My employer is deducting too much or too little TDS from my salary, what can I do

Question

I believe my employer is either over-deducting or under-deducting TDS from my monthly salary based on my actual tax liability, and I want to correct this. Before I spend money on it, I want to know whether Income-tax Act, 1961, Section 192 gives me a remedy here and what proof I would need. Any Section numbers I can quote when I write to them would be useful.

MyVakeel Legal Desk · Accepted Answer

Income-tax Act, 1961, Section 192, Income-tax Act, 1961, Section 89 and Income-tax Act, 2025 is what decides this question in India. Read it alongside the provisions named, because the relief available to you turns on the facts you can prove on paper.

Section 192 of the Income-tax Act, 1961 requires an employer to deduct TDS on salary based on the employee's estimated total taxable income for the year, considering the regime chosen, declared investments and deductions, and any other income the employee discloses, and this deduction is meant to approximate your final annual tax liability spread across the months of the year rather than be a fixed percentage.

If TDS deducted is higher than your actual liability, typically because you did not submit proof of eligible deductions to your employer on time, or because you have losses such as house property interest that were not considered, you can still claim the correct deductions while filing your own return and claim a refund of the excess TDS, since the employer's estimate is not final and binding on your actual tax computation.

If TDS deducted is lower than what your actual liability will be, for instance because you have significant other income like freelance receipts or capital gains that your employer is unaware of, you remain personally liable to pay the shortfall as self-assessment tax, along with interest under Section 234B and 234C if advance tax was also underpaid as a result, so you should not assume employer TDS alone covers your full liability once other income exists.

If you received arrears of salary in the current year relating to earlier years, which pushed you into a higher tax bracket for the current year, Section 89 allows relief by recalculating tax as if the arrears were received in the respective earlier years, and this relief must be claimed by filing Form 10E before claiming it in your return, since the return filing utility mandates this form for the relief to be validly allowed.

In practice, in this order: 1) Submit your investment and deduction declarations to your employer promptly; 2) Disclose other income to your employer for more accurate TDS if you choose to; 3) File Form 10E before claiming Section 89 relief on salary arrears; 4) Reconcile actual liability with Form 16 while filing your own return.

Timing matters here: Income-tax Act, 1961, Section 192 works on limitation periods, so a tds on salary claim that is right on the merits can still fail if it is brought late. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in tax law.