Income Tax: How to check whether employer is depositing TDS with the tax department?

The Bombay High Court has recently held that employees cannot be penalised for employer’s failure to deposit tax deducted (TDS) from salary.

“The object and purpose behind the provision is to the effect that when an obligation to deposit the tax as in the present case, is on the employer and if the employer has defaulted, the liability to pay such tax cannot be shifted so as to be foisted on the employee,” the Bombay High Court said in a recent order.

It is worth recalling that employees of TCS received income tax notices about discrepancies in their TDS. Several employees received income tax notices due to discrepancies between the TDS credit in their Form 26AS, Annual Information Statement (AIS) and the amount they claimed while filing their income tax return.

So, how does it impact the employees whose income tax is deducted as TDS by the employer and supposed to be deposited with the income tax department.

Take these steps to access Form 26AS

1. If you are an employee, you can check the tax deduction on 26AS which shows monthly deduction of tax. So, you can check whether your employer is depositing the tax that it shows on your salary slip.

2. Even during the year, you can check the tax deduction as shown in your annual tax statement (or 26AS) whether the TDS has been deducted or not.

3. In order to check your form 26AS, you can take the following steps:

i). Visit the income tax e-filing website.

ii). Log in to the website by entering login ID and password.

iii). Once logged in, you can go to e-file and click to access the scroll down menu.

iv). Click 'Income Tax Returns', go to the scroll down menu, and click ‘view form 26AS’.

v). This will take you to another link which opens as a separate window.

vi). Now, you need to click ‘View Tax Credit (Form 26AS/Annual Tax Statement)’. 

Here you can access the tax deposited by the employer with the income tax department.

Pratibha Goel, a Delhi-based chartered accountant and partner PD Gupta & Company, says, "Employees should ensure that the TDS which has been deducted by the Employer gets reflected in their Form 26AS and they get Form 16 from the employer. However, if the Employer has deducted TDS, and fails to deposit the same, the Income Tax Department will not give its credit during ITR Processing. Here the employee is required to give a reply of the demand notice issued by the department by submitting documents like Salary slips, bank entries to prove the deduction of TDS. In past High courts have supported claim of employees where TDS has been deducted but not deposited by the employer. Income Tax instruction number 275/29/2014 dated 01st June 2015 also comes to rescue as it says "The Assessee are not put at any inconvenience on account of default of deposit of tax into the Government account by the deductor."