What is the Seventh proviso to section 139(1)?
The Finance (No. 2) Act, 2019 amendment with the Seventh Proviso to Section 139(1) mandates to file the return of income for a person undertaking certain high-value transactions or expenditures. Return filing would be mandatory now even though the person is entitled to exemption from taxes due to the basic exemption limit in total income, subject to certain exceptions.
The seventh proviso to section 139(1) has been inserted after the sixth proviso, and before the Explanation 1 to Finance (No. 2) Act, 2019 with effect from 1st April 2020. There are various provisions related to ‘Voluntary and Mandatory Returns’ Under Section 139 Returns of Income, and it prescribes the due date of filing of return of income with certain exceptions.
What is Section 139(1) of the Income Tax Act?
Section 139(1) prescribed the requirement to furnish the return of income. It makes filing of ITR mandatory for a certain class of person which is as under-
1. Company or a firm;
2. 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 which is Rs 2,50,000.
Under section 139(1) ITR needs to be furnished before the due date as prescribed.
Filing of Income Tax Return as per the Seventh proviso to Section 139 (1)
In Union Budget 2019, Finance Minister has announced for compulsory filing of return for persons who undertake certain high-value transactions during a financial year, like
• Deposit of Rs. 1 crore or more in current accounts:
All types of deposits whether in cash or by cheque or online fund transfer are covered. Further, only the deposit in one or more current accounts is included. Savings Accounts and other accounts are outside the purview of this provision.
• Expenditure on foreign travel for more than Rs. 2 Lakh:
It covers all the expenditure incurred by a person to travel to a foreign country for himself or any other person. Hence, the person who incurs the expenditure may or may not travel to a foreign country. It should be noted that the legislation has used the expression ‘for travel to a foreign country’ and not the expression expenditure ‘on foreign travel’.
• Expenditure on the consumption of electricity for more than Rs. 1 Lakh:
The expenditure on the consumption of electricity is only covered under this provision. Expenses incurred for getting the electricity connection or deposits made with electricity authority are not covered.
These amendments will take effect from 1st April 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent years.
Are you filing return of income under the Seventh proviso to section 139(1) but otherwise not required to furnish return of income? To be filled only if a person is not required to furnish a return of income under section 139(1) but filing return of income due to fulfilling one or more conditions mentioned in the seventh proviso to section 139(1).
Who is required to file an Income tax Return (ITR) under the Seventh proviso to section 139(1) but otherwise not required to furnish a return of income?
The seventh proviso to section 139(1) is applicable to a person referred to in clause (b) of 139(1). Which are as follows-
- An individual
- Hindu undivided family (HUF)
- An association of persons
- Body of individuals
- Artificial juridical person.
Since Companies and Firms are not covered under section 139(1)(b), The seventh proviso to section 139(1) is not applicable to a company and a firm.
Key Changes in ITR forms for the Assessment Year 2020-21
The new ITR forms (ITR 1 to ITR 7) have been introduced with additional columns and schedules to fill up essential information. These changes are consequential to the amended Income-Tax Act.
• Changes in ITR-V (Acknowledgement form) for the Assessment Year 2020-21
The income tax department has changed the verified and unverified form. The new ITR-V form will show the necessary information about the taxpayer, e-filing data only. There will not be any details of taxes, deductions, and total income. Only after verifying the form, the assessee can download the final ITR-V.
• Rule 12 related to ITR-1 (Sahaj) and ITR-4 (Sugam) has been amended through Notification No. 31/2020 for the AY 2020-21.
Now Joint Owners of House Property can file ITR-1, and ITR-4 provided that they furnish return of income under 7th proviso to section 139(1).
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