Employer Cut TDS? You Can't Be Taxed Twice

If your employer deducted TDS from your salary but didn't deposit it with the government, the Income Tax Department cannot recover that tax from you. Section 205 of the Income Tax Act protects salaried employees from paying twice.

Here's what happened: The Orissa High Court ruled that Section 205 of the Income Tax Act protects salaried employees from tax recovery when their employer has already deducted TDS from their salary.. Tax authorities were directed to verify TDS mismatch cases properly before pursuing recovery action against individual employees whose only fault was working at the company.. This ruling matters because employers — especially smaller businesses — sometimes deduct TDS from employee salaries but fail to deposit it with the government, triggering IT department demands against workers' PANs..

What you should do: Download your Form 26AS and Annual Information Statement (AIS) from the Income Tax portal (incometax.gov.in) and check whether TDS your employer deducted actually appears as credited — do this before the current ITR season closes.. If you receive a tax demand notice for salary TDS, respond immediately in writing citing Section 205 of the Income Tax Act and attach your Form 16 — do not pay without contesting first.. Compare your Form 16 (Part A) with Form 26AS quarterly; if there is a mismatch, escalate to your HR or finance team in writing so you have a paper trail protecting you from any future recovery action..

Once your employer deducts TDS, Section 205 legally transfers the payment obligation to them — even if they go bankrupt, the IT department must chase the company, not your bank account.