WHO IS REQUIRED TO FILE INCOME TAX RETURNS AS PER RECENT AMENDMENT IN SECTION 139 OF INCOME TAX ACT?
In case of a person (other than company or firm) – Filing of Income Tax Returns is mandatory only if gross total income is more than the basic exemption limit. Therefore, a person entering into certain high value transactions is not necessarily required to furnish his return of income. In order to ensure that persons who enter into certain high value transactions do furnish their return of income, Finance Act (No 2) 2019 proposed to amend section 139 of the Income Tax Act so as to provide that a person shall be mandatorily required to file his return of income, if during the previous year, he
(i) Has deposited an amount or aggregate of the amounts exceeding one crore rupees in one or more current account maintained with a banking company or a co-operative bank; or
(ii) Has incurred expenditure of an amount or aggregate of the amounts exceeding two lakh rupees for himself or any other person for travel to a foreign country; or
(iii) Has incurred expenditure of an amount or aggregate of the amounts exceeding one lakh rupees towards consumption of electricity; or
(iv) Further, currently, a person claiming rollover benefit of exemption from capital gains tax on investment in specified assets like house, bonds etc., is not required to furnish a return of income, if after claim of such rollover benefits, his total income is not more than the maximum amount not chargeable to tax. In order to make furnishing of return compulsory for such persons, it is proposed to amend the sixth proviso to section 139 of the Act to provide that a person who is claiming such rollover benefits on investment in a house or a bond or other assets, under sections 54, 54B, 54D, 54EC, 54F, 54G, 54GA and 54GB of the Act, shall necessarily be required to furnish a return, if before claim of the rollover benefits, his total income is more than the maximum amount not chargeable to tax.
(v) Fulfils such other prescribed conditions, as may be prescribed.
These amendments will take effect from 1st April, 2020 and will, accordingly apply in relation to assessment year 2020-2021 and subsequent assessment years.
Other Cases where filing of Income Tax Returns is mandatory
Apart from the amendments introduced in Finance Act (No 2) 2019, for compulsory filing of Income Tax Returns, there are some other cases as well where filing of Income Tax Returns is mandatory. These cases are
- In case of Company or Firm irrespective of whether there is a Profit or a Loss.
- In case the assessee intends to claim Income Tax Refund.
- In case of Carry Forward of Losses under the head “Profits and gains of business or profession” or under the head “Capital Gains” or under the certain specified sources falling under the head “Income from other sources”.
- In case of resident having assets or financial interest in an entity outside India. (Not applicable to NRI’s or Resident but not ordinarily resident’s)
- In case resident having signing authority in any account located outside India. (Not applicable to NRI’s or Resident but not ordinarily resident’s)
- In case a person is in receipt of income derived from a property held under a trust for charitable or religious purposes or a political or research association, news agency, educational or medical institution, trade union, a not for profit university or educational institution, a hospital, infrastructure debt fund, any authority, body or trust.
- In case of a person (other than company or firm) if the gross total income exceeds basic exemption limit.
- In case of a foreign company taking treaty benefits in India.
PENALTY FOR LATE FILING OF INCOME TAX RETURNS
Apart from levy of interest for late payment of income tax, penalty under section 234F would also be levied in case of delay in filing of ITR.
The penalty levied for late filing of Income Tax Return is as follows
|If ITR filed before the due date||NIL|
|If ITR filed after Due Date but before 31st December||₹.5,000/-|
|If ITR filed after 31st Dec but before 31st March||₹.10,000|
There is a relief given to small taxpayers whose gross total income does not exceed Rs 5 lakh, the maximum penalty levied for delay will be ₹.1,000/-.
This penalty as mentioned above would be required to be paid before the filing of the Income Tax Return.
Further person can be proceeded against for wilful failure to furnish a ROI under section 276CC of the Act. Such proceedings can result in punishment by way of imprisonment and fine as follows.
- In a case where the tax is less than ₹.25 Lakhs –with imprisonment for a term which shall not be less than 3 months but which may extend to 2 years and with fine.
- In a case where the tax exceeds ₹.25 Lakhs – with imprisonment for a term which shall not be less than 6 months but which may extend to 7 years and with fine.
However a person cannot be proceeded against for failure to furnish a Return of Income within the due time under section 139(1) in either of the following two situations:
- a) If such a person has furnished a Return of Income before the end of the AY; or
- b) If the tax payable by such person other than a company, on the total income determined on regular assessment, as reduced by the advance tax or self-assessment tax, if any, paid before the expiry of the assessment year and any tax deducted at source, does not exceed ten thousand rupees.
Compiled By Mahesh Kumar
Date : 27.12.2019