Tax Slabs — FY 2025-26 Quick Reference

Mr. Amit’s Case — Recalculated with Correct SD ₹75,000

Salary ₹8.5 lakh. Small company employer — TDS deposited: zero. Old Regime, 80C investments ₹1.2 lakh.

The prior article showed this at ₹52,500 tax (using ₹50,000 SD). Correct figure with ₹75,000 SD: ₹45,240. Still significant — and still growing with 234B interest every month it remains unpaid.

If your estimated tax liability for the year exceeds ₹10,000 — and TDS is not covering it — you are required to pay advance tax in quarterly installments. This is not optional: it is the legal substitute for employer TDS when the employer does not deduct.

Payment: incometax.gov.in → e-Pay Tax → Challan 280 → Select “Advance Tax” → Enter AY 2026-27 → Pay. Save the challan receipt — you will need the BSR code and challan number when filing your ITR.

Interest If You Miss Advance Tax

On Amit’s ₹45,240 liability — 234B interest at 1%/month from April 1 to the date he finally pays accumulates at approximately ₹452 per month. If he pays only at ITR filing in late July — 4 months of interest = approximately ₹1,800. If he waits until December — 9 months = approximately ₹4,070. The meter runs continuously.

Changing jobs mid-year is the most reliable way to create an invisible tax gap — because both employers compute TDS on their own salary only, without knowing about the other’s income. When combined, the total salary often falls in a higher slab than either employer assumed.

When an employer is required to deduct TDS but fails to do so, they face a penalty under Section 271C — equal to the amount of TDS that should have been deducted. This is the employer’s liability, separate from yours.

However, the employer’s penalty does not reduce your obligation. Your income tax liability is yours regardless of the employer’s compliance. Two separate legal obligations — one for the employer (deduct and deposit TDS), one for you (pay the tax on your income). The employer’s failure to fulfil their obligation does not extinguish yours.

If your employer has consistently not deposited TDS — check AIS and Form 26AS regularly. If TDS appears in your Form 16 but not in Form 26AS, the employer deducted it from your salary but did not deposit it with the government. In this case: you cannot claim TDS credit for it (since it is not reflected in Form 26AS), you must pay the tax yourself, and you should report the employer’s non-deposit to the TRACES/TDS grievance cell. This is a specific form of employer fraud where you bear the practical consequence.

Case 1 — Startup Employee, No TDS, Proactive Advance Tax

Kavya joined a 12-person startup in April 2025 — salary ₹9.6 lakh per year. The company had not registered for TAN and was not deducting TDS on anyone’s salary. She checked AIS in July — zero TDS against her PAN. She calculated her liability: ₹9.6L minus ₹75K SD minus ₹1.5L 80C = ₹7.35L taxable. Tax at New Regime: approximately ₹53,750 + cess = ₹55,900.

She paid advance tax in four installments — September, December, March, and a balance payment in March. At ITR filing, her self-assessment tax was ₹2,100 — the small remainder after advance tax credits. No 234B interest. No surprise demand. Total planning time: 45 minutes across the year.

Case 2 — Investment Proofs Not Submitted, Tax Gap Discovered Late

Arjun’s salary was ₹12 lakh. He intended to invest ₹1.5L in ELSS in March but kept putting it off. He told HR in July (Form 12BB) that he would invest — HR computed TDS with ₹1.5L 80C deduction assumed. By March, he had invested only ₹50,000.

The ₹1,00,000 difference in 80C reduced his tax credit by ₹30,000 (at 30% slab). His employer had not deducted enough TDS because they assumed a deduction he did not actually claim. At ITR filing he owed ₹30,000 as self-assessment tax plus Section 234B interest because he had not paid advance tax to cover the gap. The investment he did not make cost him ₹30,000 in tax plus ₹2,100 in interest.

Lesson: Declare only investments you have actually made or will definitely make by March 31. Form 12BB declarations are not aspirational — they are representations of fact.

Case 3 — TDS Shown in Form 16 But Not in Form 26AS

Rohan’s Form 16 showed TDS of ₹68,000 — his employer had cut it from his salary monthly. But when he downloaded Form 26AS in June, TDS showed as zero. His employer had collected the money but not deposited it with the Income Tax Department.

He could not claim ₹68,000 TDS credit — it was not against his PAN in the government’s records. He had to pay ₹68,000 as self-assessment tax before filing ITR. He then filed a complaint at the TRACES grievance portal against the employer for non-deposit of collected TDS. The employer faces Section 271C penalty — but Rohan’s ITR was filed correctly and his compliance was clean.
🔗 Bank Account Freeze — How to Resolve It

1. 1Calculate Your Actual Tax Liability
   Take your gross salary. Subtract standard deduction ₹75,000. Subtract actual deductions — HRA (calculated, not just received), 80C (only what you have actually invested or will by March 31), 80D, home loan interest. Apply the correct regime. This number is your tax liability for the year.
2. 2Check AIS and Form 26AS
   incometax.gov.in → AIS and Form 26AS. What TDS has actually been deposited by your employer against your PAN? The difference between Step 1 and Step 2 is the gap you need to fill through advance tax.
3. 3Talk to HR / Employer
   If TDS should be deducted but is not — inform HR. Submit Form 12BB with your investment declarations and HRA details. If your employer is a startup or small company that has not set up TDS compliance — escalate to the founders. They face Section 271C penalties for non-compliance. Their compliance problem is also your problem.
4. 4Pay Advance Tax — On Time
   If tax gap exceeds ₹10,000 — pay advance tax. Use Challan 280 → Advance Tax → AY 2026-27. Quarterly installments on June 15, September 15, December 15, March 15. Keep challan receipts — BSR code and serial number are required for ITR filing.
5. 5If Changing Jobs — Submit Form 12B Immediately
   On Day 1 at the new employer — give them Form 12B declaring your prior employer’s salary and TDS for the financial year so far. This ensures combined income is correctly accounted for in the new employer’s TDS computation for the remaining months.
6. 6File ITR Accurately — Before July 31
   Declare full salary from all employers. Declare all advance tax payments (BSR code + challan serial + amount). Declare all TDS credits (from Form 26AS — only what is reflected there, not just what Form 16 shows). Pay any remaining self-assessment tax via Challan 280 before submitting. E-verify within 30 days of filing.

“No TDS means no tax” — the most expensive assumption:
This is the central error this entire guide exists to address. Tax liability is income-based, not TDS-based. The employer’s failure to deduct shifts the collection burden to you — through advance tax. It does not reduce the underlying liability by one rupee.

Declaring investments in Form 12BB that are never made:
Form 12BB is a declaration of actual or intended investments. If you declare ₹1.5L in ELSS and invest only ₹50,000 — your employer computes TDS on a ₹1L deduction that does not exist. At ITR time, you owe the tax on that ₹1L plus interest. Only declare what you have actually invested or are certain you will invest before March 31.

Not checking whether employer actually deposited TDS:
Form 16 shows what the employer deducted. Form 26AS shows what was actually deposited against your PAN. These can differ — and when they do, only Form 26AS matters for your TDS credit. Check Form 26AS every quarter — not just at ITR time. Discovering the gap in June leaves you time to act. Discovering it in August means self-assessment tax plus multiple months of 234B interest.

Waiting for the ITR deadline to pay all tax at once:
Self-assessment tax can be paid at any time before filing. Advance tax can be paid quarterly. There is no reason to accumulate the entire liability and pay it in one day in late July — except that it attracts maximum 234B interest and maximum cash flow stress simultaneously. Pay in installments through the year.