According to section 139(1) of the Income Tax Act, an assessee needs to file Income Tax Return (ITR) on or before the due date of filing ITR when the total annual income exceeds the maximum amount, which is not chargeable to income tax. Anybody who is less than 60 years of age and has an annual income more than Rs 2.5 lakhs has to file income tax returns. For senior citizens, the cut-off is Rs. 3 lakhs, and for those who are more than 80 years old, the cut off is Rs. 5 lakhs.
However, Finance (No. 2) Act, 2019 has inserted a new 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. The intent behind adding this proviso is to collect information about taxpayers whose income declared and expenses incurred have huge variances.
Under the seventh proviso to Section 139(1) of the Income Tax Act, 1961, even if the income is below the exempted limit, a person will have to file ITR in case he or she meets any one of the following criteria:
Ii) 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; or
(iv) fulfils such other conditions as may be prescribed,
A brief discussion on the above mentioned criteria is as follows:
This covers all types of deposits whether in cash or by cheque or through online transfer. Also, the deposits taken into consideration are the ones made in CURRENT accounts only. Savings accounts and other accounts are outside the purview of this provision.
An exception has been added for this criteria; foreign travel does not include travel to neighbouring countries or places of pilgrimage, as may be notified by the tax department. Hence, such foreign travel does not fulfill the criteria for filing an ITR. 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.
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. Also, if the person has more than one electric connection, all the expenses will be aggregated to determine the threshold limit of Rs. 1 Lakh.
CBDT is empowered to prescribe other conditions or high-value transactions under this seventh proviso. Till date, no such conditions have been prescribed.