How to Audit of TDS

There are lots of payments whose TDS is deducted by the person pays such payments. As per law of Income tax, 1961, Deductor has to deduct income tax and deposit in Govt. account. So, there is the chance of errors and mistakes in it. So, company can appoint the auditor to audits its TDS records and payments.


Auditor will follow a standard procedure for auditing the TDS like other taxation audits. Following are steps of procedure of TDS audit.

1. Check Payments

Auditor will check all the payments. See whether it will come under TDS categories or not. If company does not pay the TDS of any payment which should be as per TDS section. He will note this mistake and mention in his audit report.

2.. Audit of TDS Voucher Entries 

These there is audit system in accounting softwares. One by voucher entries of TDS related transactions will be audited and through system, auditor can write audit notes or mention audited.

3. Verification of Source Documents 

Auditor will verify all the source documents relating to TDS. If deductor has paid through eTDS, deductor has to handle all the source documents both printed and digital to auditor for its verification. Following is the digital system which auditor should understand for verification of digital documents.