Submission of Return of Income [Section 139(1)]

Section 139(1) of the Income Tax Act, 1961, lays down the rules for who must file an Income Tax Return (ITR) in India, when such filings are mandatory, voluntary, and the due dates applicable for various taxpayer categories.

Who Must File an Income Tax Return under Section 139(1)?

Filing an income tax return is mandatory for the following:

• Individuals:
  • If total annual income exceeds the basic exemption limit:
    • Below 60 years: ₹2.5 lakh
    • Age 60–80 years (senior citizens): ₹3 lakh
    • Above 80 years (super senior citizens): ₹5 lakh
  • Companies (private, public, domestic, or foreign) and firms (including LLPs and other partnerships):
    • Mandatory filing regardless of income, profit, or loss, for every financial year.
  • Residents with foreign assets:
    • Any resident individual with foreign assets, financial interests in entities outside India, or signing authority in a foreign account, regardless of income level.
  • Other entities (such as HUFs, AOPs, BOIs):
    • If the income exceeds the exemption limit, return filing is mandatory.
  • Persons seeking loss carryforward:
    • To carry forward losses to future years, filing the return is necessary.
  • Certain exempted classes:
    • The Central Government may exempt specific groups from filing, but such exemptions require Parliamentary approval.

7th Proviso – Mandatory Filing Based on Transactions:

Even if income is below the exemption limit, return filing is compulsory if the person:

• Deposited ₹1 crore or more in one or more current accounts
• Spent ₹2 lakh or more on foreign travel
• Spent ₹1 lakh or more on electricity consumption
• Meets other conditions prescribed by CBDT

Due Dates for Filing:

Note: The government may extend these dates via notifications.

Voluntary Filing:

Even if not required, a person may voluntarily file a return. This is especially useful for:

• Claiming refunds
• Establishing income proof
• Carrying forward losses (if filed on time)

Example:

Suppose Ms. Kavya earns ₹3.2 lakh in FY 2024–25 and spends ₹2.5 lakh on a Europe trip. Even though her income is below the exemption limit, she must file a return under Section 139(1) due to the 7th Proviso.

1.  Compulsory Filing of Return for Assets Located Outside India [Fourth Proviso to Section 139(1)]

Under the Fourth Proviso to Section 139(1) of the Income Tax Act, 1961, certain taxpayers are mandatorily required to file an income tax return (ITR) if they hold assets or financial interests outside India, even if their total income is below the basic exemption limit. This provision aims to enhance transparency and curb tax evasion related to undisclosed foreign assets.

Who is Covered?

• Resident taxpayers(excluding “Not Ordinarily Resident” individuals under Section 6(6)) who, during the previous year:
  • Hold beneficial ownershipof any foreign asset (e.g., real estate, bank accounts, stocks, or financial interests in entities abroad).
  • Have signing authorityover foreign bank accounts.
  • Are beneficiariesof foreign assets (e.g., trusts, inheritances).

Exemption Limit Irrelevant

• Filing is compulsory regardless of whether the taxpayer’s income exceeds the basic exemption limit(e.g., ₹2.5 lakh for individuals under 60).

Types of Foreign Assets Triggering Compliance

• Real estate, investments, or business interests outside India.
• Bank accounts, mutual funds, or equity holdings in foreign entities.
• Signing authority over offshore accounts (even if not the owner.

Due Date & Penalties

• Filing Deadline: Same as regular ITR due dates (typically July 31for individuals, October 31 for audited cases).
• Non-Compliance Penalties:
  • Late filing: Penalty up to ₹10,000 under Section 271F.
  • Concealment: Prosecution under Black Money Act, 2015for undisclosed foreign assets.

Reporting Requirements

Taxpayers must disclose:

• Schedule FAin ITR forms (e.g., ITR-2/ITR-3) detailing:
  • Description, location, and value of foreign assets.
  • Income generated from these assets (e.g., rent, dividends).

Exceptions

• Not Ordinarily Resident (NOR) taxpayersare exempt unless they meet residency criteria under Section 6(6).

2.  Compulsory Filing of Return Under Sixth Proviso to Section 139(1)

The Sixth Proviso to Section 139(1) of the Income Tax Act, 1961, mandates certain individuals to file an income tax return (ITR) even if their total income (after exemptions/deductions) is below the taxable threshold. This applies if their gross total income (before claiming exemptions under Sections 54 to 54GB or deductions under Chapter VI-A) exceeds the maximum amount not chargeable to tax.

Applicability:

• Taxpayers must file an ITR if their total income before exemptions/deductionsexceeds the basic exemption limit (e.g., ₹2.5 lakh for individuals under 60).
• Exemptions/Deductions Covered:
  • Sections 54 to 54GB: Capital gains exemptions (e.g., reinvestment in house property, specified bonds).
  • Chapter VI-A Deductions: Includes Sections 80C (investments), 80D (health insurance), etc..

Purpose:

• Ensures transparency for taxpayers availing large exemptions/deductions.
• Prevents misuse of tax benefits by non-filers.

Examples:

• An individual with ₹3 lakh gross income (before 80C deductions of ₹1.5 lakh) must file an ITR, even if net taxable income is ₹1.5 lakh (below exemption limit).
• A property seller claiming Section 54 exemption on capital gains must file if pre-exemption gains exceed the threshold.

Penalties for Non-Compliance

• Late Filing: Penalty up to ₹5,000 under Section 271F.
• Concealment: Additional penalties under Section 270A(50%–200% of tax evaded).

Exceptions

• Not applicable if gross total income (pre-deductions) is below the exemption limit

3.  Mandatory ITR Filing Under Seventh Proviso to Section 139(1): High-Value Transactions

The Seventh Proviso to Section 139(1) of the Income Tax Act, 1961, mandates certain individuals to file an income tax return (ITR) even if their total income is below the basic exemption limit, provided they engage in specified high-value transactions. This provision aims to enhance financial transparency and curb tax evasion.

Who is Covered?

The following persons must file an ITR if they undertake high-value transactions, even with zero taxable income:

1. Individuals
2. Hindu Undivided Families (HUFs)
3. Associations of Persons (AOPs)
4. Bodies of Individuals (BOIs)
5. Artificial Juridical Persons

Excluded Entities: Companies and firms are not covered under this proviso.

High-Value Transactions Triggering Mandatory Filing

If any of the following conditions are met during the financial year, an ITR must be filed:

1. Bank Deposits ≥ ₹1 Crore
   • Aggregate deposits in current accounts(not savings accounts) exceed ₹1 crore.
2. Foreign Travel Expenditure ≥ ₹2 Lakh
   • Includes expenses for self or others on international trips.
3. Electricity Bills ≥ ₹1 Lakh
   • Applies to consumption expenditure(e.g., residential/commercial electricity bills).
4. Additional Conditions (CBDT Notified):
   • Business turnover > ₹60 lakh.
   • Professional receipts > ₹10 lakh.
   • TDS/TCS ≥ ₹25,000 (₹50,000 for seniors aged 60+).
   • Savings account deposits ≥ ₹50 lakh.

Key Points

• ITR Forms: Applicable forms (ITR-1 to ITR-5) include a dedicated field to declare compliance with the 7th Proviso.
• Penalties: Non-filing attracts a late fee of up to ₹5,000 under Section 271F.
• No Income Exemption: Filing is compulsory even if net taxable income is zero after deductions/exemptions.

How to File?

1. Select “Yes”in the ITR form’s Part A-General Information for the question:
   “Are you filing under the 7th Proviso to Section 139(1)?”.
2. Disclose Transaction Details: Provide specifics of high-value transactions in the relevant schedules.

4.  Due Dates for Furnishing the Return of Income Under Section 139(1)

Here’s a summary of the due dates for furnishing the return of income under Section 139(1) of the Income Tax Act, 1961, based on the latest updates:

1. General Due Dates for FY 2024-25 (AY 2025-26)

Note: The due date for non-audit cases (individuals/HUFs) has been extended to 15 September 2025 for FY 2024-25.

2. Other Key Deadlines

• Belated Return (Section 139(4)): Can be filed by 31 December 2025(with late fees up to ₹5,000).
• Revised Return (Section 139(5)): Can be filed by 31 December 2025to correct errors in the original return.
• Updated Return (Section 139(8A)): Can be filed within 4 years from the end of the AY(e.g., until 31 March 2030 for AY 2025-26).

3. Penalties for Late Filing

• Late fee (Section 234F):
  • ₹1,000 if income ≤ ₹5 lakh.
  • ₹5,000 if income > ₹5 lakh.
• Interest (Section 234A): 1% per month on unpaid tax.
• Loss Carry-Forward: Losses (except house property) cannotbe carried forward if the return is filed after the due date.

5.  Consequences of Not Filing Income Tax Return (ITR) on Time or Not Furnishing ITR at All

Failing to file an income tax return (ITR) by the due date or not filing it at all can lead to serious financial and legal repercussions under the Income Tax Act, 1961. Below are the key consequences:

1. Late Filing Penalty (Section 234F)

• If filed after the due date but before December 31 (belated return):
  • ₹1,000 (if total income ≤ ₹5 lakh).
  • ₹5,000 (if total income > ₹5 lakh).
• If filed after December 31 (updated return under Section 139(8A)):
  • Additional 25% to 50% penaltyon the tax due, depending on timing.

2. Interest on Unpaid Tax (Section 234A)

• 1% per monthon outstanding tax from the due date until the actual payment date.
• Applicable even if the return is filed late.

3. Losses Cannot Be Carried Forward (Section 80)

• Business losses, capital losses, or speculation lossescannot be carried forward to future years if the return is filed after the due date.
• Exception: House property losses can still be carried forward.

4. Prosecution & Legal Consequences (Section 276CC)

• For willful tax evasion (if tax due > ₹10 lakh):
  • Imprisonmentfrom 6 months to 7 years.
  • Fineas per court discretion.
• For non-filing despite notice (Section 142(1)):
  • Penalty of ₹10,000 per default(Section 272A).

5. Difficulty in Financial Transactions

• Loan/Credit Card Rejection: Banks and financial institutions often require ITR receipts for loan approvals.
• Visa Issues: Many countries (e.g., US, UK, Schengen) ask for ITRs as proof of financial stability.
• TDS Refund Delays: No refund processing until the return is filed.

6. Higher Scrutiny & Notices

• Income Tax Department may issue noticesunder:
  • Section 142(1)(for non-filing).
  • Section 148(reassessment for escaped income).
• Black Money Act (2015): If foreign assets are undisclosed, severe penalties apply.

7. Ineligibility for Certain Tax Benefits

• No deductions (Chapter VI-A): If filed late, deductions under Section 80C, 80D, etc.may be disallowed.
• No exemptions (Section 54, 54F): Capital gains exemptions may be denied.