Section 139(1) of Income Tax Act, 1961, plays a crucial role in determining the obligation of individuals, firms, companies, and other entities to file their income tax returns (ITRs) in India. This section provides guidelines for taxpayers regarding who is required to file returns, the due date for filing, and the specifics of when a return is mandatory, even if the taxpayer is not necessarily required to do so under the basic tax rules.
Overview of Section 139(1) of Income Tax Act
Section 139(1) mandates that all taxpayers, whether individuals, Hindu Undivided Families (HUFs), companies, or any other type of entity, must file a return of income if their total income exceeds the prescribed basic exemption limit during the relevant previous year. This return must be filed in the prescribed manner and before the due date set by the Income Tax Department.
The section is framed to ensure compliance from individuals and entities who have significant income and to ensure they fulfill their tax obligations as part of the broader taxation framework.
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Key Provisions of Section 139(1) of Income Tax Act
Section 139(1) outlines the requirements for filing income tax returns based on income thresholds, specific exemptions, and conditions related to expenditure, foreign assets, etc.
Categories of Persons Required to File a Return:
Companies and Firms: A company or firm, regardless of the amount of income, must file a return of income.
Other Individuals, HUFs, and Entities: Any person, including individuals and HUFs, must file a return if their total income, or the income of any other person they are responsible for assessing, exceeds the maximum amount not chargeable to tax.
Income Threshold:
The requirement to file is triggered when the total income exceeds the maximum amount not chargeable to income tax. This basic exemption limit is set every year by the Finance Act and varies based on age and category of the taxpayer (e.g., for an individual below 60 years, it’s ₹2.5 lakh; for senior citizens, the limit may be higher).
Due Date for Filing:
The section also outlines the due dates by which returns must be filed. These vary depending on the type of taxpayer:
For Companies: The due date is October 31 of the assessment year.
For Firms and Other Audited Entities: The due date is October 31 as well, provided their accounts are audited.
For Individuals, HUFs, AOPs, and BOIs: The due date is generally July 31 of the assessment year unless extended by the tax department.
For Transfer Pricing Filers: The due date for those requiring a transfer pricing report (as per section 92E) is November 30.
Filing in the Prescribed Manner:
The return must be sent in the way and on the form that the Income Tax Department specifies. This includes checking the return and giving all the necessary information, such as salary, deductions and tax payments.
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Special Provisions and Exceptions Under Section 139(1) of Income Tax Act
While the general rule requires filing based on income exceeding the basic exemption limit, there are several exceptions and conditions where an individual or entity may be required to file a return even if they do not meet the standard criteria. These exceptions apply to individuals whose expenditures or asset ownership indicate that their income should be reported to the tax authorities.
1. Expenditure-Based Filing Requirement: Section 139(1) introduces provisions for individuals who, even if not required to file based on income, must file returns if they meet certain expenditure conditions, such as:
Electricity Consumption: Individuals who incur ₹50,000 or more in electricity consumption during the previous year.
Motor Vehicles: Ownership or lease of a motor vehicle (other than a two-wheeler).
Foreign Travel: If they have incurred expenditure on foreign travel for themselves or any other person.
Credit Cards: Holders of a credit card (excluding add-on cards).
Club Memberships: Membership in clubs with an entrance fee of ₹25,000 or more.
2. Foreign Assets: A resident person who has foreign assets or financial interests outside of India is also required to file a return under the section. Having the power to sign in any foreign account is part of this. Individuals who are the beneficiaries of foreign assets are also required to file.
3. Deposits in Current Accounts: Any individual or entity who deposits more than ₹1 crore in one or more current accounts in a financial year must also file a return, irrespective of whether their income exceeds the exemption limit.
4. Exemption Clauses: The section contains provisions that allow the Central Government to exempt certain classes of persons from these filing requirements, often by issuing notifications in the Official Gazette.
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Penalties and Non-Compliance
Failure to comply with the filing requirements under Section 139(1) can lead to severe consequences. These include:
Late Filing Penalty: If a return is filed after the due date, the taxpayer is liable to pay a penalty under Section 271F, which could amount to up to ₹10,000.
Interest: If there is any unpaid tax, interest will be levied under Section 234A, which is charged on the outstanding tax liability.
Loss of Benefits: A person who fails to file their return on time may lose the ability to carry forward losses (e.g., business losses or capital losses) to subsequent years.
Revised and Belated Returns
Under Section 139(5) and Section 139(4), taxpayers who miss the filing deadline can still submit their returns by filing a revised or belated return, subject to certain conditions:
A Revised Return can be filed if there is an error or omission in the original return, within one year from the end of the assessment year or before the completion of the assessment, whichever is earlier.
A Belated Return can be filed by individuals who miss the original deadline. This return can be filed before the end of the assessment year, but it may attract penalties and interest.
Summing Up
Section 139(1) of Income Tax Act, 1961, is a crucial provision that makes sure individuals and businesses with income above the exemption limits pay their income taxes. Indian taxation is based on this system, which puts a lot of emphasis on being open and responsible. The section makes sure that tax authorities have access to full and accurate information about the financial status of tax payers through its extensive provisions including conditions for individuals with significant expenditures or foreign assets.
Taxpayers must be aware of their filing obligations under Section 139(1) to avoid penalties and ensure they meet their legal obligations. Whether or not tax is payable, filing the return in the prescribed manner and on time is crucial for maintaining compliance with the law.
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Section 139(1) of Income Tax Act: FAQs
Q1: Who is needed to file a return under Section 139(1)?
Any individual, company, or firm whose total income is above the basic exemption limit needs to file a return under Section 139(1).
Q2: What is the filing due date under Section 139(1) of Income Tax Act?
The due date varies with the category of taxpayer—usually July 31 for individuals, October 31 for firms and companies, and November 30 for transfer pricing filers.
Q3: Under what conditions is the filing requirement activated even if income is less than the exemption limit?
Conditions such as heavy expenditure on electricity, foreign travel, possession of a motor vehicle, or possession of foreign assets can necessitate filing a return even if income is less than the limit.
Q4: Are penalties charged for delayed filing?
Yes, penalties are charged under Section 271F, with the maximum penalty of ₹10,000, in addition to interest on unpaid taxes under Section 234A.
Q5: Can I file a belated return if I lose the due date?
Yes, a belated return can be filed before the end of the assessment year, but with penalties and interest.
