If your employer deducted tax deducted at source (TDS) from your salary, you generally should not have to pay that same tax again merely because the employer failed to deposit or report it. If the employer never deducted TDS, however, your own tax liability can still remain. The first step is to establish which of those two situations occurred, then match your payslips and Form 16 with the correct annual tax statement for the salary-payment date.
The two cases that determine your rights
Employer TDS defaults are not one problem. Your remedy and personal exposure depend on whether money was actually withheld from your salary.
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| What happened | What it means for you | Immediate action |
|---|---|---|
| TDS was deducted from your pay but is absent or incorrect in the tax statement | Keep proof of the deduction. For salary payments governed by the Income-tax Act, 1961, section 205 bars a second direct demand to the extent tax was deducted. | Ask the employer or other deductor to correct its TDS statement and retain the evidence in case a demand appears. |
| No TDS was deducted from your pay | The employer’s withholding failure does not by itself cancel tax due on your taxable income. | Recalculate your total tax and pay self-assessment tax or advance tax when applicable. |
| TDS appears, but the amount is lower than the payslip deduction | You have a reporting mismatch. The tax credit available in the return is restricted to the amount reflected in the applicable annual statement. | Reconcile each payslip, Form 16 and annual statement, then request a revised TDS filing. |
| A tax demand has already been raised | The demand requires a documented response; the correct portal route depends on the facts and tax year. | Save the notice and deduction evidence, use the applicable response or rectification facility, and obtain professional advice if the dispute continues. |
What section 205 protects—and what it does not
For salary payments covered by the Income-tax Act, 1961, section 205 is titled Bar against direct demand on assessee. It states: “Where tax is deductible at the source under the foregoing provisions of this Chapter, the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income.” The protection is tied to tax actually deducted from that income. A payslip, payroll register or Form 16 can help demonstrate that deduction.
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The TRACES general TDS FAQ expresses the practical rule this way: “The ultimate responsibility to pay tax rests on the person who has earned income.” It also explains that if an employee deposits the tax, the employer remains liable for interest and penalty arising from failure to deduct. Treat those as separate questions: your final tax calculation, the employer’s withholding duty and the appearance of credit in the tax statement.
Use the law and statement for the salary-payment date
Salary TDS is governed by the law in force when the salary is paid, not simply by the month in which it was earned. The Income Tax Department’s transition guidance gives these examples: salary for March 2026 paid on 31 March 2026 falls under the Income-tax Act, 1961; salary for April 2026 paid on 30 April 2026 falls under the Income-tax Act, 2025.
| Salary payment date | Governing law | Salary TDS provision | Annual statement to check |
|---|---|---|---|
| Through 31 March 2026 | Income-tax Act, 1961 | Section 192 | Form 26AS for assessment years through AY 2026-27 |
| On or after 1 April 2026 | Income-tax Act, 2025 | Section 392(1) | Form 168 for Tax Year 2026-27 onwards |
Do not carry the old Act’s section 205 wording into every later tax year. Under the Income-tax Act, 2025, section 398 addresses consequences when a person required to deduct or pay tax, including an employer, fails to do so. Section 398 has a different function and text; it should not be described as a reproduction of section 205’s employee protection. If a dispute concerns a salary payment on or after 1 April 2026, identify the applicable provision and obtain advice where the legal route is unclear.
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How to investigate and correct an employer TDS default
- Identify the payment date and tax year. List each salary payment in dispute, including arrears, bonuses and an end-of-month payment that may have been credited in the following month. Mark whether the payment was before 1 April 2026 or on or after that date. This determines the Act, the salary-TDS section and the statement you should inspect.
- Collect your payroll evidence. Download the payslip for every affected month. Note the gross salary, taxable salary, TDS line, net pay and payment date. Add Form 16 when issued, payroll emails and any year-end tax worksheet. Under the 1961 Act, Form 12BB is the employee form used to provide claims and supporting particulars for salary-TDS computation; retain the declarations and documents you submitted.
- Open the correct annual statement. Use Form 26AS for assessment years through AY 2026-27. For Tax Year 2026-27 and later, use Form 168 as identified by the Income Tax Department. Save a copy showing the employer’s tax-deduction account number, payment date, amount and status before requesting a correction.
- Reconcile line by line. Compare the TDS total on your payslips and Form 16 with the amount in Form 26AS or Form 168. Check spelling of your name, tax identifier, employer account details, quarter and financial or tax year. A credit can be delayed, reported under a wrong identifier or filed for a different period, so record the exact difference rather than relying on a rounded annual total.
- Write to payroll or the deductor. Ask whether TDS was deducted, when it was deposited and whether the employer filed the required TDS statement. Attach the relevant payslip and statement extract, identify each missing or incorrect entry and request a revised TDS statement. The department’s mismatch guidance places the correction with the employer or deductor; an employee cannot amend the employer’s withholding return personally.
- Protect yourself if a demand appears. Keep the demand notice, all payslips, Form 16, annual statement copies and your written requests. Use the applicable response or rectification facility on the official tax portal. There is no single resolution route that automatically clears every demand, so seek qualified tax advice when the amount is material, the employer is unresponsive or the payment falls under the 2025 Act and the legal position is uncertain.
If your employer did not deduct TDS
Start with the tax calculation, not the payslip. Add salary and other taxable income, apply the deductions and exemptions available under the regime you selected, and subtract tax already paid through other channels. A zero TDS line may be correct if your projected taxable income was below the applicable threshold or if payroll calculated no balance after declarations; it may also be an error.
When the calculation produces tax payable, the Income Tax Department says a salaried taxpayer may need to pay self-assessment tax and, where the conditions apply, advance tax. Filing a return without paying the balance can leave an outstanding liability. The employer’s failure to withhold does not transfer the final tax obligation away from the person who earned the income.
Ask payroll for its computation and the reason no tax was withheld. Check whether you submitted investment or deduction details through Form 12BB under the 1961 Act, whether you changed jobs during the year, and whether a bonus or taxable benefit was omitted from the projection. If the shortfall is discovered before year-end, request higher deductions from later salary payments where payroll can still correct the calculation. If the year has closed, make the appropriate tax payment and report income accurately in the return.
Published departmental guidance for deductors under the 1961 Act lists interest of 1% per month or part of a month for failure to deduct, and 1.5% per month or part of a month for failure to deposit tax after deduction. These are deductor-side figures, not a formula for your personal tax interest. Confirm the applicable Act and period before relying on them.
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If TDS was deducted but is missing from Form 26AS or Form 168
A missing entry is a documentation and reporting problem, not proof that no deduction occurred. Preserve the payslip that shows the TDS line, bank evidence of the net salary, Form 16 if issued and every message to payroll. If Form 16 and the statement disagree, preserve both versions.
Tell the employer or deductor that the annual statement does not reflect the amount withheld and request a revised TDS return. The department’s mismatch guidance states that the employer must file the revised statement. Until the corrected amount appears, the tax credit you claim in your return is restricted to the amount reflected in Form 26AS or Form 168. Claiming a larger credit solely because a payslip shows a deduction can produce a processing mismatch.
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For salary paid under the 1961 Act, section 205 is important if the department seeks the same tax directly from you: the statutory bar applies to the extent tax was actually deducted from that income. That protection and the online credit are related but distinct. You may need the employer to repair the statement even while relying on your documentary evidence against a second demand.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What to do when the employer is unresponsive
Send a dated written request to payroll, the finance department or the employer’s designated tax contact. State the payment dates, the amount shown as TDS on each payslip, the amount in the annual statement and the correction requested. Keep proof of delivery and any ticket number. Follow up with a concise chronology rather than sending multiple contradictory totals.
If the employer has closed, changed its legal name or stopped responding, gather every independent record: bank credits, payslips from the employee portal, Form 16, offer and separation documents, and prior correspondence. A tax professional can help present the evidence with a demand response or rectification request. Do not alter a payslip or submit a self-created certificate as though it were an employer-issued Form 16.
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Records worth keeping
- Monthly payslips showing salary, deductions and the TDS line.
- Form 16 and the underlying salary computation, when issued.
- Form 12BB declarations and supporting investment or deduction documents for periods governed by the 1961 Act.
- Downloaded Form 26AS or Form 168 for the relevant year, including the date saved.
- Bank statements showing net salary credits and any self-assessment or advance-tax payments.
- Emails, letters, help-desk tickets and delivery proofs exchanged with payroll or the deductor.
- Any tax-demand notice, response acknowledgement and rectification order.
Common mistakes that make a mismatch worse
- Paying twice without checking the deduction. First establish whether TDS was actually withheld. A second payment may be unnecessary for a 1961 Act salary to the extent section 205 applies, although the missing statement still needs correction.
- Assuming a missing Form 26AS entry means no tax was deducted. Check payslips and Form 16 before concluding that payroll omitted withholding.
- Claiming payslip TDS that is absent from the annual statement. The department restricts tax credit in processing to the amount reflected in the statement; pursue the employer’s revised filing.
- Using the wrong statement or year. Match the statement to the payment date and the department’s transition labels: Form 26AS through AY 2026-27 and Form 168 from Tax Year 2026-27 onward.
- Applying section 205 to every future payment. It is a provision of the 1961 Act. Salary paid on or after 1 April 2026 is governed by the 2025 Act, including its section 392(1) salary-TDS rule and section 398 failure consequences.
- Ignoring a demand because payroll promised to fix it. Keep the demand response or rectification process moving while requesting the revised statement; an informal promise does not itself close a tax demand.
When professional help is justified
Consider a tax professional when the disputed amount is substantial, several employers reported different figures, you changed residence or tax identifiers, the employer is no longer operating, or the demand covers payments made across the 2026 legal transition. Professional help is also sensible when the department rejects a response despite complete deduction evidence. Provide the adviser with the payment-date timeline, both annual statements where relevant, payslips, Form 16, demand notice and your written employer requests.
The practical decision is straightforward: if TDS was never deducted, calculate and pay your own tax when due; if it was deducted, preserve proof and pursue the employer’s correction rather than paying the same amount again without examining section 205 and the applicable payment year.
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