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Income Tax · Salary · TDS

My employer deducted TDS but didn't deposit it — what can I do?

✍️ Answered by EaseValue Advisors · Updated 17 Jul 2026 · 4-min read
Quick answer

If your employer deducted TDS from your salary but didn't deposit it, the law is on your side — Section 205 bars the department from recovering that tax from you again. But because it won't show in your 26AS, you need proof of deduction to claim the credit.

Your legal protection — Section 205

Where tax was deducted at source from your salary, Section 205 says you cannot be asked to pay it again — the department must recover it from the employer (deductor). The failure to deposit is the employer's default, not yours.

The practical problem

CPC allows TDS credit as per Form 26AS. If the employer didn't deposit/file, it's missing from 26AS, so an automated intimation may deny the credit and raise a demand.

What to do

  1. Keep proof of deduction — Form 16 and/or salary slips showing tax deducted.
  2. Claim the full TDS in your return as per your salary slips/Form 16.
  3. Push the employer to deposit and file/correct the TDS return so it appears in 26AS.
  4. If you get a demand, respond citing Section 205 with your proof of deduction, and file a grievance on the portal.

Courts have consistently upheld Section 205 in the employee's favour — you shouldn't suffer for the employer's default, but you must document the deduction.

General information based on the Income-tax Act as it stands, not advice on your specific case. Tax outcomes depend on your exact facts and residential status. © EaseValue Advisors LLP.
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