CBDT vide Notification No. 37/2022 dated 21.04.2022 in G.S.R. 307(E) through Income-tax (Ninth Amendment) Rules, 2022 notified conditions for furnishing a return of income in terms of clause (iv) of the seventh proviso to sub-section (1) of section 139 Income-tax Act, 1961 (‘Act’) and for this purpose, a new Rule 12AB is inserted in the Income-tax Rules, 1962.
The notification prescribes the following four additional conditions for furnishing return of income in respect of persons referred to in clause (b) of sub-section (1) of section 139 in terms of clause (iv) of the seventh proviso to sub-section (1) of section 139 of the Act-
(i) if his total sales, turnover or gross receipts, as the case may be, in the business exceeds Rs. 60 Lakh during the previous year; or
(ii) if his total gross receipts in profession exceed Rs. 10 Lakh during the previous year; or
(iii) if the aggregate amount of TDS and TCS during the previous year is Rs. 25,000 or more (for a senior citizen, the limit is Rs. 50,000); or
(iv) if the aggregate amount of deposit in one or more savings bank accounts of the person is Rs. 50 Lakh or more during the previous year.
These four conditions are in addition to the existing three conditions prescribed in the Act for furnishing of return of income. It should be remembered that the mandatory furnishing of return of income under the seventh proviso to section 139(1) is not based on income, but based on certain high-value transactions.
Read the detailed Analysis of the Seventh proviso to section 139(1)
As per the Notification, it is mandatory for an individual or HUF or any other person except a company and a firm to file an income tax return if his total TDS/TCS is at least Rs. 25,000 in a financial year even if his total income is below the basic exemption limit. In the case of senior citizens, this rule will apply if the individual’s aggregate TDS/TCS is Rs. 50,000 or more in a year.
Readers are aware that there is another provision in the Act which provides for a higher rate of deduction or collection tax under section 206AB in the case of a non-filer of income-tax return. In this case, the non-filer must have an aggregate amount of TDS/TCS of Rs. 50,000 or more in the previous year.
Hence, the limit of TDS/TCS amount for filing of returns and non-filers of returns are set differently and hence no synchronisation is there.
Further, if an individual deposits Rs. 50 Lakh or more in his savings bank account in a financial year, he is required to compulsorily file income-tax return irrespective of his income level below the basic exemption limit of Rs. 2,50,000 or Rs. 3,00,000 or Rs. 5,00,000 for a general taxpayer, senior citizen (60 years or more) or a very senior citizen (80 years or more) respectively. This rule applies equally to senior citizens also.
Though not clarified, it appears that this rule covers the savings bank accounts maintained with any bank including cooperative banks and post offices.
Applicability Date for additional conditions
The notification states that these rules shall come into force with effect from the date of their publication in the Official Gazette which is 21st April, 2022. Thus, it is applicable for the filing of ITR for the FY 2021-22 or assessment year 202-23.
Finance (No. 2) Act, 2019 has inserted the seventh proviso to section 139(1) to provide for mandatory filing of return of income for undertaking certain high-value transactions even though the person is otherwise not required to file a return of income due to the fact that total income is below the basic exemption limit.
As per section 139(1)(b), a person other than a company or a firm is required to furnish the return of income only if his total income exceeds the maximum amount not chargeable to tax, subject to certain exceptions. Therefore, a person entering into certain high-value transactions is not necessarily required to furnish his return of income. In order to ensure that persons who enter into certain high-value transactions do furnish their return of income, section 139 of the Income Tax Act, 1961 is amended so as to provide that a person shall be mandatorily required to file his return of income, if during the previous year, such a person undertakes certain high-value transactions.
Also Read:
Section 139(8A): Filing of Updated Return - Budget 2022
Section 139 Provisions for filing Return of Income
Filing of return due to high-value transactions:
The seventh proviso to section 139(1) provides for furnishing of return by a person referred to in clause (b) of the said sub-section (1), who is not required to furnish a return under the said sub-section, if such person has undertaken the following high value transactions during the previous year —
1. 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. The deposit is not restricted to cash deposits only. Further, only the deposit in one or more current accounts is included. Savings Accounts and other accounts are outside the purview of this provision. The aggregate deposits in all the current accounts maintained in all of the banks including co-operative banks are required to be considered for determining the threshold of Rs. 1 crore.
2. Expenditure on foreign travel for more than Rs. 2 Lakh: It covers all the expenditure incurred by a person for 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 is not clarified what will constitute ‘foreign travel expenditure’. However, 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’. It is not necessary that the expenses should be incurred in foreign currency. Further, it is immaterial whether the travel to a foreign country is a business trip or a personal leisure trip.
Note: As per Explanation 3, the expression "travel to any foreign country" does not include travel to the neighbouring countries or to such places of pilgrimage as the Board may specify in this behalf by notification in the Official Gazette.
3. 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. Further, it is immaterial whether the consumption of electricity is due to commercial usage or personal usage, expenses on both are covered. It is also not necessary that the expenses are incurred on the electricity connection which is in the name of the person himself. The provision covers where the expenses incurred for the consumption of electricity even if the connection is in the same of someone else but the electricity must be consumed by the person concerned. Further, if the person has more than one electric connection, all the expenses will be aggregated to determine the threshold limit of Rs. 1 Lakh.
4. Other prescribed conditions: CBDT is empowered to prescribe other conditions or high-value transactions under this seventh proviso. CBDT has now prescribed additional conditions under this clause.
Note: It is not necessary that all the conditions have to be fulfilled. Fulfilling any one of the above-mentioned conditions is sufficient to file a return of income.
These amendments will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent years.
Further, a person referred to in clause (b) refers to a person other than a company or a firm. The seventh proviso to section 139(1) is not applicable to a company and a firm. It applies only to a person covered in section 139(1)(b) which includes an individual or a Hindu undivided family or an association of persons or a body of individuals, whether incorporated or not, or an artificial juridical person.
After this notification and insertion of Rule 12AB, the following persons (if satisfies any one of the following conditions) are mandatorily required to file the return of income under the seventh proviso to section 139(1) based on high-value transactions (but not on the basis of income)-
1. A person who has deposited more than Rs. 1 crore in aggregate in his all current account during a previous year.
2. A person who has incurred expenditure on foreign travel for himself or any other person in excess of Rs. 2 Lakh during a previous year.
3. A person who has incurred expenditure on electricity in excess of Rs. 1 Lakh during a previous year.
4. A person whose total sales, turnover or gross receipts in the business exceed Rs. 60 Lakh during the previous year.
5. A person whose total gross receipts in profession exceed Rs. 10 Lakh during the previous year.
6. A person whose aggregate amount of TDS and TCS during the previous year is Rs. 25,000 or more (Rs. 50,000 in case of senior citizens).
7. A person whose aggregate amount of deposit in one or more savings bank accounts of the person is Rs. 50 Lakh or more during the previous year.
In case a person is otherwise required to file a return of income under section 139(1) due to the reason that his total income exceeds the basic exemption limit is not covered by these 7 conditions as specified in the seventh proviso to section 139(1).
Read the full text of the CBDT Notification No. 37/2022 dated 21.04.2022 on Conditions for furnishing return of income under 7th Proviso to Section 139(1)
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 21st April, 2022
G.S.R. 307(E).-In exercise of the powers conferred by clause (iv) of the seventh proviso to subsection (1) of section 139 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend Income-tax Rules, 1962, namely:-
1. Short title and commencement. - (1) These rules may be called the Income-tax (Ninth Amendment) Rules, 2022.
(2) They shall come into force with effect from the date of their publication in the Official Gazette.
2. In the Income-tax Rules, 1962, after rule 12AA, the following rule shall be inserted, namely:-
'12AB. Conditions for furnishing return of income by persons referred to in clause (b) of sub-section (1) of section 139.– The conditions for furnishing return of income in respect of persons referred to in clause (b) of sub-section (1) of section 139 in terms of clause (iv) of the seventh proviso to sub-section (1) of section 139 shall be the following, namely: -
(i) if his total sales, turnover or gross receipts, as the case may be, in the business exceeds sixty lakh rupees during the previous year; or
(ii) if his total gross receipts in profession exceeds ten lakh rupees during the previous year; or
(iii) if the aggregate of tax deducted at source and tax collected at source during the previous year, in the case of the person, is twenty-five thousand rupees or more; or
(iv) the deposit in one or more savings bank account of the person, in aggregate, is rupees fifty lakh or more during the previous year:
Provided that in the case of an individual resident in India who is of the age of sixty years or more, at any time during the relevant previous year, the provision of clause (iii) shall have effect as if for the words “twenty-five thousand”, the words “fifty thousand” had been substituted.'.
[Notification No. 37/2022/F.No. 370142/01/2020-TPL(Part1)]
SHEFALI SINGH, Under Secy.
Note : The principal rules were published in the Gazette of India, Extraordinary, Part-II Section-3, Sub Section (ii) vide number S.O. 969(E), dated the 26th March, 1962 and were last amended vide notification No. G.S.R. 275(E), dated the 06th April, 2022.
Download CBDT Notification No. 37/2022 dated 21.04.2022 on Conditions for furnishing return of income under 7th Proviso to Section 139(1) in PDF format
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