Seventh Proviso to Section 139(1) – Income Tax
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What is Seventh Proviso to Section 139(1)
This article updates on the ITR filing criteria. This provision mandates to file income tax return on high value expenditures / transaction made vis a vis normal requirement to file income tax return once income exceeds threshold criteria. Efforts has been made to expand the tax base of people who are making high value transaction but not filing their return of income as income is below the exemption limited prescribed in the income tax act. Seventh Proviso to Section 139(1)
Section 139(1) prescribes the due date of filing income tax return.
Union Budget 2019 – Section 139(1) – Seventh proviso
The Finance Act (No 2) of 2019 has inserted Seventh Proviso to Section 139(1) of Income Tax Act to make it mandatory to file income tax return once the expenditure/transaction amount exceeds the prescribed threshold. The taxpayer has to file income tax return and disclosure required in the return.
Union Budget of 2019 (Finance Act No 2 of 2019) has made amendment to section 139 as follows:
In section 139 of the Income-tax Act, in sub-section (1), with effect from the 1st day of April, 2020,––
(a) in the sixth proviso, after the word, figures and letters “section 10BA”, the words, figures and letters “ or section 54 or section 54B or section 54D or section 54EC or section 54F or section 54G or section 54GA or section 54GB” shall be inserted;
(b) after the sixth proviso, and before Explanation 1 the following proviso shall be inserted, namely:
“Provided also that a person referred to in clause (b), who is not required to furnish a returnunder this sub-section, and who during the previous year––
(i) has deposited an amount or aggregate of the amounts exceeding one crore rupees in one or more current accounts 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) fulfils such other conditions as may be prescribed,
shall furnish a return of his income on or before the due date in such form and verified in such manner and setting forth such other particulars, as may be prescribed.”;
(c) after Explanation 5, the following Explanation shall be inserted, namely:––
‘Explanation 6.—For the purposes of this sub-section,—
(a) “banking company” shall have the meaning assigned to it in clause (i) of the Explanation to section 269SS;
(b) “co-operative bank” shall have the meaning assigned to it in clause (ii) of the Explanation to section 269SS.’.
Compulsory filing of Income Tax Return
Section 139(1) seventh proviso mandate compulsory filing of return of income even though the income is below exemption limit for such taxpayer
1) Total Deposit in the current account is Rs. 1 crore or more
All the types of deposit are considered under this threshold limit of Rs 1 Crore whether the amount deposited is in cash, cheque, digital transaction like NEFT/RTGS/UPI/IMPS mode etc.
Further only deposit in current account is considered, hence savings and other types of bank account are excluded
2) Foreign Travel expenditure of Rs 2 Lakh or more
Foreign travel expenditure more than Rs 2 Lakhs spent during the financial year is considered. Once the amount spent exceeds the threshold limit, then the person has to file income tax return
Further, the amount should have been spent on foreign travel whether for business trip or personal tour or foreign vacation. Also, the amount may be spent in foreign currency or local currency.
3) Amount spent for more than Rs 1 Lakh on consumption of Electricity
The amount may spent on electric consumption should exceeds Rs 1 Lakh at a consolidated level in case the taxpayer has more than 1 connection. Only electricity consumption expenditure whether for domestic or commercial usage are considered and any amount towards deposit or connection fees are excluded.
4) Any other conditions prescribed
Extract of information to be filed in Income Tax Return (ITR) Seventh Proviso to Section 139(1)
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