Clause 34(b) of Tax Audit Report: TDS/TCS Statement Filing for AY 2026-27
Updated: Sep 28
CBDT changed the AY 2026–27 due dates on 28 September: for the specified ordinary audit category, the report moved from 30 September to 21 October 2026 and the related ITR moved from 31 October to 21 November 2026. Form 3CEB remains separate. Official Income Tax Department announcement
Direct answer: Clause 34(b) of tax audit report requires the tax auditor to examine whether the assessee was required to furnish statements of tax deducted at source (TDS) or tax collected at source (TCS) and, where applicable, report the relevant statement-filing details in Form 3CD. For AY 2026-27, the audit trail should connect TDS/TCS liabilities, challans, quarterly statements, acknowledgements, corrections and unresolved defaults rather than merely confirm that a return was uploaded.
This focused guide answers the Clause 34(b) search intent without repeating the broader Clause 34 analysis. It explains what should be verified, ordinary quarterly statement dates, the FY 2025-26 transition, common mismatches and a practical pre-filing checklist.
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What is Clause 34(b) of Tax Audit Report?
The Income Tax Department's current guidance on items reportable in the tax audit report separates Clause 34 into three parts. Clause 34(a) deals with whether the assessee is required to deduct or collect tax at source and the related reporting. Clause 34(b) separately asks whether the assessee is required to furnish a statement of tax deducted or tax collected and, where applicable, requires the relevant statement details to be reported. Clause 34(c) then deals with interest liability under the TDS/TCS default provisions.
That separation matters. A business can deduct and deposit tax correctly but still have a Clause 34(b) issue if its quarterly statement was late, omitted transactions, used an incorrect PAN or challan mapping, or required a correction that was not completed before the tax audit report was finalised.
For the broader TDS/TCS framework, see our Form 3CD Clause 34 for AY 2026-27. This page concentrates on the statement-filing limb under Clause 34(b).
What should be checked under Form 3CD Clause 34(b)?
A reliable Clause 34(b) working paper should begin with the entity's TAN-wise compliance universe and work forward to the filed statements. In practice, the tax auditor and finance team should establish:
Which TANs, branches or payroll/payment systems were active during FY 2025-26.
Whether the assessee was required to furnish TDS statements, TCS statements, or both.
Which quarterly statements were required for salary, resident payments, non-resident payments and collections, as applicable.
The statutory due date for each required statement and the actual filing date shown by the portal or TRACES acknowledgement.
Whether challans, deductee or collectee PANs, sections, amounts and transaction records were completely captured in the statement.
Whether any correction statement was filed and whether corrected data was processed before the tax audit report was signed.
Whether defaults shown in TRACES or internal reconciliation reports remain unresolved at the audit-report date.
The objective is completeness, not only timeliness. A statement filed on time can still require attention if material transactions were excluded or mapped incorrectly.
Clause 34(b) due dates: ordinary TDS statement calendar
Under Rule 31A of the Income-tax Rules, the ordinary quarterly TDS statement calendar under the 1961 Act framework is:
Quarter ending 30 June: 31 July of the financial year.
Quarter ending 30 September: 31 October of the financial year.
Quarter ending 31 December: 31 January of the financial year.
Quarter ending 31 March: 31 May immediately following the financial year in which the deduction is made.
These are statement-filing dates, not the monthly dates for depositing TDS. A common audit mistake is to reconcile challan payment dates but not separately test whether the quarterly statement itself was furnished on time and with complete information.
TCS statement calendar under Rule 31AA
For the 1961 Act framework, Rule 31AA prescribes Form 27EQ for quarterly TCS statements. The ordinary due dates are 15 July, 15 October, 15 January and 15 May for the four respective quarters. These dates should always be read with any valid extension or transition instruction applicable to the specific filing.
AY 2026-27 transition: why the audit file needs extra care
AY 2026-27 relates to income for 1 April 2025 to 31 March 2026 and the tax audit continues under the Income-tax Act, 1961 using Forms 3CA/3CB with Form 3CD. At the same time, the Income Tax Act, 2025 and Income Tax Rules, 2026 commenced from 1 April 2026, so businesses are completing FY 2025-26 compliance during a reporting-system transition.
The Income Tax Department's transition FAQs clarify that the governing TDS law depends on when the triggering event of credit or payment occurred. If that event occurred on or before 31 March 2026, the 1961 Act governs the underlying TDS obligation. From 1 April 2026, the new Act applies to new-period transactions. Because some FY 2025-26 year-end statement work is completed after 1 April 2026, the audit file should rely on actual portal acknowledgements, challans and processed statement data rather than mechanically assume a legacy form number.
For the complete AY 2026-27 audit framework and 21 October 2026 report deadline, see the Tax Audit AY 2026-27 hub.
Worked example: statement filed, but Clause 34(b) still needs attention
Assume ABC Pvt. Ltd. files its quarterly non-salary TDS statement within time. During tax-audit reconciliation, the auditor finds professional fees of ₹12 lakh paid to two vendors. TDS was correctly deducted and deposited, but those deductee records were omitted from the original quarterly statement.
This is not merely a tax-payment issue. The company should identify the omitted records, reconcile the challan balance, file the appropriate correction statement, retain the acknowledgement and confirm the correction status. The Clause 34(b) working paper should explain the original omission and correction. Merely stating that the quarterly statement was 'filed' would not capture the actual compliance position.
Late filing fee and penalty exposure
For the FY 2025-26 / 1961 Act framework, delayed TDS/TCS statements can attract the statutory late-filing fee under Section 234E, generally ₹200 per day of continuing default subject to the statutory cap linked to the tax deductible or collectible. Section 271H can also create penalty exposure in specified cases of delayed or incorrect statements, subject to the conditions and relief available under law.
Clause 34(b) should therefore be reconciled with actual default reports rather than prepared from a simple spreadsheet of due dates. Where a fee, demand or correction is outstanding, the audit file should preserve the computation, status and management explanation.
Seven common Clause 34(b) mistakes
Checking TDS payment challans but not the quarterly statement acknowledgement.
Using only one TAN when the business operates through multiple TANs or payroll locations.
Treating an on-time statement as complete without reconciling deductee or collectee records to the ledger.
Ignoring correction statements that were filed but not yet processed.
Failing to reconcile non-resident payment reporting separately from resident-payment reporting.
Not distinguishing a statement-filing default under Clause 34(b) from interest issues under Clause 34(c).
Using last year's checklist without considering the FY 2025-26 to 2026-27 transition in forms, section numbering and portal workflows.
Clause 34(b) tax audit checklist for AY 2026-27
Before signing Form 3CD, finance teams and tax auditors can use this sequence:
Prepare a TAN-wise list of all TDS/TCS obligations for FY 2025-26.
Map ledger and payment categories to the applicable TDS/TCS compliance stream.
Compile quarterly filing acknowledgements and processed statement data.
Match tax deducted or collected in the books with challans and statement totals.
Reconcile PAN-level deductee and collectee records and identify omissions or mismatches.
Review TRACES default reports and correction statements.
Document due date versus actual furnishing date for every required statement.
Separate statement-filing issues from Clause 34(a) deduction/collection issues and Clause 34(c) interest issues.
Cross-check material TDS disallowances with the relevant Form 3CD expense-disallowance clauses.
Retain the final reconciliation and management explanations in the audit working papers.
For a wider clause-by-clause review, use our Tax Audit Clauses for AY 2026-27 reference page.
FAQs on Clause 34(b) of Form 3CD
Is Clause 34(b) only about whether the TDS return was filed?
No. Filing status is central, but a defensible audit review should also test whether required statement information is complete and whether material corrections or defaults remain outstanding. The Department's current tax-audit guidance describes Clause 34(b) as the reporting limb for statements of tax deducted or collected.
Does timely TDS payment automatically mean Clause 34(b) is clean?
No. Deposit of tax and furnishing of the quarterly statement are separate compliance steps. The statement can be late or incomplete even where the tax itself was deposited correctly.
Should correction statements be considered before signing Form 3CD?
Yes. Material corrections should be traced to their acknowledgement and, where possible, processing status so that the tax audit report reflects the most reliable information available on the signing date.
What is the tax audit due date for AY 2026-27?
The ordinary due date for furnishing the tax audit report for AY 2026-27 is 21 October 2026, subject to the applicable category and any valid extension. Transfer-pricing cases follow a different audit-report timeline.
Practical takeaway
Clause 34(b) of tax audit report is best treated as a statement-completeness reconciliation, not a yes/no filing question. A strong audit trail links books, challans, TAN-wise quarterly statements, acknowledgements, corrections and default reports. That reduces last-minute surprises and makes the Form 3CD disclosure easier to support if later examined.
PGT & Associates assists businesses with tax-audit readiness, TDS/TCS reconciliations, Form 3CD reporting and resolution of statement mismatches. The appropriate treatment depends on the taxpayer's facts and filing history.
Primary official references
Income Tax Department, Items Reportable in the Tax Audit Report (2026); Rule 31A of the Income-tax Rules, 1962; Rule 31AA of the Income-tax Rules, 1962; Income Tax Department TDS Compliance transition FAQs; and the Department's Tax Deductor guidance. Any subsequent CBDT extension or portal instruction should be checked for the exact filing period.
Disclaimer: This article is for general professional information and does not constitute legal or tax advice for a specific taxpayer.
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