Borivali Central CPE Study Cricle of

WIRC of ICAI

TDS Practical issues in Bank Branch Audit & its

reporting In Tax Audit Report

Tax-O-Smart |Technology empowering your business |

R J SONI & ASSOCIATES | Chartered Accountants |
Corporate Office: MUMBAI
Kamla Niwas | Plot No. 136/141 | Gorai-1 | Borivali (W) | Mumbai-091 Email: info@rjsa.in | web: carjsoni.com
| Tele fax: - 022- 28673458.
Tel phone:08097090024/25/26/27/28, 022-28672008
The material contained in the ensuing slides is for general information,
compilation and the views of the speaker and is purely for general
discussion at the seminar and it should not be construed and binding
either on the part of the Speaker or the Institute/Study Circle. It is not
intended to be legal advice on any particular matter. Since the features of
the website are dynamic in nature, it is advised in your own interest to
refer to Government publications including the Income Tax Act and Rules
before arriving to any final conclusion. Members are requested to refer to
the Act, Laws, Rules and Decisions of the various courts of law from time
to time depending on a particular case to case as may be applicable to
them
The Income Tax Department of India introduced the concept of TDS to
collect tax from every source of income. Tax Deduction at Source (TDS)
is one of the means of collection of direct taxes. It is one form of Advance
Tax .TDS constitutes nearly 40% of the direct tax collections.
TDS is an indirect mechanism of collecting tax which combines twin
concepts of “pay as you earn” and “collect as it is being earned.”It
facilitates sharing of responsibility of tax collection between the deductor
and the tax administration. It ensures regular inflow of cash resources to
the Government. It acts as a powerful instrument to prevent tax evasion as
well as expands the tax net.

25/10/2020
 Pay as you
Earn

Regular Cash Avoid

Inflow Evasion

Widening of Shift the

Tax Base Responsibility
 TDS Provision Applicable to Banks
TDS provision Applicable to Banks

➢ Section 192: TDS on salary

➢ Section 194A: TDS on Interest (other than interest on securities).
➢ Section 194C: TDS on Payment to contractor/sub-contractor.
➢ Section 194-I: TDS on Rent
➢ Section 194H: TDS on Commission or brokerage
➢ Section 194J: TDS on Fee for professional / Technical services;
➢ Section 194N: TDS on Cash withdrawal.
➢ Section 194P: Tax deduction by specified banks while making
payments (pension or interest) to specified senior citizens
➢ Section 194Q: Payments to residents for the purchase of goods

TCS provisions applicable to Banks

➢ Section 206C(1G): TCS on remittance under LRS

➢ Section 206C(1): TCS on Sale of Scarp
Deposit - TDS Payment
Due Date For Payment of TDS
Due Date of Deposit of
Amount Paid / Credited TDS
In Month of March 30th April
Others
In Other Months 7th of the Next Month
 Declare – Returns & Certificate

Form No.24Q • TDS on salary Form 16 - Annually

• TDS on payment other than salary to a non-

Form No. 27Q resident Form 16A - Quaterly

Form No. 26Q • TDS on payment other than salary to a resident Form 16 A- Quaterly

• Quarterly statement of collection of (TCS) tax at

Form No. 27EQ source.
Form 27D - Quaterly
 Declare – Filing Return
Due Date of Filing Various Statement
Download Download
Certificate Certificate
Form 15G / H TCS Return TDS Return Form16A Form27D

Quarter 1 15th July 15th July 31st July 15th August 30th July

Quarter 2 15th October 15th October 31st October 15th November 30th October

Quarter 3 15 th January 15 th January 31st January 15th February 30 th January

Quarter 4 30th April 15th May 31st May 15th June 30th May
 TDS Procedure at Various Bank

Different Banks follow different procedure for TDS

Compliances

➢ Decentralized TDS – TDS deduction, Payment and

Filing is done at Branch Level

➢ Centralized TDS – TDS Payment and Filing is done at

Head Office Level, however TDS deduction is done at
Branch Level

➢ Semi- Centralized TDS – TDS Payment and Filing is

done at Regional office, however TDS deduction is
done at Branch Level
 Terminology used by Bank

Different terminology used by bank

1) Sol ID - It’s the identification number of that branch. Sol ID is unique for each
branch
2) GL Code – Its Ledger number. Generally for different type of TDS, Bank uses
different GL Code
3) CRM Report / TDS Register – It contain the details of all the customer on which
TDS is deducted
4) Interest Certificate – It contain system wise report of Particular Client

Different Types of GL
- TDS on Vendor Payment
- Resident TDS on Interest
- Non-Resident TDS on Interest
- TDS on Salary
- TDS on Cash Withdrawal
- TCS on Foreign Remittance
 TDS on Interest

TDS on Interest is paid to Resident is deducted u/s 194A @ 10% if the interest amount is more than 40000/50000 during
the year
TDS on Interest is paid to Non-Resident is deducted u/s 195 @ 30.00% plus surcharge and education cess

Reconciliation of TDS Deducted with TDS payable and TDS Paid

➢ TDS Deducted Report - TDS Register / CRM report

➢ TDS Payable – GL Report

➢ TDS Paid – Challan

The Total in all 3 report should be matched

 Non Deduction of TDS

Generally there would be 4 reason for non deduction of TDS

1) Below Threshold limit – Total Interest paid is below threshold limit

2) Self Declaration- Client has submitted self declaration in the form of Form 15G/H
3) Exemption u/s 196 - Special exemption is provided to the customer
4) Any other reason

On sample basis verify the reason of Non declaration with the supporting documents

As per section 197A – Resident whose income is below exemption can submit self declaration for non deduction of TDS

Points to taken care for Form 15G/H

1) List of Person submitted Form 15G/H

2) Sol Id wise Consolidate statement of Form 15G/H
3) Sample basis check the declaration of the Form 15G/H with the list
 TDS on Payment to Vendors

TDS on Payments to vendors includes

1) Rent Paid to Landlords

2) Amount paid to Contractor for work
3) Amount paid to Chartered Accountants / Lawyers
4) Commission Paid to DSA

Points to be taken care

1) Verify the residential Status of the Person to whom payment

2) Verify the supporting document – Rent Agreement, Rent Slip, Invoice, Work contract etc
3) Verify the GL balance
4) Verify the TDS Challan
 Practical issue faced during Bank Audit

Practical issues faced during Bank Audit

➢ TDS is deducted automatically, branch does not have any role in it

TDS in case of Interest is deducted by system, however the many time Banks do manual reversal of TDS as
such on sample basis that is for 1 month reconcile the TDS deducted with TDS paid and also the report of
manual reversal made during the period

➢ Payment is made directly by the Head office / Regional Office

Though the payment is made directly by the Head Office / Regional Office – Ask the Bank to provide the proof
of TDS deducted and Paid on that expenses
 Type of TDS Default

TDS – Default Short Deduction

Short Payment

Interest

Late Filing
 Short Deduction

Tax Deductible is more than Tax Deducted

Quoting Invalid PAN (FY 2010-11 onwards)

Non- Marking of “A”,“B”, “T” etc

Typographical Error

Quoting Incorrect Section

Lower Deduction Certificate

 Short Payment

Tax Paid is less than Taxes Due

Mistake in
Typographical quoting the
Error CIN / Dummy
CIN

Over
Combining of
utilisation of
Challan
Challan
 Interest

Interest on Late
Deduction

Interest on Late Interest on Short

Payment Deduction

Interest on Short
Payment
 Late Filing Fees u/s 234 E

➢LEVY OF FEE U/S.234E (w.e.f.01-07-2012)

Failure to file TDS/TCS quarterly statements shall be liable for a fee of

Rs.200 per day of default and shall not exceed the amount of tax deductible
or collectible.
 Rectification of Errors

Download
Conso File

Download
Justification
Report

Rectify the
Correction

File
Correction
Statement
 Who will rectify the Errors

Deductor
Challan
Details
Assessing
TYPES OF Officer
CORRECTIONS
TDS
Deductor
Statement
 Correction in Challan
Sl. No. Type of Correction on Procedure
Challan
1 TAN – Invalid TAN is Submit an application (Both in Hard & Soft Copy) for correction
Mentioned of TAN Number in Challan along with an Indemnity Bond and
Bank statement reflecting the payment has been done.
2 TAN – Valid TAN of Submit an application (Both in Hard & Soft Copy) for correction
Other deductor of TAN Number in Challan along with an Indemnity Bond and No
Mentioned Objection Letter from other Deductor plus Bank statement from
which the payment has been done.
3 Assessment Year Online Correction
4 Major Head Not Required – Just mention the correct Details in the Statement
5 Minor Head Not Required – Just mention the correct Details in the Statement
6 Nature of Payment Not Required – Just mention the correct Details in the Statement
Glance of New Provisions for TDS/TCS 2020
Glance of New Provisions for TDS/TCS 2020
Deductor Functionalities @
TRACES
 Deductor
Dashboard
Green
Initiative- Statement
Paper less Status
intimations

197 Lower
Challan
Deduction
Status
Certificate

Deductor
Download Default
Conso Files Summary

Download View
TDS TDS/TCS
Certificates credit

Justification PAN
report Verification
 Report Non
Filing of
Statement
Tag /
Online
Replace
Correction
Challan

Green Deductor
Deductor
Initiative-
Grievance
Paper less
Portal
Intimation

Register
Manage
Digital
Profile
Signature
 Oltas
Challan
Correction

Declaration
LDC
to Deposit
Certificate
Lower TDS

Deductor

Non
Resident Request for
TDS 26A/27BA
Certificate

Request for
Refund
 Submission
of Form 13
LDC

Online
Manage
26QC/QB
Profile
correction
Tax
Payer

Aggregate
26QB
TDS
Refund
Default
Tax – O – Smart | Technology empowering your business |
R J SONI & ASSOCIATES | Chartered Accountants |
Corporate Office: MUMBAI
Kamla Niwas | Plot No. 136/141 | Gorai-1 | Borivali (W) | Mumbai-091.
Email: info@rjsa.in, web: carjsoni.com Tele fax: - 022- 28673458.
Tel phone:08097090024/25/26/27/28, 022-28672008