01-Apr-2020 Person Liable to File Return of Income under Income Tax Act

Let we first understand whether you are liable to file your income tax return as per current law.  To answer this question, we need to visit section 139 of the Income tax 1961 which lists down the person liable to file the Income tax return.

 Following categories of persons are defined under The Income Tax Act, 1961

1.     an individual,

2.     a Hindu undivided family (HUF),

3.     a company,

4.     a firm,

5.     an association of persons (AOP) or a body of individuals (BOI), whether incorporated or not,

6.     a local authority (LA), and

7.     every artificial juridical person (AJP), not falling within any of the preceding sub-clauses.

Of the above,  

a company and a firm (Partnership Firm or Limited Liability Partnership) are mandatorily required to file its return of income for the year, irrespective of income / loss incurred by it during the year, as there is no monetary limit of the threshold exemption is prescribed by the law.  

All other categories of persons like, Individual, HUF, AOP, BOI, LA, AJP are required to file their return of income in cases where their Gross Total Income without giving effect to deduction/exemptions, if any, claimed under

-         section 10A (new establishment in FTZ), Section 10B (New establishment with 100% EOU) & Section 10BA (exports of certain goods),

-         Section 54 (Residential property sold and invested in new Residential property), Section 54B (exemption on Gain on land used for agricultural purpose), Section 54D (exemption on Gain on compulsory acquisition of land/building), Section54EC(Land/Building sold and investment in Bonds), Section 54F (Long Term Capital Gain on sale of capital asset claimed exempt by investing in the same in Residential Property), Section 54G (exemption on gain of shifting of industrial undertaking from urban area), Section 54GA (exemption on gain of shifting of industrial undertaking from urban area to SEZ), Section 54GB (exemption on gain of residential house and invested in Startup) or

-         Chapter VI-A deductions which included LIC, ULIP, PPF, principal repayment of housing loan, payment for Health insurance etc.,

exceeds basic exemption limit of Rs 2,50,000.( The same being Rs 3,00,000 in case of senior citizen and Rs. 5,00,000 (for super senior citizen aged more than 80 years).  

This clearly indicates that if your Gross Total Income without claiming the deductions listed above is more than the limits prescribed, irrespective of the fact that you are not required to pay any tax, the liability to file the income tax return is still there. In case of your failure to file the return would invite penalty u/s 234F amounting to Rs.5,000 or Rs.10,000 as applicable for non-filling of return.

Apart from income criteria, as discussed above, there are other criteria’s which requires and Individual, HUF, AOP, BOI, LA, AJP to file their return mandatorily if they have entered into any of the following transactions during the year;

a.     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

b.     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

c.      has incurred expenditure of an amount or aggregate of the amounts exceeding one lakh rupees towards consumption of electricity; or

d.     Holds, as a beneficial owner or otherwise, any asset (including any financial interest in any entity) located outside India or has signing authority in any account located outside India; or

e.     Is a beneficiary of any asset (including any financial interest in any entity) located outside India.

So, one must always check every year “am I liable to file return of income?” whether you have taxable income or no such income as certain transactions are also requiring you to file return of income as detailed above.

Please feel free to write to us on info@apmh.in / ravi@apmh.in for further queries on the above blog.