Tds on charges directly debited by bank
This query is : Resolved
25 April 2012
our concern had stock audit directed by bank form some chartered accountant , they submitted the bill directly to the bank and the bank debited our account with the amount of the bill, my query is how should we book the entry in our books, if we book it as audit fees than whether we have to deduct tds.
26 April 2012
Yes ,This is Audit fee & TDS is applicable.Discuss with Auditors & pay thru company not directly.
26 April 2012
above expert given u right answer...............
26 April 2012
the audit was conducted by the bank by their auditors and we came to know the amount only after bank had debited our with the same , how could we deduct tds,pls clarify
26 April 2012
the audit was conducted by the bank by their auditors and we came to know the amount only after bank had debited our with the same , how could we deduct tds,pls clarify
27 July 2025
This is a common practical issue. Here’s how it works:
---
### Scenario:
* Bank arranges stock audit through their own Chartered Accountant (CA).
* CA submits the bill **directly to the bank**.
* Bank debits your account with the audit fees.
* You receive the debit entry **without direct payment to the auditor**.
* You want to know if you need to deduct TDS on this amount.
---
### What should you do?
1. **TDS Liability:**
You **are liable to deduct TDS** on payments for professional services (audit fees) under **Section 194J** if payment exceeds the threshold limit.
2. **Who is the Deductor?**
The **person responsible for making the payment to the service provider** is liable to deduct TDS.
Since **bank debited your account and paid the auditor directly**, the bank is the one making the actual payment to auditor, so **bank is the deductor**, not you.
3. **Your Accounting Treatment:**
* You can record the amount debited by the bank as **“Audit Fees” expense** in your books.
* No TDS needs to be deducted by you since you **did not pay directly** to the auditor.
* The bank will have to deduct TDS (if applicable) while paying the auditor.
4. **Best Practice:**
* Confirm with the bank if they have deducted TDS before paying the auditor.
* Obtain TDS certificate or details from the bank for your records.
* If bank hasn’t deducted TDS, you may request bank to do so.
---
### Summary:
| Aspect | Responsibility | Action to Take |
| ---------------------------------------- | --------------- | -------------------------------------------------------- |
| Payment made by Bank directly to auditor | Bank (Deductor) | Bank deducts TDS and issues TDS certificate |
| Amount debited in your account | Your company | Record expense, no TDS deduction required from your side |
---
If the bank has already paid the auditor and deducted TDS, you’re clear. Just maintain proper records.
If not, ask bank to comply. You cannot deduct TDS when payment is not directly made by you.
---
If you want, I can help you draft a letter/email to the bank requesting TDS certificate or confirming TDS deduction. Would that help?
---
### Scenario:
* Bank arranges stock audit through their own Chartered Accountant (CA).
* CA submits the bill **directly to the bank**.
* Bank debits your account with the audit fees.
* You receive the debit entry **without direct payment to the auditor**.
* You want to know if you need to deduct TDS on this amount.
---
### What should you do?
1. **TDS Liability:**
You **are liable to deduct TDS** on payments for professional services (audit fees) under **Section 194J** if payment exceeds the threshold limit.
2. **Who is the Deductor?**
The **person responsible for making the payment to the service provider** is liable to deduct TDS.
Since **bank debited your account and paid the auditor directly**, the bank is the one making the actual payment to auditor, so **bank is the deductor**, not you.
3. **Your Accounting Treatment:**
* You can record the amount debited by the bank as **“Audit Fees” expense** in your books.
* No TDS needs to be deducted by you since you **did not pay directly** to the auditor.
* The bank will have to deduct TDS (if applicable) while paying the auditor.
4. **Best Practice:**
* Confirm with the bank if they have deducted TDS before paying the auditor.
* Obtain TDS certificate or details from the bank for your records.
* If bank hasn’t deducted TDS, you may request bank to do so.
---
### Summary:
| Aspect | Responsibility | Action to Take |
| ---------------------------------------- | --------------- | -------------------------------------------------------- |
| Payment made by Bank directly to auditor | Bank (Deductor) | Bank deducts TDS and issues TDS certificate |
| Amount debited in your account | Your company | Record expense, no TDS deduction required from your side |
---
If the bank has already paid the auditor and deducted TDS, you’re clear. Just maintain proper records.
If not, ask bank to comply. You cannot deduct TDS when payment is not directly made by you.
---
If you want, I can help you draft a letter/email to the bank requesting TDS certificate or confirming TDS deduction. Would that help?
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