Employer Skips TDS? You Owe ₹3.36L — Or Do You?
A Mumbai IT employee got a ₹3.36 lakh tax notice because her employer deducted TDS from her salary but never sent it to the government. A tax tribunal ruled she was not liable. Here's what this means for every salaried Indian.
Your employer deducts TDS from your salary but YOU get the IT notice if they don't pay it — like paying your electricity bill and still getting disconnected.
Your tax demand if your employer pockets your TDS instead of paying it
Key Takeaways
Check your Form 26AS and AIS on the Income Tax portal (incometax.gov.in) every quarter — if your employer's TDS deposits are missing, you'll see it before the IT department flags you.
Download your salary slips monthly and match TDS deducted against what appears in your Form 26AS — any gap means your employer may not be depositing your tax.
If you receive a tax demand notice linked to your employer's TDS default, file a written response citing Section 205 of the Income Tax Act and attach your salary slips and Form 16 as proof.
A Mumbai IT employee got a ₹3.36 lakh tax notice because her employer deducted TDS from her salary but never sent it to the government. A tax tribunal ruled she was not liable. Here's what this means for every salaried Indian.
Here's what happened: A Mumbai IT professional received a ₹3.36 lakh income tax demand because her employer deducted TDS from her salary but failed to deposit it with the Income Tax Department.. The Income Tax Appellate Tribunal (ITAT) ruled in her favour, holding that an employee cannot be penalised for TDS deducted but not remitted by the employer to the government.. This ruling reinforces Section 205 of the Income Tax Act, which protects employees from double taxation when TDS has been deducted at source — even if the employer defaults on depositing it..
What you should do: Check your Form 26AS and AIS on the Income Tax portal (incometax.gov.in) every quarter — if your employer's TDS deposits are missing, you'll see it before the IT department flags you.. Download your salary slips monthly and match TDS deducted against what appears in your Form 26AS — any gap means your employer may not be depositing your tax.. If you receive a tax demand notice linked to your employer's TDS default, file a written response citing Section 205 of the Income Tax Act and attach your salary slips and Form 16 as proof..
Pro tip: If TDS shows as deducted in your Form 16 but is missing in Form 26AS, file a complaint against your employer at the TDS Centralised Processing Centre (CPC) — the IT department can recover the amount directly from your employer, not you.
Check Your Tax Status
Open GoCredit App →References
- [1]“Mumbai IT employee hit with ₹3.36 lakh tax demand after employer fails to deposit TDS — here's what happened next” mint - money · 28 Jun 2026
This article is reported by GoCredit's Editorial Team based on the source above. GoCredit synthesises, contextualises, and adds India-borrower-relevant analysis. We are not the original publisher.