Start from the entity's TAN(s) registered on TRACES, not from what the accounts team hands over — a common gap is a TAN used for one payment type (say, contractor payments) that finance forgets to mention because "we don't really use it." Every TAN the entity holds needs its own row in the 34(a) table.
For every section (194C, 194J, 194Q, 192, 206C(1H), etc.), tabulate total payment/receipt of that nature, the amount on which tax was deductible/collectible, the amount actually deducted/collected, and the amount deposited to the government account. The gaps between these four columns are the entire point of the clause — a payment made but not deducted, or deducted but not deposited, both surface here.
Cross-check every quarter's Form 138 (TDS, formerly 24Q/26Q/27Q) and Form 140 (TCS, formerly 27EQ) against the TRACES filing status — not just "filed" but filed within the due date. A statement filed late is still a default for this clause even if the tax itself was deposited on time.
Interest at 1% per month for late deduction, 1.5% per month for late deposit (TDS) — or the TCS-equivalent 1%/month under Sec 206C(7) — on every default identified in step 2. Report whether this interest is payable AND whether it was actually paid; a common finding is interest computed but never remitted.
The department cross-verifies clause 34 against the deductee-side data already sitting in Form 26AS and the Annual Information Statement. A mismatch between what the entity's books say it deducted and what 26AS shows as deposited-and-reported is exactly the kind of gap a NFRA or scrutiny-assessment inspection tests first.
The 3CD entry is a snapshot; the audit file should show the per-TAN, per-section reconciliation behind it — which is also the evidence base if the client later disputes a demand raised off this clause.
Last season for this format: the Income Tax Act 2025 folds Clause 34 into a consolidated Form 26 from Tax Year 2026-27 (first due 30 September 2027), expected to move TDS default reporting toward a more granular transaction-level disclosure rather than the current summary table. This year's audit is still filed exactly as described above.
The TDS interest calculator computes the exact 201(1A) figures step 4 needs; the 3CD template carries clause 34's table structure ready for the letterhead.
CORAA reconciles TDS deducted, deposited and returned against the books automatically — see AI reconciliation or start free: your first audit is on us.
Three linked disclosures: (a) a table of TDS/TCS compliance by section and TAN — amounts on which tax was deductible/collectible vs. actually deducted/collected vs. actually deposited; (b) whether the required TDS/TCS statements (Form 138/140, formerly 24Q/26Q/27Q/27EQ) were filed, and filed on time; (c) the interest payable and paid under Sec 201(1A) (TDS) or Sec 206C(7) (TCS) for any default identified in (a) or (b).
By cross-referencing the auditor's reported figures against Form 26AS and the Annual Information Statement (AIS), both of which are built from the TDS/TCS returns actually filed by deductors — including the entity being audited, for amounts it deducted from others, and its own vendors/customers, for amounts deducted from it. A mismatch between the audit's clause 34 table and 26AS is a standard first-pass scrutiny trigger.
Not for the AY 2026-27 audit (due 30 September 2026) — Clause 34 stays as described here. What is changing: the Income Tax Act 2025 consolidates Forms 3CA, 3CB and 3CD into a single 53-clause Form 26 from Tax Year 2026-27 onwards (first due 30 September 2027), which is expected to expand TDS default reporting from a compliance-table format to a more granular transaction-level disclosure. This season's Form 3CD is the last one filed under the current 44-clause structure.
1% per month or part of a month from the date tax was deductible to the date it was actually deducted, then 1.5% per month or part from the date of deduction to the date of deposit — the same mechanics as the standalone TDS default calculation. The TCS-equivalent under Section 206C(7) runs at 1% per month on late collection or late deposit.
