Form 26 clauses 14(b) to 14(e) and 52(b): what to collect and how to build the working
Two parts of Form 26 with no Form 3CD answer to copy from: where the books are kept, and expenditure by the supplier's GST status.
Two parts of Form 26 are new work for most firms and have no Form 3CD answer to copy from: the questions on where the books are kept (clause 14) and the three-row split of expenditure by the supplier's GST status (clause 52(b), which replaces clause 44 of Form 3CD). This note sets out what each asks and a way to collect and build the answers.
The clause wording below is taken from the Form 26 clause list kept in Corelytix. It describes the questions, not the legal effect of every answer: read the form and the rules for that, and check the notified text before you sign.
Clause 14: where the books are kept
Clause 14 is a short run of questions about the books of account. The first, 14(a), existed before (it descends from clause 11(b) of Form 3CD). The next four are new and apply to books kept in a computer system. Two of them, 14(c) and 14(e), are marked mandatory in the form.
| Clause | What it asks | What to collect from the client |
|---|---|---|
| 14(a) | Address or addresses at which the books of account are kept, and which books are kept at each | The registered office, branch and any accountant's office holding books |
| 14(b) | Accounting software used for books kept in a computer system | Name and version (Tally Prime, an ERP, a cloud product) |
| 14(c) | Cloud or other software used to store the books, with the location (IP address and country). Mandatory in Form 26. | The hosting provider's name, the IP address or addresses of the server, and the country |
| 14(d) | Whether the provisions of rule 46(8) have been complied with | A yes or no, which the auditor can give only after seeing the client's set-up |
| 14(e) | If yes: address of the location of the backup server in India. Mandatory in Form 26. | The full address of the place where the backup is kept |
A way to collect it
- Put the five questions in the year's query letter and send them to the person who runs the client's systems, not only to the accounts team.
- For cloud-hosted books, ask for the provider's name and the address of the server as the provider's own console or invoice shows it, and keep a copy.
- For books kept on the client's own computer, say so, give the address, and ask where the backup copy is kept.
- For 14(d), look at the set-up before you answer yes. The answer is the auditor's, and it rests on what was seen.
A line for the management representation letter
The letter should say what the client has told you, in the client's words, and nothing more. A form of words you can adapt:
We confirm that our books of account for the tax year are kept in [software], stored on [provider and IP address, country], and that the backup is kept at [address in India]. We will inform you of any change to these during the year.
Clause 52(b): expenditure in three rows
Form 3CD clause 44 split expenditure into four columns: exempt, composition dealers, other registered suppliers, and unregistered. Form 26 clause 52(b) asks for three rows, and the composition column is gone.
| Row | Expenditure relating to | What goes in |
|---|---|---|
| 1 | Expenditure relating to entities registered under GST | Every purchase and expense line whose supplier has a GSTIN |
| 2 | Expenditure relating to entities not registered under GST | Every line whose supplier has no GSTIN: cash bills, unregistered contractors, small retail |
| 3 | Expenditure relating to goods or services exempt from GST | Lines that are exempt or outside GST by their nature, whoever the supplier is (a written policy is needed for items such as salary and interest) |
Building the working
- Take the total. Start from the purchase and expense ledgers of the profit and loss account, so that the three rows have one total to add up to.
- Tag each line with the supplier's status. The party master gives it: a valid GSTIN puts the line in row 1; no GSTIN puts it in row 2. Purchases on which the buyer paid tax under reverse charge from an unregistered supplier belong to row 2, the supplier being unregistered.
- Take out the exempt lines. Anything exempt from GST by its nature goes to row 3 even when the supplier is registered. Items outside GST altogether, such as salary and interest, need a policy that you write down once and apply to every client the same way.
- Check that the rows add up. Row 1 plus row 2 plus row 3 must equal the total of step 1. A difference is a line that has no row.
- Use GSTR-2B as a sense check on row 1 only. Registered-supplier expenditure and the 2B figure will rarely be equal, because 2B holds input tax credit documents and the books hold expenditure; large gaps are worth a question to the client, not an adjustment.
Where the risk sits
| Clause | What can go wrong | What to do about it |
|---|---|---|
| Clause 14(c), 14(e) | The client moves its books to another host or a new backup site during the year, and the report names the old one | Ask again at year-end, not only at the start of the audit; keep the provider's invoice or console screen as evidence |
| Clause 14(d) | A yes is signed on the client's word | See the set-up: where the books live and where the backup is kept. Say in the working what you saw |
| Clause 50(b) | The count of transactions reported and not reported in the TDS statements does not match the books | Get the filed statements and count transaction by transaction against the deductions in the books before you sign |
| Clause 52(b) | Exempt items sit in row 1 because the supplier is registered | Decide the row by the nature of the expenditure first, the supplier's status second; apply one written policy to the whole year |
| Clause 52(b) | The three rows do not add up to the expenditure in the books | The rows must add up to the same total as the expenditure ledgers; any difference is a line without a row |
This note reflects the Form 26 clause list kept in Corelytix on 20 October 2026. It is a working method, not a statement of what the law requires for any particular client; check the notified form and the rules before you sign a report.