Less than seven days are left for the financial year 2023-24. Tax teams need to be assured about the numbers after reconciling their books’ data with the government data. Let’s Review the end-of-financial-year checklist for Tax Deducted at Source (TDS).
TDS Receivable
The TDS Receivable ledger should be reconciled with the Latest 26AS form downloaded from the TRACES portal.
If a few customers have not yet deposited TDS and it is not reflected in the 26AS form or customers have deducted TDS at a higher rate despite the submission of Lower Tax Deduction Certificates, follow-up should be done with such customers so that there is no loss of working capital and the total amount can be claimed in income tax refund/a lesser amount of tax has to be deposited.
If some entries / Customers are found in the 26AS form but not in the books, then the accounts receivable team should be involved in updating the books so that the books are updated, and problems can be avoided during the tax audit at a later stage.
If a TDS booking is made on a payment receipt basis, all entries for which payment has not yet been received shall be carried forward.
TDS Entries brought forward from the previous financial year are to be checked to see if they have been reconciled.
Sales Amount as per GSTR 1 shall be reconciled with Sales in 26AS form.
TDS Payable
All expenses booked in books of accounts shall be reconciled to check if appropriate TDS deductions have been made. While doing this reconciliation—206 AB, PAN Aadhar linkage, lower tax deduction certificates shall be considered to avoid under deductions. Inappropriate TDS deductions may attract penalties later. TDS Provision entries are recorded, and TDS is deposited with the Government of India.
Reconciliation output shall be reconciled with forms 26Q and 27Q to ensure the appropriate amount of TDS has been deposited with the government. Based on these reconciliations, Year till date form 3CD shall be generated and reviewed before finalising the tax numbers.
A proactive approach can save future assessments and penalties. Technology can help in automating these processes and give time to update the books before closing the financial year.