Individuals or HUF or AOP or BOI under section 139 of Income Tax Act are required to file Income Tax return if their total income during a financial year exceeds maximum amount not chargeable to tax.
For Individuals below 60 years of age the limit is Rs. 2.5 lakh, for individual between age of 60-80 year it is 3,00,000 and for individuals above the age of 80 years the limit will be 5,00,000.
However, Income Tax department had inserted a seventh proviso to section 139 by way of Finance Act, 2019 wherein additional conditions were mentioned and if individual fulfill those conditions he would be required to file Income Tax return even if his income does not exceed the above mentioned threshold limit.
The conditions mentioned in seventh proviso to section 139 are as under:
“(i) has deposited an amount or aggregate of the amounts exceeding one crore rupees in one or more current accounts maintained with a banking company or a co-operative bank; or
(ii) has incurred expenditure of an amount or aggregate of the amounts exceeding two lakh rupees for himself or any other person for travel to a foreign country; or
(iii) has incurred expenditure of an amount or aggregate of the amounts exceeding one lakh rupees towards consumption of electricity;“
If any of the conditions are fulfilled then the individual or other entities needs to file Income tax even if his total income does not exceed the maximum limit.
Now, CBDT has prescribed some other conditions under fourth clause of above proviso vide notification No. 37/2022 Dt. 21.04.2022 wherein the person will have to file Income Tax return irrespective of whether the income exceeds the maximum amount not chargeable to tax.
The new conditions prescribed in notification 37/2022 under seventh proviso to section 139(1) are as under:
“(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.’.”
Condition 1: If a person whose total turnover from business exceeds Rs. 60 lakhs and if the person is having a loss or having total profit or income below Rs. 2.5 lakh then also he will have to file income tax return which he was not required till now.
Condition 2: Similar to above for a person engaged in profession the limit has been prescribed as Rs. 10 lakh.
Condition 3: If the total TDS or TCS credit during the year in case of a person exceeds Rs. 25,000. This limit in case of senior citizen of age above 60 years has been substituted with 50,000.
Condition 4: If the aggregate amount of deposit in one or more savings accounts of a person during the year exceeds Rs. 50 lakh. Now this does not say about cash deposit or any specific type of deposit. Thus, in our opinion any credit in saving account would be counted and accordingly if total credit in bank of accounts exceeds Rs. 50 lakh then they will have to file Income Tax return. Thus, many people who were just rotating money in their bank account for few thousands doing money transfer or such other thing will have to think twice before doing that.
Thus, if any of the conditions are fulfilled one would be required to file Income Tax return and if they don’t file income tax return it could lead to charging of late fees u/s 234F of the Income Tax Act upto Rs. 5000.
To read the notification CLICK HERE.
As mentioned in the rules that it will be applicable from 21.04.2022 and hence should apply to Income Tax return being filed for FY 2021-22, however such changes will still be incorporated in those Income Tax returns and that’s we had advised our viewers to wait for a while till the time Income tax return are finalized.
To read about the Income Tax return announced for FY 2021-22 CLICK HERE.
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