Filing return of income under Seventh proviso to section 139(1) but otherwise not required to furnish return of income

While filing an Income tax return (ITR) for AY 2020-21 (FY 2019-20), A new column is appearing in General Information which is “Are you filing return of income under Seventh proviso to section 139(1) but otherwise not required to furnish return of income?”. Many of you are not aware of this clause which is added in the ITR of AY 2020-21.

In this article we are going to cover detailed guide on-

What is Section 139(1) of Income Tax Act?

What is Seventh proviso to section 139(1)?

Who is required to file Income tax Return (ITR) under Seventh proviso to section 139(1) but otherwise not required to furnish return of income?

What is the transaction covered under Seventh proviso to section 139(1)?

Guide to “Are you filing return of income under seventh proviso to section 139(1)- Yes or No in ITR ?

Impact of seventh Proviso to section section 139(1) for salaried employees

So lets discuss one by one-

What is Section 139(1) of Income Tax Act?

Section 139(1) prescribed the requirement to furnish the return of income. It makes filing of ITR mandatory for a certain class of person which is as under-

  1. Company or a firm;
  2. A person other than a company or a firm, if his Gross total income during the previous year exceeded the maximum limit not chargeable to income-tax which is Rs 2,50,000

Under section 139(1) ITR need to furnish before the due date as prescribed.

What is Seventh proviso to section 139(1)?

Finance Act, 2019 has inserted a new seventh proviso to section 139(1) to provide for mandatory filing of return of income for certain class of person who carries out certain high-value transactions even though the person is otherwise not required to file a return of income due to the fact that Gross total income is below the basic exemption limit (which is 2,50,000/3,00,000/5,00,000) currently.

Income Tax Basic Exemption Limit for Different class of Individuals

Rs. 2,50,000 Basic exemption limit: is for Individuals aged bellow 60 years,

Rs. 3,00,000 basic exemption limit: is for individuals (Other than Non-Resident) aged 60 years or more but less than 80 years (Senior Citizens) and

Rs 5,00,000 basic exemption limit: is for Individuals (Other than Non-Resident) aged 80 years or above (Super Senior Citizens)

Earlier, A person other than a company or a firm is required to furnish the ITR only if his Gross total income exceeds the maximum limit 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 and introduced proviso to section 139(1) so as to provide that a person shall be mandatorily required to file his return of income if such a person undertakes certain high-value transactions.

What are the high value transactions covered under Seventh proviso to section 139(1)?

Are you filing return of income under Seventh proviso to section 139(1) but otherwise not required to furnish return of income?
Reporting of Seventh proviso to section 139(1) in Income tax return

The seventh proviso to section 139(1) provides for furnishing of ITR by a person who is not required to furnish a return, if such person has undertaken the following high-value transactions during the previous year-

1. Total Deposit in the current account is Rs. 1 crore or more

In this criteria of Rs. 1 crore deposit, only current accounts are included and all types of bank deposits are covered whether its cash, cheque or online fund transfer. So it is clear that along with cash deposit, all other deposits will also be counted.

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. Foreign travel expenditure is more than Rs. 2 Lakh

It covers all the expenditure on foreign tours and travel. Expenditure may be incurred for own travel or for someone else. However the term ‘foreign travel expenditure’ is not clarified.

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 irrelevant whether the travel to a foreign country is a business trip or a personal trip.

3. Expenditure on the consumption of electricity for more than Rs. 1 Lakh

In this criterion of expenditure on electricity consumption, personal as well as commercial usages are covered. Expenses incurred for getting the electricity connection or deposits made with electricity authority are not covered.

It is not necessary that the expenses are incurred on the electrical 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.

Other prescribed conditions

CBDT is empowered to prescribe other conditions or high-value transactions under this seventh proviso of section 139(1). No such conditions have been prescribed till yet.

If any of the above conditions are fulfilled, you have to mandatorily file an income tax return under section 139(1).

These amendments will be effective from the assessment year 2020-21 onwards.

Who is required to file Income tax Return (ITR) under Seventh proviso to section 139(1) but otherwise not required to furnish return of income?

The seventh proviso to section 139(1) is applicable on a person referred to in clause (b) of 139(1). Which are as follows-

  • An individual
  • Hindu undivided family (HUF)
  • An association of persons
  • Body of individuals
  • Artificial juridical person.

Since Companies and Firm are not covered under section 139(1)(b), The seventh proviso to section 139(1) is not applicable to a company and a firm.

Guide to “Are you filing return of income under seventh proviso to section 139(1)- Yes or No in ITR?

are you filing return of income under seventh proviso to section 1391
IndiaTaxLaws.com

While filing an Income tax return (ITR), there is a column which ask “Are you filing return of income under seventh proviso to section 139(1) but otherwise not required to furnish return of income?”. There is 2 options (Yes or No). What should you choose- Yes or No?

Select Yes: If

(1) Assessee is other than the company and Firm and

(2)Gross Total income during the previous year is bellow the maximum limit not chargeable to income tax (Rs. 2,50,000/3,00,000/5,00,000) and

(3) Assessee has undertaken the high-value transactions (Total Deposit in the current account is Rs. 1 crore or more or Foreign travel expenditure is more than Rs. 2 Lakh or Expenditure on the consumption of electricity for more than Rs. 1 Lakh).

Select No: If Assessee is not covered in the above case.

For ease of understandings It is summarized in the following table:

ConditionsYes/No Option for Seventh Proviso to Section 139(1)Reason


1. If Gross Total Income is more than the basic exemption limit Rs. 2,50,000/ 3,00,000/ 5,00,000/-


Always Select “No” Option
In this case the assessee is compulsorily required to file ITR.
Even if the assessee satisfies anyone or more of the condition specified in the seventh proviso to section 139(1), You need to select NO

2. If Gross Total Income is bellow the basic exemption limit Rs. 2,50,000/ 3,00,000/ 5,00,000Yes/No based on the bellow conditionsNow here you need to check the prescribed conditions as prescribed in the seventh proviso to section 139(1)

2(a). If the assessee satisfies any one or more of the conditions specified in the seventh proviso to section 139(1)
Select “Yes”
and fill the amount in given colomn

In this case, the person is not compulsorily required to file ITR
Even if such a person was filing ITR voluntarily for earlier years, he should select ‘YES’

2(b). If the assessee DOES NOT satisfy any one or more of the conditions specified in the seventh proviso to section 139(1)
Select “No”
Such a person is not required to file ITR even under 7th proviso to section 139(1).
He may file ITR voluntarily and select No in the option.

Impact of seventh Proviso to section section 139(1) for salaried employees

The impact of this provisions [seventh Proviso to section section 139(1)] on salaried employees are as follows-

Select No option in ITR, If Gross Total income during the previous year is above the maximum limit not chargeable to income tax ie. Rs 2,50,000. In short, If your yearly salary is more than 2,50,000 you need to select No in option to “Are you filing return of income under seventh proviso to section 139(1)”

Select Yes Option In ITR, If 1. Yearly salary is less than 2,50,000 AND 2. Assessee has undertaken the high-value transactions (Total Deposit in the current account is Rs. 1 crore or more or Foreign travel expenditure is more than Rs. 2 Lakh or Expenditure on the consumption of electricity for more than Rs. 1 Lakh). You may also be interested in ITR-1 for AY 2020-21: Detailed Guide on ITR filing for salaried employees

For Any Query, ask in comment.

You may also be interested in:

Due Date to File ITR and Tax Audit for AY 2020-21

What are Income Tax slab for AY 2020-21/ FY 2019-20

Income Tax on Salary-Old Vs New Regime: Which one is better to Opt

For Step by step guide on return of income under seventh proviso to section 139(1) Watch the video:

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16 COMMENTS

  1. Sir
    If a person having taxable income and filling his return regularly since long and he purchased foreign currency for study of his children than what should he write in the column of seventh provision u/s 139(1) Yes or no
    If we write no as he is regular assessee and having taxable income every year the column for detail of foreign currency disappear Plese suggest

    • Hi Rajiv Bhatia,

      If a person having income exceeding 2,50,000 in a financial year, ITR under the seventh provision to section 139(1) is not applicable. High value transaction has no relevance if assessee has taxable income exceeding Rs 2,50,000/-

  2. If I am a salaried person and my salary is 6 lakhs and i have 350000 agricultural income also. how to show my income in itr form and which form i am fill?

  3. Sir
    I Wrongly put YES instead of No in seventh Proviso to section section 139(1) but Put NO in below three high value condition & submit ITR .What can I Do .filed revise return or not.

  4. My annual income is only 2.2 lakhs but interest on fixed deposits are above one lakh. Other conditions mentioned above are not applicable to me. What should I opt yes or no?

    • I am also in same boat. Could anyone clarify what to select Yes or No….Also, if I select No will I get my tax paid amount as returns???

  5. Sir
    I have too wrongly selected Yes instead of No. Two days before on 28th Dec 20 I have efiled return and e verified. While filing return I have paid difference of tax which appeared as Self Assessment Tax while submitting return.
    But now while submitting Revised return to correct it from Yes to No the tax amount is not appearing.
    What should I do?

    Thank you for your guidance.

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