Over the years, the Indian Income Tax Act/Rules have undergone amendments to broaden the scope of mandatory filing, requiring certain individuals to submit their income tax returns, even if they were previously exempt. In this article, we will discuss the key provisions related to the mandatory filing of income tax returns in specific cases, as provided under the Seventh Proviso to Section 139(1) of the Income Tax Act, along with the subsequent amendments and additional conditions notified/prescribed by the Central Board of Direct Taxes (CBDT).
The Seventh Proviso to Section 139(1)
Under the Seventh Proviso to Section 139(1) of the Income Tax Act, inserted through the Finance Act of 2019 and effective from April 1, 2020, certain individuals are required to mandatorily file their income tax returns, even if they were previously not obligated to do so, i.e. exempted under clause (b) of section 139(1). The following cases fall under the ambit of this mandatory ITR filing provision:
i) Deposits in Current Accounts: Any person, other than a company or a firm, who has deposited an amount or an aggregate of amounts exceeding one crore rupees in one or more current accounts with a banking company or a co-operative bank during the previous year.
ii) Foreign Travel Expenses: Individuals who have incurred aggregate expenditure exceeding two lakh rupees on travel to a foreign country for themselves or any other person during the previous year.
iii) Electricity Consumption: Those who have incurred aggregate expenditure exceeding one lakh rupees towards payment of electricity bills during the previous year.
iv) Other Prescribed Conditions: The provision allows for mandatory filing if a person fulfills any other conditions that may be prescribed or notified by the CBDT.
Additional Conditions for Mandatory Filing notified by CBDT: New IT Rule 12AB
Later, the CBDT has also issued notification 37/2022, dated 21-04-2022, which introduced additional conditions to expand the scope of mandatory ITR filing in certain cases under the Seventh Proviso to Section 139(1).
The CBDT inserted New IT Rule 12AB relating to conditions for mandatory filing of tax returns by individuals falling in otherwise exempted category under Section 139(1)(b), as listed here-under:
i) Business Turnover: If the total sales, turnover or gross receipts of a business exceed Rs 60 lakh during the previous year.
ii) Professional Receipts: If the total gross receipts from a profession exceed Rs 10 lakh during the previous year.
iii) Aggregate TDS/TCS: If the total of tax deducted and collected in a person’s case during the previous year amounts to Rs 25,000 or more (Rs 50,000 or more for senior citizens).
iv) Savings Bank Deposits: If the aggregate deposit in one or more savings bank accounts of the person is Rs 50 lakh or more during the previous year.
The mandatory filing of income tax returns under the Seventh Proviso to Section 139(1) of the Income Tax Act, along with subsequent amendments and CBDT notifications, aims to enhance tax compliance and transparency. Individuals who meet the specified criteria must adhere to the prescribed deadlines and file their returns accordingly.