Verification of TAN Allotment

• Auditors must confirm that the assessee has been allotted a valid TAN under Section 203A of the Income Tax Act.
  
• The TAN must match the entity’s legal name and PAN, and should be correctly mentioned in all TDS-related documentation.
  
• If the entity is required to deduct or collect tax but does not have a TAN, it must be reported as a compliance failure.
  

Disclosure in Tax Audit Report (Form 3CD)

• Under Clause 34 of Form 3CD, auditors are required to:
  
  • Report the TAN of the assessee
    
  • List the sections under which TDS/TCS is applicable
    
  • Mention the amounts deducted or collected, deposited, and any shortfalls
    
• This disclosure is mandatory and forms part of the audited financial statements submitted to the Income Tax Department.
  

Examination of TDS/TCS Compliance

• Auditors check whether:
  
  • TDS/TCS was deducted at the correct rates
    
  • Tax was deposited within due dates
    
  • TDS returns were filed quarterly using the correct TAN
    
  • Form 16/16A certificates were issued to deductees on time
    
• Any non-compliance (like late deposit, short deduction, or wrong TAN usage) is reported in the audit findings.
  

Reconciliation with Form 26AS and TRACES

• Auditors reconcile the TDS data recorded in books of accounts with:
  
  • Form 26AS (to verify deductee credits)
    
  • TRACES portal records (to ensure filing and challans match)
    
• This process confirms whether the TAN has been used correctly and whether the tax deducted has reached the deductees.
  

Reporting of Penalties and Defaults

• If the entity has incurred penalties under Section 272BB or Section 271H for TAN-related failures (e.g., not quoting TAN, late filings), auditors must:
  
  • Report the nature and amount of penalties
    
  • State the reasons and corrective actions (if any)
    
• This ensures full transparency of TAN compliance as part of the entity’s audit trail.