TDS payable under 34A – Manner and Problem areas

By Vijender Singh — In Accounting Basics, Accounting Process, Tax Automation, Tax Law Changes, Tax Strategy, Tax Technology Startup, Tech Startup — August 1, 2022



The recon of the 34A is probably the most crucial recon of the Form 3CD. 

Usually, companies take the data as filled out in the TDS returns filed during the year and submit the same with the details from all the quarters. 

However, in order to get the same approved from the Auditor to sign on Form 3CD, the companies need to provide the analysis of all the transactions on which the TDS was not deducted with reasons and the view point as why a particular transaction has been taken as exempt or under threshold check for the vendors. 

This primarily means that every transaction of the general ledger needs to be scrutinized under the different sections of the TDS chapter and decided upon for the TDS applicability and non-applicability. Also, commentary to be kept for the auditor to check and verify. 

This makes the recon, of 34A clause, a very difficult task. 

There are many transactions which are not tax deductible but still needs to be deducted for TDS provisions like TDS on Dividend Payable. 

There has to be a recon of the total general ledger transactions versus the TDS sections for the year. 

The exempt transactions need their due classification and the reasoning. 

With new compliance requirement of 206AB compliant PAN numbers, the appropriate check has to be maintained in some sort of systematic manner and the due higher rate of TDS has to be applied. 

The number of TDS deductees’ have increased significantly to check for the 206AB and ever since the TDS on Dividend came into picture, the huge number of the shareholders for the listed companies is creating a sheer pressure on the finance teams to ensure the TDS compliance. 

194Q has also increased the number of transactions to be scrutinized for applicability of TDS. 

The expense ledgers need to be reconciled with the expenses claimed in the tax return. The transactions which have TDS provisions and are not part of tax return deductible expenses have to be reconciled and reported separately. 

All these reconciliations are now an integral part of the corporate finance and direct tax function. 

With so many requirements and the gravity of the importance of the TDS provisions, it becomes utmost important to provide a technology tool to the TDS payable function. 

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