(7). If yes, please furnish:
(1) Tax deduction and collection Account Number (TAN)
(2) Amount of interest under section 201(1A) / 206C(7) is payable
(3) Amount paid out of column (2) along with date of payment.
a. All cases of late deduction as well late payments (and even non-
deduction) are covered by reporting under this clause.
b. Irrespective of payment of interest, reporting has to be made.
c. You may download Aggregated TDS Compliance report from TRACE.
Aggregated TDS Compliance report will list down all the TAN's with
defaults mapped to a deductor's PAN.
d. Special emphasis should be given to incorrect date of
payments/deduction reported in TDS returns

23/09/2014DK BHOLUSARIA

19. Clause 34(c) – Interest payable u/s 201(1A)/206C(7)
SL # TAN Amount of interest
under section
201(1A) / 206C(7) is
payable
Amount paid
out of column
(2) along with
date of
payment.
Remarks
1 DELD01234F ₹ 15750
₹ 15750
dated
15/12/2013
For 26Q
2 DELD01234F ₹ 7000
₹ 7000
dated
15/12/2013
For 27Q
3 DELD01234F ₹ 2345 Not paid For 27Q
4 MUMD9211F ₹ 1435
₹ 1000
Dated
14/11/2013
For 27EQ
Sample reporting
23/09/2014DK BHOLUSARIA

20. Clause 34(a)

21. Clause 34(a) – TDS/TCS compliance statement
(a) Whether the assessee is required to deduct or collect tax as per the
provisions of Chapter XVII-B or Chapter XVII-BB, if yes please furnish:
(1) Tax deduction and collection Account No. (TAN)
(2) Section
(3) Nature of payment
(4) Total amount of payment or receipt of the nature specified in column (3)
(5) Total amount on which tax required to be deducted or collected out of
(4)
(6) Total amount on which tax was deducted or collected at specified rate
out of (5)
(7) Amount of tax deducted or collected out of (6)
(8) Total amount on which tax was deducted or collected at less than
specified rate out of (7)
(9) Amount of Tax deducted or collected on (8)
(10)Amount of Tax deducted or collected not deposited to the credit of the
Central Government out of (6) and (8)

23/09/2014DK BHOLUSARIA

22. Clause 34(a) – TDS/TCS compliance statement
 In 2009 Government had made unsuccessful attempt
to bring in form 24C – TDS compliance statement
through notification no. 31/2009 dated 25th March
2009 read with circular no. 02/2009.
 This statement is exact copy of form 24C (except 1
field)
 This is the very statement which all TDS AO
invariably demands during proceedings u/s 201 {TDS
Survey}
 It’s a more or less reconciliation of your PL* with your
TDS/TCS returns.
 If assessee is not covered by TDS/TCS provisions at
all – No need to jump into this clause.
* Scope of 34(a) travel beyond PL
23/09/2014DK BHOLUSARIA

23. Various scenarios for
clause 34(a)

24. Scenario # 1 : Interest expense u/s 194A
Particulars Amount (₹)
Interest as per PL A 1.10 cr
Interest capitalised as per AS-16 B 0.15 cr
Sub total (A+B) C 1.25 cr
Total amount paid below threshold limit D 0.30 cr
Total amount for which valid 15G/15H recd. E 0.20 cr
Total amount paid to banks F 0.25 cr
Balance (C) - (D+E+F) G 0.50 cr
Total amount covered by sec. 197 @ 1% H 0.20 cr
Balance (G-H) I 0.30 cr
TDS not deducted J 0.01 Cr
Balance (I-J) K 0.29 Cr
TDS on I … 20 Lakhs @ 10% L 2.90 Lakhs
TDS on F … 20 Lakhs @ 1% M 0.20 Lakhs
23/09/2014DK BHOLUSARIA

25. Scenario # 1 : Disclosure
TAN (1) DELD09763X
Section (2) 194A
Nature of payment (3)
Interest other than
interest on securities
Total amount of payment or receipt of the nature
specified in column (3)
(4) 1.25 cr A
Total amount on which tax was required to be
deducted or collected out of (4)
(5) 0.50 cr G
Total amount on which tax was deducted or
collected at specified rate out of (5)
(6) 0.49 cr H+K
Amount of tax deducted or collected out of (6) (7) 3.10 Lakhs L+M
Total amount on which tax was deducted or
collected at less than specified rate out of (5)
(8) Nil
Amount of tax deducted or collected on (8) (9) Nil
Amount of tax deducted or collected not deposited
to the credit of the Central Govt. out of (6) and (8)
(10) Nil
23/09/2014DK BHOLUSARIA

26. Scenario # 2 : Salary
Particulars Amount (₹)
Gross salary and benefits as per PL A 50 Lakhs
Perk value of car included in car rental expense (under
administrative expenses of PL)
B 2 lakhs
Perk value of furnished accommodation included in
Salary and benefit already (actual rental paid: 10 lakhs)
C 3 Lakhs
Employer Contribution towards EPF (included in Gross
salary above)
D 1.2 Lakhs
Entire salary of directors for FY 2013-2014 which is still
payable as on 12-09-2014 and no TDS deducted due
to non-payment. Board planning to pay salary on 15-
03-2015
E 5 Lakhs
Total amount of salary paid below threshold limit due to
various provisions of act
F 20 Lakhs
Tax deducted and paid on salary during the year G 1.2 lakhs
23/09/2014DK BHOLUSARIA

27. Scenario # 2 : Computation of Values for 34(a)(4) /(5)
Particulars Amount
(₹ lakhs)
Gross salary and benefits as per PL 50.00
Add: Perk value of car included in car rental expense + 2.00
Gross Value for the purpose of Clause 34(a)(4) 52.00
Less: (Actual rental paid for furnished accommodation included in
salary and benefits – Perk Value of furnished accommodation)
- (7.00)
Less: Entire salary of directors for FY 2013-2014 which is still
payable as on 12-09-2014 and no TDS deducted due to non-
payment.
- (5.00)
Less: Employer Contribution towards EPF (only employer
contribution more than 12% of salary is taxable)
- (1.20)
Less: Total amount of salary paid below threshold limit due to
various provisions of act
- (20.00)
Gross Value for the purpose of Clause 34(a)(5) 18.80
23/09/2014DK BHOLUSARIA

28. Scenario # 2 : Disclosure
TAN (1) DELD09763X
Section (2) 192
Nature of payment (3) Salaries
Total amount of payment or receipt of the nature
specified in column (3)
(4) 47 lakhs
Total amount on which tax was required to be
deducted or collected out of (4)
(5) 17 Lakhs
Total amount on which tax was deducted or
collected at specified rate out of (5)
(6) 18.80 lakhs
Amount of tax deducted or collected out of (6) (7) 1.2 Lakhs
Total amount on which tax was deducted or
collected at less than specified rate out of (7)
(8) Nil
Amount of tax deducted or collected on (8) (9) Nil
Amount of tax deducted or collected not deposited
to the credit of the Central Govt. out of (6) and (8)
(10) Nil
23/09/2014DK BHOLUSARIA

29. Suggested disclaimer
on clause 34(a)

30. In column (4) of Clause 34(a) of Form No. 3CD "total
amount of payments of the nature specified in column (3)"
has been mentioned to the extent it was possible; out of
which the aggregate "amount on which tax was not required
to be deducted" in view of any exemption / deduction
allowable under the respective section or the payment being
below the threshold provided or the assessee has obtained
Permanent Account Numbers (PAN) of the payee u/s
194C(6) etc., as the case may be, has been reduced to
derive the amount on which tax was required to be deducted
for reporting in column (5) of Clause 34(a) of the Form No.
3CD.
Clause 34(a) – Suggested disclaimer # 1
23/09/2014DK BHOLUSARIA

31. Though the assessee has made available the books of account,
necessary records and relevant documents for the purpose of our
examination for reporting the particulars in Clause 34(a) of Form
No. 3CD, however, keeping in view the scope of section 194C of
the Income Tax Act,1961 and considering the volume of payments
covered in section194C it is not possible to prepare and compile
the "total amount of payment of the nature specified in column (3)".
It is not out of place to mention that on most of the payments made
for carrying out "work' in pursuance of "a contract" no tax is
required to be deducted in view of the threshold provided in sub-
section (5) and the provisions of sub-section (6) of section 194C.
Therefore, in column (4) of Form No. 3CD the aggregate amount
as declared in the quarterly statements of tax deducted at source
furnished in Form No. 26Q has been reported.
Clause 34(a) – Suggested disclaimer # 2
23/09/2014DK BHOLUSARIA

32. Thanks !