The Central Board of Direct Taxes mandates everyone to file the income tax return if one’s income exceeds the basic exemption limit. Filing an income tax return every year on time has many benefits even if your annual income is below the minimum taxable limit. Key changes to Indian tax regulations from time to time would impact the process of income tax return filing. The Central Board of Direct Taxes accordingly makes changes in the income tax return forms and notifies the ITR form to be used every year by each category of taxpayers.
What is the 7th Proviso
to Section 139 (1) of the Income Tax Act, 1961?
As per Section 139 (1) of the Income Tax Act, 1961,
income tax return filing is mandatory for a certain class of people mentioned
below –
·
Company
or a firm;
·
A
person other than a company or a firm, if his total income during the previous
year exceeded the maximum limit not chargeable to income tax.
Section 139 (1) needs you to furnish a return of
income in the prescribed form and manner. However, The Finance (No. 2) Act,
2019 has now inserted a new 7th Proviso to Section 139 (1) of the Income Tax
Act, 1961 with effect from 1st April 2020. As per the 7th Proviso
to Section 139 (1), it is mandatory to file the income tax return for a certain
class of people who carries out certain high-value transactions mentioned in
the section even though their total income is below the basic exemption limit
(who are otherwise not required to file the income tax return).
Who
needs to File Income Tax Return under 7th Proviso to Section 139 (1) of
the Income Tax Act, 1961?
As per the Income Tax Department and its laws, a
person referred to in clause (b) of section 139 (1) is only required to furnish
a return under the 7th Proviso to Section 139 (1) of the Income
Tax Act, 1961, if such person has undertaken the certain high-value transactions
specified in the section during the financial year. That means 7th Proviso
to Section 139 (1) of the Income Tax Act is applicable for –
·
An
individual
·
Hindu
undivided family (HUF)
·
Association
of persons
·
Body
of individuals (whether incorporated or not)
·
An
artificial juridical person
Filing income tax returns under 7th Proviso
to Section 139 (1) of the Income Tax Act, 1961 is not applicable for a company
or a firm, as they are not covered under clause (b) of section 139 (1).
What are the High-Value Transactions
Covered under 7th Proviso to Section 139 (1) of the Income Tax Act, 1961?
Furnishing of income tax return is mandatory for a
person who is otherwise not required to furnish the return if the person has
undertaken the following high-value transactions during the financial year –
The
aggregate of deposits in current account/accounts exceeding INR 1 crore
In case deposited amount or aggregate of the amounts
deposited into one or more current accounts maintained by the person with banks
or co-operative banks is INR 1 crore or more, that person is required to
furnish the return under 7th Proviso to Section 139 (1) of the Income
Tax Act, 1961. Deposits in any mode such as cash, cheque or online transfer,
etc are covered.
The
aggregate of expenditures on foreign travel exceeding INR 2 lakhs
In case a person incurs expenditure aggregating to
INR 2 lakhs and more on foreign tours and travels, the income tax return needs
to be filed under 7th Proviso to Section 139 (1) of the Income
Tax Act, 1961. Expenditure incurred for travelling to a foreign country can be
for your own travel or for any other person.
The aggregate of expenditure towards consumption of
electricity exceeding INR 1 lakh
In case a person incurs expenditure aggregating to
INR 1 lakh and more towards consumption of electricity, the income tax return
needs to be filed under 7th Proviso to Section 139 (1) of the Income
Tax Act, 1961. However, it covers only the consumption expenditure where
electricity is consumed by the person concerned.
7th Proviso to Section 139 (1) of the Income
Tax Act is also applicable for any other high-value transactions or conditions
prescribed by the Central Board of Direct Taxes.
Guide to File Income Tax
Return under 7th Proviso to Section 139 (1) of the Income Tax Act, 1961
Part A-General Information section of the income tax
return form includes a column that asks you to tick yes/no for the question -
‘Are you filing return of income under the seventh proviso to section 139 (1)
but otherwise not required to furnish return of income?’.
·
Tick
‘NO’ if it is not applicable for you
·
Tick
‘yes’ if you have undertaken any high-value transactions prescribed as per the
provisions of the section and your annual income is below the basic exemption
limit.
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