Employer Skips TDS? You May Owe ₹3.36L to IT Dept

If your employer deducts TDS from your salary but never sends it to the government, the Income Tax Department can come after YOU. Here's what the law actually says — and how one Mumbai employee fought back and won.

Here's what happened: A Mumbai IT employee received a ₹3.36 lakh tax demand because her employer deducted TDS from her salary but never deposited it with the Income Tax Department.. The Income Tax Appellate Tribunal (ITAT) ruled in her favour — an employee cannot be held liable for TDS that was deducted but not remitted by the employer.. Under Section 205 of the Income Tax Act, if TDS is reflected as deducted, the employee's liability is discharged — the shortfall must be recovered from the defaulting employer..

What you should do: Check your Form 26AS and AIS on the Income Tax portal (incometax.gov.in) every quarter to verify your TDS has actually been deposited — not just deducted.. If you spot a mismatch between your salary slip TDS and Form 26AS, immediately write to your HR and payroll team in writing, creating a paper trail before filing your ITR.. If you receive a tax demand despite TDS being shown as deducted, file a rectification request under Section 154 citing Section 205 protection — do not pay the demand blindly..

Your Form 26AS is your legal shield. If TDS appears deducted there, ITAT and courts have consistently held that you cannot be made to pay twice — the department must chase your employer, not you.