Balance Confirmation Letter Format
Ask customers, suppliers and lenders to confirm the balance in their account as per your books at year end.
Law version: Up to FY 2025-26 (Income-tax Act, 1961); Tax Year 2026-27 onwards (Income-tax Act, 2025). Checked on 26 Sep 2026.
What it is
A balance confirmation letter asks a third party, such as a customer, supplier, lender or depositor, to confirm the balance shown in the company's books on a date, usually 31 March. Auditors use these replies as external confirmation evidence under SA 505, so the reply is sent directly to the auditor. The letter also helps the business reconcile differences before the accounts are closed.
When it is used
- Year-end closing and statutory or tax audit.
- Reconciling a debtor or creditor account with differences.
- Confirming loans, deposits and interest with lenders.
What the template covers
- Name and address of the party and account type
- Balance as on the date, debit or credit
- Interest and TDS for the period where relevant
- Request to reply directly to the auditors
- Confirmation slip with space for the party's own balance
Details you will need
The generator asks for the following. Fields marked with an asterisk in the form are required; the rest can be left blank and filled in later in Word.
Letter
Letter Date; Reference No.
Our Entity (sender)
Entity Name; Address; GSTIN; PAN; Email for replies (if no auditor); Authorised Signatory; Designation
Party (recipient)
Party Name; Party Address; Party PAN
Balance
Type of Account; Balance as on; Balance as per our books (₹); Dr / Cr in our books; Interest for the year (₹, loans only); TDS on that interest (₹, loans only); Reply By
Auditor (optional)
Auditor Firm Name; Auditor Address; Auditor Email
Stamp duty, registration and filing
Under SA 505 (External Confirmations), the auditor controls the sending and receipt of confirmation requests, so replies should go to the auditor, not the entity. Interest on loans is subject to TDS under the Income-tax Act; from tax year 2026-27 the Income-tax Act, 2025 applies. Differences should be explained with a statement of account.
For loans, the TDS reference follows the "as on" date: Section 194A of the Income-tax Act, 1961 up to 31 March 2026, Section 393(1) of the Income-tax Act, 2025 from 1 April 2026.
Generate the Balance / Loan Confirmation Letter
Fill in the form and download the draft as a Word file. It is a general template, not legal or professional advice; have it reviewed for your facts before you sign or rely on it.
Related documents
Frequently asked questions
Why should the reply go to the auditor?
Because SA 505 treats a confirmation as reliable evidence only when the auditor keeps control over the request and receives the reply directly.
What if the other party does not reply?
The auditor performs alternative procedures, such as checking later receipts or payments, invoices and contracts.
Is a balance confirmation needed for every party?
No. Auditors usually select parties based on the size of the balance and risk.
This page gives general information for reference only. Laws, stamp duty rates and filing requirements change and differ between States, so confirm the current position for your case. Related: all document templates · free tax calculators · compliance calendar and guides.