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Be on alert you may have to file return

July 5, 2019 1000 Views
Meenakshi Subramaniam
Former IRS Officer

A king, who had a good cook liked his dishes. But, the minister was envious and when the cook wanted to meet the emperor for urgent money, he laid down a condition. "Stand in water, for whole winter night." The cook did so. "You must have got warmth from flaming torches of soldiers, "the minister said. He refused money. The next day, the king did not get meals for a long time. He went to kitchen and saw pot of rice was hanging high above fire. On questioning, the cook told the whole story. "If I can get warmth from flaming torches, why can't rice boil from above," he asked. The king punished the minister and gave the cook the required money.

In the same way, the July Budget, 2019 has sought to make filing of returns mandatory for those whose income does not exceed the taxable limit. Those who are far removed from the scene have to submit return.

Mandatory furnishing of return of income by certain persons under Section 139 has been introduced. Those who deposit a big amount of cash in bank, travel to foreign country, spend a lot on electricity or get capital gains by selling house, bonds or other assets have to compulsorily submit income tax return. Although the government's aim is to deepen and widen the tax base, it is bound to create harassment for ordinary citizens.


Currently, a person other than a company or a firm is required to furnish the return of income only if his total income exceeds the maximum amount 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, it is proposed to amend section 139 of the Act so as to provide that a person shall be mandatorily required to file his return of income, if during the previous year, he-

  (i)  has deposited an amount or aggregate of the amounts exceeding one crore rupees in one or more current account 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 prescribed conditions, as may be prescribed.

Further, currently, a person claiming rollover benefit of exemption from capital gains tax on investment in specified assets like house, bonds etc., is not required to furnish a return of income, if after claim of such rollover benefits, his total income is not more than the maximum amount not chargeable to tax . In order to make furnishing of return compulsory for such persons, it is proposed to amend the sixth proviso to section 139 of the Act to provide that a person who is claiming such rollover benefits on investment in a house or a bond or other assets, under sections 54, 54B, 54D, 54EC, 54F, 54G, 54GA and 54GB of the Act, shall necessarily be required to furnish a return, if before claim of the rollover benefits, his total income is more than the maximum amount not chargeable to tax.


  •  The new proviso means that if any person's income is not taxable, yet he would have to file a return.

  •  Just because a person has to incur huge expenditure for say sending a relative to foreign country, he would have to file a return.

  •  The new rule also means that the old criteria for filing income tax return has been swept under the carpet, with a single stroke of pen.

  •  A person who sells a house, once in a lifetime has to furnish a return.

  •  Sometimes a person gets ridiculously high electricity bills but the income tax department would expect him to file a return.

  •  Expenditure would determine whether you have to file a return, not income !

  •  Does it mean ITR forms would have to be changed ? Bringing new forms has been the favourite hobby-horse of the Department.

The Revenue leans on cases like P.P Rajan v Union of India ( 103 taxmann 95), where it was held that fixing of criteria for filing of return is not illegal. After all, filing of return is not onerous job. Hence, the court held even if income is not assessable, the person should submit a return.

A wicked woman was, once, told by a sage that she should splash water once on her face from a pond. But, she was warned not to throw the water more than once. She splashed water on her face and was delighted to find herself beautiful. But, she thought if she splashed water once more, she would become more beautiful. She did so. She turned into the most ugly-looking creature. The Revenue should, likewise, try not to bring in each and every person, under the compulsorily filing of returns scheme.

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