Section 518
Section 518: indemnity
Section 518 protects anyone who deducts, retains or pays tax under the Income-tax Act, 2025 on income that belongs to someone else - for example, an employer deducting TDS from an employee's salary. That person is indemnified for having made the deduction, retention or payment.
What Section 518 says
"Every person deducting, retaining, or paying any tax in pursuance of this Act in respect of an income belonging to another person shall be indemnified for the deduction, retention, or payment thereof."
In practice, this means a deductor (such as an employer, or any payer required to deduct tax at source) cannot be held liable by the person whose income it is for having correctly deducted, retained or paid over tax as required under the Act.
Frequently asked questions
Who does Section 518 protect?
Anyone who deducts, retains or pays tax under the Act on income belonging to another person - for instance, a TDS deductor.
What does being 'indemnified' mean under this section?
It means the deducting/paying person is protected from being held liable by the owner of the income for having made the deduction, retention or payment as required under the Act.
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Talk to our tax team about this sectionLast updated 9 September 2026