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Guide

What to Do If Your Employer Deducted TDS but Did Not Deposit It

By TheFinanceBase Team 9 min read

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If tax was deducted from your salary but the amount is missing from Form 26AS or the Annual Information Statement (AIS), do not pay the same tax again without first documenting the deduction. Reconcile your payslips, bank credits and Form 16 with the relevant year’s tax statement, ask the employer to correct its TDS reporting, and escalate through the Income Tax Department’s grievance system if the employer does not act.

Keep evidence that the money was actually withheld. Section 205 of the Income-tax Act, 1961 protects you from being called upon to pay tax yourself to the extent it was deducted, but that protection is not the same as an automatic portal credit. A Bombay High Court decision dated 5 August 2026 shows why proof of deduction and the distinction between non-recovery and TDS credit matter.

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First establish what went wrong

A missing entry does not by itself prove that your employer kept the money. The problem can be an unfiled TDS statement, an incorrect PAN, TAN, assessment year, amount or quarter, or a return that was filed but has not yet produced a matching entry. The Income Tax Department’s tax-credit guidance says to compare your records with Form 26AS and take a mismatch up with the deductor.

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Check the right year and statement

Sign in to the official e-filing portal and download Form 26AS for the financial year in which the salary was paid. Review the corresponding AIS as well. Form 26AS is the department’s TDS information statement; AIS can provide additional transaction details. The forms and tax year must match the salary period, not merely the calendar year.

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Check the employer’s name, TAN, salary months, gross salary, TDS amount and the financial year or assessment year shown in your documents. The department explains how to verify a deductor’s TAN in its Know TAN Details service. Keep a copy of the downloaded statement before asking for a correction.

Build a month-by-month reconciliation

Use your payslips and bank statements to list the tax deducted from each salary payment. Compare the total with the TDS figure in Form 16 and with the amount appearing in Form 26AS or AIS. Note whether the mismatch is a completely missing entry, a partial amount, an incorrect year, or a wrong PAN or TAN. This classification makes the employer’s correction request specific.

What you observe Likely reporting issue to raise Records to preserve
No employer entry in Form 26AS TDS statement may not have been filed, processed or matched Payslips, bank credits, Form 16 and employer correspondence
Entry exists but amount is lower One or more salary months or challan amounts may be missing Monthly deduction schedule and the tax statement download
Entry is under the wrong year, PAN or TAN Correction statement may be required PAN details, Form 16, payslip and TAN information
Form 16 shows tax but the portal does not Employer’s filed statement and certificate may not agree Signed or digitally issued Form 16 and the portal records

Ask the employer to correct the TDS return

The employer, as deductor, is the party that can file or revise the TDS statement. The Income Tax Department’s Tax Credit Mismatch guidance identifies a revised TDS return by the deductor as the route for correcting a mismatch.

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Send a written, precise request

Email payroll, the finance or tax-deductor contact and, where appropriate, your HR case channel. State the financial year and assessment year, the months involved, the amount deducted in each month, the amount appearing in Form 26AS or AIS, and the difference. Ask the employer to verify that the tax was deposited against the correct challan and PAN and to file the necessary correction or revised statement.

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Attach only the documents needed to identify the error, such as payslips, Form 16 and the relevant tax-statement page. Mask unrelated bank-account information. Ask for a written confirmation of the action taken and the expected filing date. Keep the sent email, attachments, delivery record and every reply.

Allow for processing, then recheck

After the employer says it has filed a correction, download Form 26AS and AIS again and compare the entry. A verbal assurance or a new Form 16 is not the same as a corrected tax statement. If the amount still does not match, reply in the same email thread with the remaining difference and request the statement or acknowledgement details that let you identify the correction.

Keep evidence that tax was actually deducted

Your strongest position is a consistent chain from gross salary to the net bank credit and the tax certificate. Create one folder for the disputed year containing:

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  • Every payslip showing the TDS deduction.
  • Bank statements showing the corresponding net salary credits.
  • Form 16 and any corrected Form 16 issued by the employer.
  • Downloaded Form 26AS and AIS versions, with the download date.
  • Your written requests, the employer’s replies and any correction acknowledgement.
  • Your income-tax return, processing intimation and any demand notice.

Do not alter payslips or rely only on a payroll spreadsheet. If a document is available through an employee portal, save a PDF and the original email or portal message. The recent Bombay High Court matter Parul Trivedi Nirmal v Union of India, decided on 5 August 2026, records why evidence of actual deduction was material when taxpayers alleged that TDS had been deducted but not deposited. The judgment is available at Indian Kanoon.

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Understand Section 205 protection—and its limit

Section 205 of the Income-tax Act, 1961 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.” Read the provision at the department’s Section 205 page.

In practical terms, if you can establish that the employer actually deducted tax from the salary, the department should not recover that same deducted amount from you merely because the employer failed to deposit it. This is a safeguard against direct recovery; it does not instruct the portal to manufacture a missing entry.

The 5 August 2026 Bombay High Court decision discusses the Revenue’s position that Section 205’s bar on direct recovery and the grant of credit under Section 199 read with Rule 37BA are separate questions. It also records the need for evidence satisfactory to the assessing officer that tax was actually deducted. The outcome of that case is not a blanket guarantee for every employee, so present your documents and obtain advice for your facts if credit is disputed.

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File your income-tax return correctly

A missing Form 26AS entry does not erase the salary. Department guidance for salaried taxpayers says to disclose salary income and claim the TDS in the return. Report the gross salary and the tax shown as deducted in your records; do not omit income simply because the portal has not reflected the employer’s statement.

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If the return is not yet filed

Use the applicable return form for the relevant assessment year, enter salary and TDS details from your Form 16 and reconciliation, and retain proof of the mismatch. If the electronic form prevents the expected credit or calculates a demand, save the draft and seek year-specific professional advice rather than changing the salary figure.

If processing has produced a demand

Read the intimation or demand notice carefully, identify the response deadline and preserve the notice with your evidence file. The available guidance establishes the statutory protection and the importance of proof, but it does not create one universal response procedure for every type of demand. A qualified Indian chartered accountant or tax lawyer can determine whether a response, rectification request, appeal or other remedy fits the notice.

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Escalate through the Income Tax Department

If the employer ignores your written request or refuses to correct the statement, use the e-filing portal’s grievance service. The department’s Submit Grievances User Manual lists both Default by TDS deductor and Inaccuracy of TDS/TCS in Form 26AS/Annual Tax Statement as grievance categories.

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  1. Open the grievance facility on the official e-filing portal and select the category that matches the problem.
  2. Describe the year, employer, TAN, months and amount deducted, and explain exactly what is missing or wrong in Form 26AS or AIS.
  3. Upload legible payslips, Form 16, bank-credit evidence, the tax-statement page and your written employer request. Include the employer’s response or note that no response was received.
  4. Submit the grievance and save the acknowledgement or reference number, submission date and uploaded files.
  5. Use the portal’s status facility to follow up. Add any later employer reply or corrected statement to the record if the system permits.

A grievance can bring the mismatch to the department’s attention, but it does not replace the employer’s duty to file the corrected TDS statement or guarantee a particular credit decision. Continue preserving every document while it is investigated.

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Choose your next step by situation

Your situation Immediate action Escalation focus
Entry is missing and no demand has arrived Reconcile records and request a revised statement from the employer File a TDS-default or tax-statement-inaccuracy grievance if the employer does not act
Entry is partial or has wrong PAN, TAN or year Give payroll the exact discrepancy and request a correction statement Attach the corrected Form 16 or PAN/TAN evidence to the grievance
A demand or processing intimation has arrived Record the deadline and assemble proof before responding Obtain case-specific professional advice on the available response or remedy
You have payslips but no Form 16 Ask the employer for the certificate while retaining payslips and bank records Explain the missing certificate and attach alternative deduction proof
The employer is unreachable or refuses responsibility Send a final written request and preserve delivery evidence Use the department’s grievance categories and keep the reference number

Check the tax-year rules before naming forms or sections

Forms and filing labels can change with the assessment year. The department’s page on forms applicable for salaried individuals for AY 2025-26 is a useful year-specific reference. Its ITR-1 (Sahaj) online FAQs explain filing questions for that form, while the TDS Compliance FAQs discuss the transition to the 2025 Act. Check the deduction date and the applicable financial and assessment year before relying on a form name, section reference or portal workflow.

Common mistakes that weaken a claim

  • Assuming non-appearance proves non-deposit: first rule out a wrong year, PAN, TAN, amount or processing mismatch.
  • Relying on a phone call: make the correction request and the employer’s response part of a dated written record.
  • Discarding bank evidence: a payslip shows an accounting entry; the bank statement helps show the net amount actually paid.
  • Omitting salary from the return: the missing portal credit does not remove the reporting obligation.
  • Paying a disputed amount without advice: read the notice and obtain professional guidance where Section 205 protection or TDS credit is contested.
  • Using the wrong tax year: keep financial year, assessment year, deduction date and return form aligned.
  • Failing to save the grievance number: without the acknowledgement, follow-up is harder and the chronology is incomplete.

When professional help is justified

Consider a qualified Indian chartered accountant or tax lawyer when a demand has a short response deadline, the employer has ceased operations, the disputed amount is substantial, the employer denies making the deduction, or the department rejects credit despite your documents. Give the adviser the complete evidence folder and a timeline. No adviser can promise that a missing portal entry will become a credit; the decision depends on the records, the relevant year’s law and the assessing authority’s findings.

Frequently Asked Questions

Can my employer make me pay TDS that was already deducted from my salary?

Section 205 says you cannot be called upon to pay tax yourself to the extent tax was deducted, but you should be able to prove the deduction. That protection concerns recovery; it does not automatically create a Form 26AS credit.

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What if the employer says it deposited TDS but Form 26AS is still blank?

Ask for a written verification and correction of the TDS statement, then reconcile the employer’s TAN, your PAN, the year and the amount. If the mismatch remains, use the Income Tax Department grievance category for TDS default or inaccuracy in Form 26AS/AIS.

Should I leave the TDS claim out of my return until Form 26AS is corrected?

No. Disclose salary and handle TDS using your Form 16 and deduction evidence. If processing or a demand is affected, respond by the stated deadline and obtain year-specific professional advice.

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