Tax Paid in Advance/Tax Deducted at Source
Generally, this item is dealt with at the head office only and would, therefore, not appear in the balance sheet of a branch, except that tax deducted at source on fixed deposits and other products/services if handled at the branch level. The procedures to be followed by the branch auditor for verification of tax deducted at source by the branch would be similar to those in an audit of other types of entities. The branch auditor needs to examine whether the certificates for such tax deducted at source is collected by the branch and the original copy is sent to the Head Office along with the transfer of such Tax Deducted at Source (TDS) amount to Head Office on periodic basis as defined.
At Head Office, the availability of all the TDS Certificates, submission of the same with Income Tax Department/claim of the same in Income Tax returns filed should be checked to verify the justification of the claim towards such certificates. The auditor should also verify the online tax credit from the Income Tax website with the TDS/advance tax recoded in the books and ask for a reconciliation of the same. Income recognized in the books could also be cross verified by this analysis.