Mandatory Filing of Return 7th Proviso to Section 139 (1)

Mandatory Filing of Return

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 Minimum Exemption limit not chargeable to income tax.
  Section 139 (1) needs you to furnish a return of income in the prescribed form and manner.

Here Total Income Means Income before claiming exemptions U/S 54 to 54GB and deductions Under Chapter VI A (from sec 80C to 80U) 

Here basic exemption limits vary based on age groups, and Tax Regime like under Old tax regime the basic exemption limit for A.Y 2024-25 is as follows:

• Individuals below 60 years: Rs 2.5 lakh
• Individuals above 60 years but below 80 years: Rs 3.0 lakh
• Individuals above 80 years: Rs 5.0 lakh

In case of New Tax Regime the Minimum Exemption Limit is for A.Y 2024-25 is :

• Individuals for all age groups: Rs 3 lakh

Example 1: Suppose an individual has net taxable income of Rs 4.25 lakh. As the income is below the taxable income of Rs 5/7 lakh, there will be zero tax payable. However, income of Rs 4.25 lakh is above the basic exemption limit of Rs 2.5/3 lakh, hence ITR filing is mandatory.

Example 2: Suppose an individual has gross taxable income of Rs 6.25 lakh. He is eligible to claim standard deduction of Rs 50,000 and section 80C deduction of Rs 1 lakh. After claiming the deductions, the net taxable income is Rs 4.75 lakh. Hence, ITR filing is mandatory here to claim the tax rebate under section 87A.

Example 3: Suppose an individual has gross taxable income of Rs 2.25 lakh. Here total taxable income is below the basic exemption limit of Rs 2.5 lakh. Hence, ITR filing is not mandatory. However, there are certain benefits of filing NIL ITR.

Example 4: Suppose an individual has gross taxable income of Rs 2.5 lakh. Here total taxable income is equal to basic exemption limit of Rs 2.5 lakh. Hence, ITR filing is not mandatory. Because the act language says that total taxable income should be more than basic exemption limit.

Example 5: Suppose an individual has gross taxable income of Rs 3 lakh. Here ITR Filing is mandatory under old tax regime but not mandatory under new tax regime whereas under both the tax regime tax should be zero.

Filing of Return Under 7th Proviso to Section 139 (1)

The Finance Act, 2019 has 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 like an individual, HUF, AOP,BOI, Artificial Juridical Person (other than a company or a firm),  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) if during the previous year he/she

1. Has deposited an amount (or aggregate of amount) in excess of Rs. 1 crore in one or more current account maintained with a bank or a co-operative bank.
2. Has incurred aggregate expenditure in excess of Rs. 2 lakh for himself or any other person for travel to a foreign country.
3. Has incurred aggregate expenditure in excess of Rs. 1 lakh towards payment of electricity bill.
4. Fulfils such other conditions as may be prescribed.

The CBDT vide notification No. 37/2022, dated 21-04-2022, has notified additional conditions under the seventh proviso to section 139(1) whereby return filing is made mandatory. These additional conditions are as follows

1. If total sales, turnover or gross receipt of the business exceeds Rs. 60 lakh during the previous year; or 
2. If total gross receipt of profession exceeds Rs. 10 lakh during the previous year; or
3. If the total of tax deducted and collected in case of a person during the previous year is Rs. 25,000 or more. The threshold limit shall be Rs. 50,000 in case of a resident individual of the age of 60 years or more; or
4. If the aggregate deposit in one or more savings bank accounts of the person is Rs. 50 lakhs or more during the previous year