No demand on taxpayer if TDS deducted but not deposited by deductor

When your employer or any other deductor deducts TDS from your salary/income they must deposit it to the income tax department against your PAN.

Hapless taxpayers write to us asking what to do when TDS is deducted but not deposited by the employer. In such a case they are unable to take credit of TDS against total tax payable by them. If they take TDS credit they receive a demand notice from tax department for TDS mis-match.

Sometimes repeated communication to employers/deductors goes waste. The taxpayer is caught between the tax department raising demand to pay the balance tax and the deductor not depositing tax which has already been deducted.

 

In a major relief to taxpayers, the income tax department has said

  • when TDS has been deducted but not deposited by the deductor, 
  • demand due to TDS/tax credit mismatch shall not be made on the taxpayer.

 

This was also stated by CBDT in its earlier circular – read in detail here.

 

Other important things to note –

  • Remember to maintain proofs of TDS deduction such as –
  • Payslips
  • Bank statements
  • Communication with the deductor
  • Any other documents that supports that TDS was deducted

 

  • You can check details of your TDS deduction by reviewing your Form 26AS – read here.

 

  • Sometimes TDS is deducted but deposited against incorrect PAN – in such a case you must reach out to the deductor and ask them to revise their TDS statement.

 

 

As per CBDT office memo F.No 275/29/2014-IT (B) dated 11th March 2016

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