TDS not deposited by employer: 26AS mismatch fix, citizen guide 2026

Your Form 16 shows that ₹1,20,000 was deducted as TDS from your salary across the year, but when you log into the income-tax portal and pull Form 26AS, the figure shown is ₹40,000 (or sometimes ₹0). This guide tells you exactly what to do, in the order that works, and which laws protect you when your employer keeps your tax money instead of paying it to the government.

Your employer is a “deductor” under §192 of the Income-tax Act 1961. They are required to (a) deduct tax at source from your salary every month, (b) deposit it with the Central Government within 7 days of the next month (or by 30 April for March), and © file a quarterly statement in Form 24Q under Rule 31A. If they deduct but do not deposit, that is a statutory default with civil and criminal consequences. You are not the defaulter, but you are the one stuck with a 26AS that does not match your Form 16.

• Income-tax Act 1961, §192: employer must deduct TDS on salary at the average rate.
• §200: deposit deadlines and consequences of missed deposits.
• §201(1) and §201(1A): employer is “assessee in default” and liable for interest at 1.5% per month for non-deposit.
• §205: where tax is deductible at source, the assessee shall not be called upon to pay the tax himself to the extent it has been deducted. This is the citizen shield.
• §271C: penalty equal to the unpaid TDS amount.
• §276B: prosecution for failure to deposit, with rigorous imprisonment from 3 months up to 7 years plus fine. The Supreme Court in Madhumilan Syntex Ltd v Union of India (2007) 290 ITR 199 (SC) confirmed that directors and principal officers can be prosecuted personally.
• Yashpal Mohinder Pal Sahni v Commissioner of Income Tax (2008) 165 Taxman 144 (Bombay HC) later cited and applied widely: credit cannot be denied to the assessee for tax actually deducted by the deductor, even if the deductor defaulted in deposit.
• CBDT Instruction dated April 2024 to CIT(TDS) officers: where deductor default is proven, the assessee must be given credit and recovery action shifted to the deductor.
• Rule 31A, Income-tax Rules 1962: quarterly TDS statement (Form 24Q) filing schedule.
• Bharatiya Nyaya Sanhita 2024, §316: criminal breach of trust. When an employer takes your tax money in trust and uses it for working capital, that fits the definition.
• Code on Wages 2019: wages include amounts deducted for statutory remittance; non-remittance is a wage-code violation.
• Payment of Wages Act 1936: still applies for sectors not yet notified under the Code on Wages.

1. Log in to the Income-tax e-filing portal at https://www.incometax.gov.in and download Form 26AS for the relevant financial year.
2. From the same dashboard, download AIS (Annual Information Statement) and TIS (Taxpayer Information Summary). These three documents together show what the Department thinks you earned and paid.
3. Open your Form 16 Part A (issued by employer) and read the quarterly TDS table.
4. Pull out 12 monthly payslips and add up the TDS column.
5. Build a simple discrepancy table with five columns: Quarter, TDS per payslips, TDS per Form 16, TDS per 26AS, Gap.
6. Screenshot every page in 26AS, AIS, and your payslip portal. Save as PDF.
7. Open TRACES at https://www.tdscpc.gov.in and pull your Annual Tax Statement (Form 26AS) and the Taxpayer view of TDS/TCS credit.
8. Email the payroll head and finance head of your employer with the discrepancy table attached and a 7-day deadline (sample below).

If you do these eight steps inside 30 minutes, you now have the entire evidence pack that every later authority will ask for.

1. Employer withheld but did not remit. Most common with cash-stressed MSMEs and start-ups. The money sat in their current account and got used for vendor payments.
2. Filed Form 24Q with wrong PAN. A single transposed character means your TDS is credited to a stranger.
3. Filed with correct PAN but wrong amount. Quarter-wise mismatch; the employer reported less than they deducted.
4. Late deposit followed by quiet cancellation. Employer paid, then reversed the challan when cash flow tightened.
5. Section or nature-of-payment code error. Tax was reported under §194J (professional fees) instead of §192 (salary), or vice versa.
6. Multiple employers in the year, only one filed. Common during job switches; the previous employer dragged feet on the closing quarter.
7. Misclassification as consultant. Employer treated you as a 194J consultant when you were actually a §192 salaried employee.
8. Employer dissolved or under IBC. The company is in Corporate Insolvency Resolution; the Resolution Professional now controls statutory dues.

To: payroll@[employer-domain].com; cfo@[employer-domain].com
Cc: hr.head@[employer-domain].com
Subject: TDS deducted from salary not reflecting in Form 26AS, FY 2025-26, 7-day demand notice

Dear [Payroll Head Name / Sir or Madam],

I, [Your Name], Employee Code [XXXX], PAN [ABCDE1234F], was employed with
[Employer Name] during FY 2025-26. The total TDS deducted from my monthly
salary as per payslips and Form 16 (Part A) issued by you is ₹[1,20,000].

However, my Form 26AS and AIS, as accessed on the income-tax portal on
[date], reflect a TDS credit of only ₹[40,000]. The quarter-wise
discrepancy is as follows:

   Quarter        TDS per Form 16   TDS per 26AS   Gap
   Q1 (Apr-Jun)   ₹30,000           ₹10,000        ₹20,000
   Q2 (Jul-Sep)   ₹30,000           ₹10,000        ₹20,000
   Q3 (Oct-Dec)   ₹30,000           ₹10,000        ₹20,000
   Q4 (Jan-Mar)   ₹30,000           ₹10,000        ₹20,000
   Total          ₹1,20,000         ₹40,000        ₹80,000

Under §192, §200 and Rule 31A of the Income-tax Act 1961 and Rules 1962,
you were required to deposit the deducted TDS within the prescribed time
and file the quarterly statement (Form 24Q) accurately. The above gap
indicates either a filing default, a deposit default, or both, exposing
the company and its principal officers to liability under §201, §271C
and §276B.

I hereby demand that within 7 days of this email you:

   1. Deposit any unpaid TDS along with interest under §201(1A).
   2. File a revised Form 24Q for each affected quarter.
   3. Issue a corrected Form 16 (Part A) downloaded fresh from TRACES.
   4. Send me a written confirmation along with challan copies (CIN, BSR
      code, date of deposit).

If the discrepancy is not cured in 7 days, I will be constrained to file
a grievance with the jurisdictional Commissioner of Income-tax (TDS), an
e-Nivaran complaint, a CPGRAMS complaint, and to consider a complaint
under §276B of the Income-tax Act 1961 and §316 of the Bharatiya Nyaya
Sanhita 2024 for criminal breach of trust.

Regards,
[Your Name]
PAN: [ABCDE1234F]
Employee Code: [XXXX]
Mobile: [+91-XXXXXXXXXX]
Date: [DD-MM-YYYY]

To,
The Commissioner of Income-tax (TDS),
[City having jurisdiction over employer's TAN],
Income-tax Department, [Address].

Subject: Complaint against [Employer Name] (TAN: [XXXX12345X]) for non-
deposit of TDS deducted under §192 from salary of the undersigned for
FY 2025-26 and request for credit under §205 of the Income-tax Act 1961.

Respected Sir / Madam,

   1. I, [Your Name], PAN [ABCDE1234F], was employed with [Employer Name],
      TAN [XXXX12345X], during FY 2025-26.

   2. As per Form 16 (Part A) issued by the deductor and monthly payslips
      (enclosed), a total TDS of ₹[1,20,000] was deducted from my salary.

   3. However, Form 26AS and AIS available on the income-tax portal
      reflect TDS credit of only ₹[40,000]. The shortfall of ₹[80,000]
      arises from the deductor's failure to deposit and/or correctly
      report the deduction in Form 24Q.

   4. A 7-day written demand was served on the deductor on [date]; copy
      enclosed. No corrective action has been taken till the date of this
      complaint.

   5. Under §205 of the Income-tax Act 1961, where tax is deductible at
      source, the assessee shall not be called upon to pay the tax to
      the extent it has been so deducted. This principle was upheld by
      the Hon'ble Bombay High Court in **Yashpal Mohinder Pal Sahni v
      CIT (2008) 165 Taxman 144** and reiterated in CBDT instructions of
      April 2024 directing CIT(TDS) offices to credit the assessee and
      recover from the deductor.

   6. I respectfully request this office to:

         a. Treat the deductor as "assessee in default" under §201(1).
         b. Recover the unpaid TDS, interest under §201(1A), penalty
            under §271C and initiate prosecution under §276B against
            the principal officers, as held permissible in **Madhumilan
            Syntex Ltd v UOI (2007) 290 ITR 199 (SC)**.
         c. Direct the Centralised Processing Centre to grant me TDS
            credit of ₹[1,20,000] in full in any pending or future ITR
            processing for FY 2025-26.

Enclosures: Form 16, 26AS, AIS, payslips, 7-day demand email, employer
reply (if any), PAN copy.

Place: [City]
Date: [DD-MM-YYYY]                                  [Your Name]
                                                    PAN [ABCDE1234F]

1. Tier 1: Employer payroll and HR (7 days). Send the sample email above to payroll, finance, HR, and CC the founder or MD if it is a smaller company. Ask for revised 24Q, fresh Form 16 from TRACES, and challan copies (CIN and BSR code).
2. Tier 2: CIT(TDS) of employer's jurisdiction (15 days). Find the CIT(TDS) office by mapping the employer's TAN at https://www.incometax.gov.in (Help > Know your AO / Know your jurisdiction). Send the complaint by email, by Speed Post with acknowledgement due, and hand-deliver one set with a receiving stamp.
3. Tier 3: e-Nivaran (30-day SLA). Log in to the income-tax e-filing portal, go to Grievances > Submit Grievance, choose category AO (TDS) or CPC-TDS, sub-category Mismatch in 26AS / TDS credit not given. Attach the same evidence pack. Quote the ticket number in every later filing.
4. Tier 4: CPGRAMS (30 days). File at https://pgportal.gov.in addressing the Department of Revenue / Income Tax. The case will route to the relevant Principal CCIT. CPGRAMS is the citizen-facing escalation backstop; non-action triggers a written reply that you can use later.
5. Tier 5: §276B prosecution complaint and BNS §316 route. If the deductor continues to default, request the CIT(TDS) in writing to launch §276B prosecution against the directors and principal officers. Parallelly, you can file a private complaint or an FIR under BNS 2024, §316 (criminal breach of trust) at the police station having territorial jurisdiction over the employer's registered office.

Parallel sub-tracks:

• Labour Commissioner: if your monthly salary itself has been short-paid or unpaid, file a wage-claim under the Code on Wages 2019 (or Payment of Wages Act 1936 where still applicable). The same employer is now exposed on two fronts.
• §138 Negotiable Instruments Act 1881: if the employer issued a settlement cheque that bounced, you have a separate cause of action within 30 days of dishonour notice.
• Companies Act 2013, §447 (fraud) and MCA complaint: directors of a company that has used employee TDS as working capital can be reported to the Registrar of Companies and the Serious Fraud Investigation Office.
• Insolvency route: if the employer is under CIRP, file your TDS claim with the Resolution Professional in Form CA / Form D (workmen and employees). Statutory dues for tax deducted but not deposited are typically treated as Government dues with their own priority.

1. Claim the full TDS in your ITR as per Form 16 and payslips, even if 26AS shows less. The portal will allow you to type a higher TDS figure than the prefill suggests; do so deliberately and keep the evidence ready.
2. Attach a covering note to the ITR acknowledgement in your own records: Form 16, payslips, 26AS print, AIS print, the 7-day demand, and the CIT(TDS) complaint.
3. Expect an intimation under §143(1) within 30 to 90 days raising a demand for the unmatched TDS or reducing the refund. Do not panic.
4. File a rectification application under §154 quoting Yashpal Sahni and §205, attaching the same evidence pack. The CPC at Bengaluru has been instructed (CBDT April 2024) to release credit on this basis.
5. If the CPC still refuses, file a first appeal before CIT(A) under §246A within 30 days. Costs are minimal and the precedent is overwhelming.
6. Track interest under §244A: if your refund is delayed because of the deductor's default and not your fault, you are entitled to interest at 0.5% per month from 1 April of the assessment year.

• 12 monthly payslips (PDF, not screenshots).
• Form 16 Part A (downloaded from TRACES, not just employer's PDF).
• Form 26AS for the financial year.
• AIS and TIS prints.
• Salary credit bank statements showing matching net-of-TDS deposits.
• Appointment letter and any salary-revision letters.
• Employer PAN and TAN (visible on Form 16 Part A header).
• Email correspondence with payroll and HR.
• TRACES Taxpayer view of TDS credit.
• Acknowledgements of e-Nivaran and CPGRAMS tickets.
• CIN and BSR code of any partial deposits made by the employer.

• Credit cannot be denied for tax actually deducted (Yashpal Sahni, 2008; CBDT instruction April 2024).
• Recovery cannot be made against the assessee where the deductor defaulted (§205, Income-tax Act 1961).
• Right to file FIR or private criminal complaint under BNS 2024 §316 for breach of trust.
• Right to seek prosecution under §276B of the Income-tax Act 1961 against the principal officers.
• Right to inspect statutory registers of the employer under the Companies Act 2013 (members), and to file an RTI request if the employer is a Public Sector Undertaking, government body, or substantially financed by government.
• Right to whistleblower protection under the Whistle Blowers Protection Act 2014 when reporting wilful tax default to CIT(TDS).

• Freelancers and consultants (§194J or §194C TDS). Same playbook applies, but the demand letter should cite §194J / §194C and Form 26Q (not 24Q). For consultants, the deductor still owes you a Form 16A.
• Start-ups and failed companies. Move to Tier 2 within 7 days. Founders are individually liable as principal officers; do not let the corporate veil distract you.
• ESOP TDS. TDS is required at perquisite exercise. Eligible start-ups can defer for 5 years under §192(1C); confirm whether your employer formally exercised this deferral, otherwise it is a regular §192 default.
• Perquisite TDS. Rent-free accommodation, company car, ESOPs and other perquisites attract TDS at marginal rates; mismatches here are common because employers under-report perquisite value.
• NRI employees under §192. If you were an NRI for part of the year, ensure DTAA relief is not double-counted; the rules under §90 and §195 differ.
• Government deductors. Central or State Government salary TDS flows through the Pay and Accounts Office (PAO) using Form 24G, not direct challans. The escalation route is to the PAO and the Principal CCA, not a private TAN office.

• Filing ITR using the prefilled lower TDS without flagging the discrepancy.
• Waiting for the employer to “fix it next quarter” past the ITR due date.
• Sending only WhatsApp messages to payroll, no email trail.
• Not downloading Form 16 from TRACES (the employer-issued PDF can be unilaterally regenerated).
• Forgetting CIN and BSR code in correspondence (CIT(TDS) needs these to trace partial deposits).
• Skipping e-Nivaran and jumping straight to court; the SLA-driven grievance ladder makes later appeals stronger.

Yes. The portal allows you to declare a TDS figure higher than the prefilled 26AS amount. Keep Form 16 Part A from TRACES and payslips ready. Expect a §143(1) intimation; file a §154 rectification quoting §205 and Yashpal Sahni.

The employer's failure does not extinguish your right under §205. File the CIT(TDS) complaint anyway, and parallelly file your dues with the Resolution Professional in the IBC matter using Form CA (employees) or Form D (workmen). Tax deducted but not deposited typically ranks as Government dues.

Yes, under §316 of the Bharatiya Nyaya Sanhita 2024 (criminal breach of trust). The employer holds your tax money in trust. You can also push CIT(TDS) to launch §276B prosecution; that is the tax-statute route with imprisonment up to 7 years.

In practice, 6 to 16 weeks. The April 2024 CBDT instruction has tightened timelines. The e-Nivaran 30-day SLA and CPGRAMS 30-day SLA running parallelly force the office to respond on record.

Yes, if the delay is attributable to the Department or the deductor and not to you. Interest is 0.5% per month from 1 April of the assessment year until the date of refund.

§205 says that where tax is deductible at source, the assessee shall not be called upon to pay the tax himself to the extent it has been so deducted. It is the statutory wall between the citizen and the deductor's default.

Yes, but with a lag of 1 to 3 weeks after CPC-TDS processes the corrected statement. Always ask the employer for the CIN and BSR code of the deposit and the acknowledgement number of the revised 24Q, then verify on TRACES.

Ask for the challan CIN, BSR code, date, and amount, then check the same on TRACES (Challan Status Inquiry). If the challan exists but is not linked to your PAN, the employer's 24Q is filed with the wrong PAN; demand a revised statement.

RTI applies to public authorities. If your employer is a PSU, central or state government body, or substantially financed by government, you can RTI both the employer and the Income-tax Department. For private employers, you cannot use RTI against the employer, but you can RTI the Income-tax Department to learn about action taken on your CIT(TDS) complaint.

No. §205 protects you. The deductor faces §201, §201(1A) interest, §271C penalty, and §276B prosecution. You are at most asked to clarify the source documents.

Build one consolidated discrepancy table covering all employers, file one CIT(TDS) complaint per jurisdiction, and a single e-Nivaran covering both. The §154 rectification will rely on the consolidated evidence.

• Income-tax Act 1961: §192, §200, §201, §205, §271C, §276B (https://incometaxindia.gov.in).
• Income-tax Rules 1962: Rule 31A; Form 24Q and Form 16.
• Bharatiya Nyaya Sanhita 2024: §316 (criminal breach of trust).
• Code on Wages 2019; Payment of Wages Act 1936.
• Supreme Court of India, Madhumilan Syntex Ltd v Union of India (2007) 290 ITR 199 (SC).
• Bombay High Court, Yashpal Mohinder Pal Sahni v CIT (2008) 165 Taxman 144.
• CBDT Instruction, April 2024, on credit to assessee where deductor default proven.
• TRACES portal at https://www.tdscpc.gov.in.
• Income-tax e-filing portal at https://www.incometax.gov.in.
• CPGRAMS at https://pgportal.gov.in.

• Citizen RTI Playbook: 10 ways to use RTI to fix government services
• eDaakhil online consumer commission filing in India
• AI RTI Draft App: generate a tailored RTI application in 2 minutes

If the employer's non-deposit also masks unpaid salary, perquisite under-reporting, or PF default, the same evidence pack feeds three more complaints in parallel. Build the file once, fight on every front. Use the AI RTI Draft App to generate the CIT(TDS) and CPGRAMS letters in your name in two minutes, and keep the Citizen RTI Playbook open in another tab while you escalate.

Last reviewed by RTI Wiki editorial team on 2026-05-16.