REPORT ON

Management of Account Receivables (TDS)

Industry Mentor
Ms. Namrata Pradhan

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Table of Contents
CHAPTER 1: INTRODUCTION.............................................................................................................1
1.1 COMPANY PROFILE....................................................................................................................2
1.1.1 ERNST & YOUNG...................................................................................................................2
1.1.2 GLOBAL STRUCTURE..........................................................................................................3
1.2 WORK PROFILE/ JOB DESCRIPTION.....................................................................................5
CHAPTER 2: PROJECT DESCRIPTION.............................................................................................6
2.1 INTRODUCTION...........................................................................................................................6
2.1.1 TAX DEDUCTED AT SOURCE (TDS).................................................................................6
2.1.2 TDS CERTIFICATE................................................................................................................7
2.1.2.1 FORM 16A..........................................................................................................................7
2.1.3 DUNNING PROCESS............................................................................................................10
2.1.3.1 TDS DUNNING PROCESS..............................................................................................10
Dunning Criteria........................................................................................................................10
Exception...................................................................................................................................10
Follow up Process......................................................................................................................11
2.1.3.2 AR DUNNING PROCESS................................................................................................11
Dunning Criteria’s.....................................................................................................................11
Follow up Process......................................................................................................................11
2.2 WORK ASSIGNED AT EY..........................................................................................................12
2.3 WORKING OF TDS SYSTEM....................................................................................................13
2.4.1 TDSC ENTRY SYSTEM.......................................................................................................15
CHAPTER 3: REFERENCES................................................................................................................18

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CHAPTER 1: INTRODUCTION

1.1 COMPANY PROFILE

1.1.1 ERNST & YOUNG

 CEO: Mark Weinberger
 Headquarters: London, United Kingdom
 Revenue: 28.7 billion USD (2015)
 Founder: Arthur Young Figure 1: EY logo

 Founded: 1849, England, United Kingdom

EY is a global leader in advisory, assurance, tax and transaction services. 212,000 people are
united by EY’s shared values, which inspire people worldwide and guide them to do the right
thing, and their commitment to quality, which is embedded in who they are and everything they
do.

The member firms of the global EY organization are separate legal entities that help companies
in businesses across a range of industries from emerging growth companies to global
powerhouses, deal with a broad range of business issues. EY’s people around the globe pursue
the highest levels of integrity, quality and professionalism to provide clients with a broad array
of services relating to audit, advisory, tax and transactions.

EY has 5000 professionals based in 16 locations across Canada – 358 of whom are partners. In
the province of Québec, EY has 800 professionals based in Montréal and Québec City – 59 of
whom are partners, who provide audit, tax, advisory and transaction advisory services to a range
of industries, including Automotive & Transportation, Government, Life Sciences, Mining &
Metals, Consumer Products & Retail, Real Estate, Hospitality & Construction, Technology,
Media & Entertainment and Telecommunications and Industrial Products. Ernst & Young
(trading as EY) is a multinational professional services firm headquartered in London, United

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Kingdom. It is one of the "Big Four" audit firms and is the third largest professional services
firm in the world by aggregated revenue in 2014.

The organization operates as a network of member firms which are separate legal entities in
individual countries. The firm dates back to 1849 with the founding of Harding & Pullein in
England. The current firm was formed by a merger of Ernst & Whinney and Arthur Young &
Co. in 1989. It was known as Ernst & Young until 2013, when it underwent a rebranding to EY.
The acronym "EY" was already an informal name for the firm prior to its official adoption.

In 2016, Fortune magazine ranked EY as one of the 100 Best Companies to Work Forand in
2015, EY was the 11th largest privately owned organization in the United States.

1.1.2 GLOBAL STRUCTURE

A global organization, 212,000 people based in over 700 offices in more than 150 countries,
organized into 28 Regions and four Areas

EY is the most globally managed of the Big Four firms. EY Global sets global standards and
oversees global policy and consistency of service, with client work performed by its member
firms.

Each EY member country is organized as part of one of four areas. This is different from other
professional services networks, which are more centrally managed.

The four areas are:

 EMEIA: Europe, Middle East, India  Asia-Pacific

and Africa  Japan
 Americas

Each area has an identical business structure and a management team, which is led by an Area
Managing Partner who is part of the Global Executive board. The aim of this structure is to
effectively cater for an increasingly global clientele, who have multinational interests.

Their structure is composed of the Executive and Regions. The Executive includes global
leadership, governance bodies and their four geographic Areas. Working together they oversee

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EY’s global strategy, brand, business planning, investments and priorities. EY’s four service
lines are represented and enabled by the four functions of Markets, Operations, People and Risk.

Our 28 Regions are grouped under four geographic Areas.

1. Americas: Their Americas Area comprises 11 Regions and nearly 45,000 people.
The workplace culture of the Americas Area is regularly recognized by organizations
such as the Great Place to Work Institute and Universum, which frequently place EY
near the top of their lists for countries across the region.

2. Europe, Middle East, India and Africa (EMEIA): Our EMEIA Area brings
together more than 73,000 people from 12 Regions across Europe, the Middle East,
India and Africa.

3. Asia-Pacific: Asia-Pacific brings together more than 27,000 people across five
Regions. Asia-Pacific Area will enable EY to better serve clients looking to invest in
or grow across the region.

4. Japan: Our Japan Area employs more than 6,500 professionals and works with many
of Japan’s best-known companies across the financial, manufacturing and electronics
sectors. It also acts as the hub for our Japan Business Services network nearly 350
Japanese-speaking professionals based in 60 cities around the globe who serve
Japanese clients operating overseas.

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 Figure 2: EY member firms presence

1.2 WORK PROFILE/ JOB DESCRIPTION

EY develop outstanding leaders who team to deliver on their promises to all of the stakeholders.
In so doing, they play a critical role in building a better working world for their people, for their
clients and for their communities.

EY is committed to:

 Creating the highest - performing teams

 Empowering our people through learning and professional development
 Valuing Diversity and Inclusiveness (D&I)
 Providing competitive compensation and benefits.

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CHAPTER 2: PROJECT DESCRIPTION

2.1 INTRODUCTION

2.1.1 TAX DEDUCTED AT SOURCE (TDS)

Tax Deducted at Source (TDS) is a means of collecting income tax in India, governed under the
Indian Income Tax Act of 1961. It is one of the modes of collection of taxes, by which a certain
percentage of amounts are deducted by a person at the time of making/crediting certain specific
nature of payment to the other person and deducted amount is remitted to the Government account. It
is managed by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue
managed by Indian Revenue Service (IRS). It has a great importance while conducting tax audits.
It is similar to "pay as you earn" scheme also known as Withholding Tax in many other countries,
one of the countries is USA. The concept of TDS envisages the principle of "pay as you earn". It
facilitates sharing of responsibility of tax collection between the deductor and the tax administration.
It ensures regular inflow of cash resources to the Government. Every person responsible for making
payment of nature covered by TDS provisions of Income Tax Act shall be responsible to deduct tax.
According to the 194J of the Indian Income Tax Act, 1961 TDS is to be deducted at 10% on nay
amount to any resident as-
1. Fees for professional services
2. Fees for technical services
3. Royalty
Professional Services’ means services rendered by a person in the course of carrying on legal,
medical, engineering or architectural profession or the profession of accountancy or technical
consultancy or interior decoration or advertising or such other profession as is notified by the Board
for the purposes of Section 44AA or of this section.
Fees For Technical Services ‟means any consideration (including any lump sum consideration) for
the rendering of any managerial, technical or consultancy services (including the provisions of
services of technical or other personnel) but does not include consideration for any construction,

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assembly, mining or like project undertaken by the recipient or consideration which would be income
of the recipient chargeable under the head, “Salaries”.

2.1.2 TDS CERTIFICATE

A certificate is prescribed u/s 203, which is to be issued by person deducting tax at source. Every
person deducting tax is duty bound to furnish this certificate to the person from whose
income/payment the tax has been deducted. The certificate should specify the amount of tax deducted
and rate at which it is deducted.

2.1.2.1 FORM 16A

Form 16A is a TDS certificate certifying the amount of TDS deducted. Nature of payments and the
TDS Payments deposited with the Income Tax Department. TDS on payments like TDS on interest,
TDS on rent etc is to be deducted at specified rates, the TDS so deducted and deposited on all
payments except salary is shown in form 16A. It consists of following fields:
 Certificate Number
 Deductor (Client) Name and Address, PAN, TAN
 Deductee (EY and its Entity) Name and Address, PAN
 Total Amount Paid/Credited
 Assessment Year
 Quarter: Q1 (Apr-June), Q2 (July-Sept),Q3 (Oct-Dec),Q4 (Jan-Mar)
 Date of Credit
 Total Tax Deposited
 Date on which Tax is deposited
 Signature of Client – Manual/Digital
 Verification/Acknowledgement by the client

TAN: Every deductor is required to obtain a unique identification number called TAN (Tax
Deduction Account Number) which is a ten digit alpha numeric number. This number has to be
quoted by the deductor in every correspondence related to TDS.
Format of TAN is:

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Figure 3: An Example of TAN Number of Deductor

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Full Name: Notes: Page 1 of 2

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Section Description
Code
195 Other sums payable to a non-resident
196A Income in Certificate
respect ofNumber:
units of non-residents TAN of Deductor: PAN of Deductee: Assessment Year:

196B Payments in respect of units to an offshore fund

Place
Income from foreign currency bonds or shares of Indian
196C
company payable to non-residents
196D IncomeDate
of foreign institutional investors from securities
(Signature of person responsible for deduction of tax)
206CA Collection at source from alcoholic liquor for human
consumption
206CB Designation:
Collection at source from timber obtained under forest
lease
1. Form 16A contains the latest transaction reported by the deductor in the TDS / TCS Statement. For further details please view your 26AS for same AY on the
Collection at source from timber obtained by any mode
206CC website https://www.tdscpc.gov.in 2. To update the PAN details in Income Tax Department database, apply for 'PAN change request' through NSDL or UTITSL
other than a forest lease
3. In items I and II, in column for tax deposited in repect of deductee, furnish total amount of TDS, surcharge (if applicable) and education cess (if applicable).
Collection at source
Legend usedfrom any other
in Form forest produce (not
16A
206CD
being tendu leaves)
Legend Descrip Definition
206CE Collection at source from anytionscrap
Collection at source from Unmatch
contractors or licensee or
Deductors lease
have not deposited taxes or have furnished incorrect particulars of tax payment. Final credit will be reflected only
206CF U lots
relating to parking ed when payment details in bank match with details of deposit in TDS / TCS statement
Collection at source from contractors or licensee or lease
206CG Provision Provisional tax credit is effected only for TDS / TCS Statements filed by Government deductors."P" status will be changed to
P
relating to toll plaza
al Final (F) on verification of payment details submitted by Pay and Accounts Officer (PAO)
Collection at source from contractors or licensee or lease
206CH In case of non-government deductors, payment details of TDS / TCS deposited in bank by deductor have matched with the
relating to mine or quarry
F Final payment details mentioned in the TDS / TCS statement filed by the deductors. In case of government deductors, details of TDS
206CI Collection at source from tendu Leaves/ TCS booked in Government account have been verified by Pay & Accounts Officer (PAO)
206CJ Collection at source from on sale of certain Minerals
Payment details of TDS / TCS deposited in bank by deductor have matched with details mentioned in the TDS / TCS
206CK Collection at source Overboo
O on cash case of Bullion and but
statement Jewellery
the amount is over claimed in the statement. Final (F) credit will be reflected only when deductor reduces
ked claimed amount in the statement or makes new payment for excess amount claimed in the statement
* Status of matching with OLTAS

Section Description
Code
193 Interest on Securities
194 Dividends
194A Interest other than 'Interest on securities'
194B Winning from lottery or crossword puzzle
194BB Winning from horse race
194C Payments to contractors and sub-contractors
194D Insurance commission
194E Payments to non-resident sportsmen or sports associations
194EE Payments in respect of deposits under National Savings Scheme
Payments on account of repurchase of units by Mutual Fund or Unit
194F
Trust of India
194G Commission, price, etc. on sale of lottery tickets
194H Commission or brokerage
194I Rent
194I(a) Payment of Rent for the use of any machinery or plant or equipment
Payment of Rent for the use of land or building or land appurtenant or
194I(b)
furniture or fittings
**
194JNature ofFees
Payment
for professional or technical services
Income payable to a resident assessee in respect of unitsFigure 4: Form 16A
of a specified
194K
mutual fund or of the units of the Unit Trust of India
194LA Payment of compensation on acquisition of certain immovable property
194LB Income by way of Interest from Infrastructure Debt fund
PAN: Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of
Income by way of interest from specified company payable to a non-
194LC
resident
a laminated card, by the Income Tax Department.
A typical PAN is:

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 Figure 5: An Example of PAN Number of Deductee

Following person must obtain PAN:

1. All existing assesses or taxpayers or persons who are required to furnish a return of income, even
on behalf of others, must obtain PAN.
2. Any person, who intends to enter into financial transaction where quoting PAN is mandatory, must
also obtain PAN.
3. The Assessing Officer may allot PAN to any person either on his own or on a specific request
from such person.

2.1.3 DUNNING PROCESS

Ernst & Young is a firm which provides professional services to its clients. Hence, its clients are
supposed to deduct TDS while making payments. They also need to provide certificates as a
proof of deposit of the deducted tax with authorities.
Accounts Receivables (AR) team is engaged with the maintaining of these TDS certificates as
well as calling clients for the missing or pending certificates.

2.1.3.1 TDS DUNNING PROCESS

It is the process of methodically following up with the Mangers & Clients to ensure the collection of
Pending TDS certificates.

Dunning Criteria
 TDS Amount Pending from receipt FY 2006 till last quarter (FY 11-12).

Exception
1. Mails for entity PDS legal will not be sent.
2. Do Not Dun mails will not go.

Follow up Process
 Manager’s Mail: To inform about Pending TDS amount against all the invoices which have
become due for the certain period.

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 o Mail goes on Monday (Morning)
o Same day mail would be sent to all accounts people at all locations to send the TDS
certificates received from the client till date.
 Manager’s Mail: Confirmation of contact details that are updated and information about the
dunning schedule.
o Mail goes on Friday (Morning)
 Client’s Mail: Follow up of Pending TDS amount against all the invoices which have become due
for the certain period.
o Mail goes on Coming Monday (Evening)

2.1.3.2 AR DUNNING PROCESS

It is the process of methodically communicating with the clients to ensure the collection of Accounts
receivable which have become due beyond a certain period.

Dunning Criteria’s
 Optional Follow up (Criteria A):An Engagement where the aggregate Outstanding is more than
30 days that are over INR 1,000,000 as on last Friday of scheduled Manager’s/Client’s Mail
 Mandatory Follow up (Criteria B): An Engagement where any Invoice is outstanding for more
than 60 days that are over INR 600,000 as on last Friday of scheduled Manager’s/Client’s mail.

Follow up Process
 Manager’s Mail: To inform about Dunning schedule, Outstanding Invoices as per Criteria, to
update the Do not dun option/client contact details.
o Mail goes on First Tuesday of the GFIS Month
 Partner’s Mail: To inform about Dunning schedule, managers’ comments if instructed not to
follow up.
o Mail goes on First Friday of the GFIS Month
 Client’s Mail: Follow up of Invoices which meets the Dunning criteria and which have not been
instructed as Do not dun.
o Mail goes on Second Tuesday of the GFIS Month

2.2 WORK ASSIGNED AT EY

Being part of AR team, work assigned is related to Dunning of TDS certificates .i.e. creating new
entries in TDSC system, Provision, Adjustments and All entity files.
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  To check all the certificates pending in TDSC pending system and if the certificate is
pending then write the receipt no. on the left side of the certificate.
 If the certificate is already entered in the TDSC system then write the entry number on
the right side of the certificate.
 To make the entries of all the pending certificates in the TDSC system by attaching the
PDF file of certificates received from clients.
 To make the provision, adjustments of all the payments for which invoice no.is not
known.
 To make excel sheet of daily TDS certificate received whether it being a pending
certificate or Duplicate certificate.
 To compare 26AS upload (at income tax site) with data in TDSC system (maintained by
AR team) to check for partial entries, full entries or any excess entries being done.
The various processes involved in this task of record keeping are:
 Dunning Process - a process to follow up with manager & clients for pending
certificates.
 Entry of the received certificates in the TDSC system
 Filling of received certificates with respect to entity and financial year.
 Adjusting provisions by tagging the TDS certificates with appropriate invoices and
transactions.
In addition the team also contributes in the AR dunning. It is a process to follow up clients
for collecting dues. The AR dunning cycle is undertaken every month unlike the TDS
dunning, which is done once in a month and a half to two months.

2.3 WORKING OF TDS SYSTEM

Below steps illustrates daily process being followed at EY for TDS certificates received from
clients:

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  After the TDS certificates are received from the clients, they are entered in the excel
sheet on a daily basis. The excel sheet contains the following data:
a. Serial number
b. Date of receipt of TDS certificate
c. Entity
d. TAN
e. Client name
f. Total TDS certificate amount
g. Remarks

Serial Date Entity TAN Client Total TDS Remarks

number name certificate amount
No of Date of receipt of EY TAN of Name of Tax being deducted Status of
certificate TDS certificate Entity Deductor Deductor certificate
Table 1: Table showing fields of TDS certificate received from client

 The client name is searched in another file that has master data for all the client names
listed by TAN. Following steps are followed:
a. First, the client name is searched by TAN in the client “name” file.
b. Next, the TAN is copied from here and pasted in the “Daily certificates entry”
file.
c. After that, the client name is pasted from here to the main file.

There are two separate steps, instead of only one because in the clients’ name file, TAN comes
after Client name, while in the “all entry” file, the TAN comes before client name.
 Next, the certificates are collected by the employees and the payment receipts are written
on the bottom left hand corner of the certificates. In case the receipts are not found, then
the amount is placed under “provision”.
 In addition for all the given checks, the TDS certificates are also checked for duplicity.
The process is as follows:
a. Check in TDS entry option under the Entry tab of the dot net software (TDSC
system) by TAN.
b. If a certificate for similar amount and date of payment are found, then check the
challan/certificate number from the scanned copy attached with the entity.

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 c. If the challan number on the certificate received is the same as that in the scanned
copy with a crossing on the face of the certificate and write duplicate on it.
 The certificates that are digitally signed are received in the online format. But the sign
may not always be valid. If the bottom right corner shows a “?” in place of digitally
signed, the sign needs to be validated at the firm’s end because not validated certificates
can’t be submitted to the tax authority. The steps are as follows:
a. Right click on “?”
b. Click on validate certificate in the sub menu
c. Click on signer legal notice
d. Under the “trust” tab, click on “add to trusted entities”. Click on ok.
e. Select all check boxes
f. Click on ok
g. Finally, click on “validate signature” in the dialog box that opens.
 Finally, when the “?” changes to a tick mark, the certificate is validated and can be
treated as a valid proof of TDS deposit.
 Next, they send in their calling MIS report to the management on a daily basis.
 After the receipt numbers for each of the line items in the certificate are written, they are
given for entry. Sometimes some line items may not have a corresponding receipt
number. Such certificates are kept in provision. The reason that provision arise are as
follows:
a. Provision made for 31st march whose invoice has not been raised yet.
b. Payment of invoice yet to be received from the client.
c. Credit note passed to the effect that the payment will not be received.
 Next, the certificates are entered into the system as explained in the preceding pages.
 Once the data is entered the system, TDS voucher number is generated, which is written
on the bottom right corner of the certificates.
 The certificates are filed in the ascending order of the TDS voucher number in the correct
entity and financial year file. It is important because the tax department wants the
physical copy of the certificate to give tax credit to deductee. Though the TDS returns are
filed in October of the next financial year, the physical copies of certificates can be
submitted at any time within 2 years of the financial year given in the certificate.

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2.4.1 TDSC ENTRY SYSTEM
This is the view of TDSC Entry system when the site is first opened:

Figure 6: Screen Shot of TDSC Entry System, Home Page

The various fields shown above are elaborated as:

Entry:
 TDS Certificate Adjustment: if there are some amounts of certificate lying in provision
then in order to tag those amounts to appropriate receipt numbers, this option is used.
 TDS Certificate Entry: The certificates which are received and haven’t been entered in
the system are entered using this option.
Views:
 TDS Entry: The already entered certificates can be viewed under this option.
 TDS Pending: Those amounts for which certificates have not been received can be seen
using this option.
Cancel: Used to cancel a wrongly done entry or adjustment. However the entry is cancelled
only after providing a valid reason.

Reports:
This head gives options to extract reports by entity for a year or for a combination of two. These
reports are extracted in the Excel format and are necessary for subsequent reconciliation.
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Creating new entry:

To create a new entry, the user to enter details of the new certificates received as follows:

 The financial year has a drop down list from which the relevant year can be selected.
 Location refers to the place where the certificate is entered into the system. The drop-
down in the earlier years used to have various options but at present it only has Delhi. All
certificates are entered into the system from Delhi.
 Clients name field requires the name of the tax deductor. It is selected from the list
already given in the system. When we click on the search icon next to the field name, a
dialog box opens which prompts the user to write the first word of the client name as
given in the deductor column of the TDS certificate so that the correct name can be
selected from the list so generated.
 Next, the TAN is entered as given in the certificate. In case of foreign certificates there is
no TAN, so the field is entered with FTCC12345X where X is the first letter of the client
name.
 After the TAN is entered, the fields city, state, address and pin code are auto-populated
if it is an existing client, if not, then these fields should be manually filled from KNOW
YOUR TAN (income tax site).
 Then the total amount and currency of the certificate is entered.
 The next two fields deal with the online (26AS) and offline status of the certificate.
 It is mandatory to attach a scanned copy of the certificate with the entry. It facilitates
employees to have a copy in front of them while dealing with clients so that all the
queries can be answered immediately.
 After that, it is required to enter the line item details of the certificate. When we click on
add line item tab a dialog box opens, which has receipt no, total amount paid, date of
credit and TDS amount. When we select the correct receipt no from the drop-down list,
the other fields are auto-populated. In case the receipt selected is “Provision” the other
fields would have to be filled manually.
 In case there is more than one line item in the certificate, we click on Add and Continue
button in the dialog box, otherwise Add and Exit.

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  Finally, we click on save and exit to complete the entry process. The TDS Voucher
number so generated is written on the bottom right corner of the certificate and is put
away for filling.

CHAPTER 3: REFERENCES
 “EY India”, “http://www.ey.com/IN/en/Home accessed on May 20, 2016.”
 “http://www.accountingverse.com/articles/big-4-accounting-firms.html accessed on May
19, 2016.”
 “The Importance of Analyzing Accounts Receivable”,
“http://www.investopedia.com/articles/investing/052815/importance-analyzing-accounts-
receivable.asp#ixzz4Ac9Cnpls accessed on June 4, 2016.”
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 “http://www.cfoinnovation.com/story/9303/deloitte-vs-pwc-vs-ey-vs-kpmg-which-
worlds-no-1-accounting-firm accessed on May 24, 2016.”
 “http://www.hayagreevangp/a-report-on-big-4-auditing-companies accessed on May 24,
2016.”
 “http://www.big4accountingfirms.org/ accessed on May 19, 2016.”
 “http://irlibrary.ku.ac.ke/bitstream/handle/123456789/10197/Principles%20and
%20practice....pdf?sequence=1 accessed on June 4, 2016.”
 “E-Filing”, “http://incometaxindiaefiling.gov.in/ accessed on June 4, 2016.”
 Kimani Joseph Waweru (2010), “Principles And Practice of Effective Accounts
Receivable Management in Kenya: A Case of Selected Manufacturing Firms In Thika
Municipality”
 “http://www.incometaxindia.gov.in/Pages/international-taxation/withholding-tax.aspx
accessed on June 4, 2016.”

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