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 ?

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 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 total income is below the basic exemption limit (which is 2,50,000) currently.

Earlier, A person other than a company or a firm is required to furnish the ITR only if his 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) Total income during the previous year is bellow the maximum limit not chargeable to income tax (Rs. 2,50,000) 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 Any Query, ask in comment.

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8 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?

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