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Section 139

We all, as individuals, keep hearing that one must file his income tax returns within the provided due date every year to avoid serious consequences. But what exactly is the income tax return? What does it help us with? Does non –filing of the same have any disadvantages? Why do we keep filing it every year?

We all have thought of the above questions at one or the other point of time. The answer to the above questions lies in Section 139 of the Income Tax Act, 1961.

Section 139 of the Act provides us with various provisions relating to filing of tax returns.

The first and foremost thing to know about tax return is that there is no specific definition of tax returns. It is, in general, a form to be filed with the Tax Authorities, disclosing one’s income earned during the period specified. The tax shall be calculated on the income earned. Thus, filing of return helps the government to ascertain the tax liability to be collected from the taxpayer, thereby generating revenue for the nation.

Basics of the Income Tax Act:

What is a Financial Year?

  • Financial year refers to a year in which income is earned.

What is an Assessment Year?

  • Assessment year refers to a year in which income is taxed.

E.g.: If a person earns salary in during the period April, 2017 to March, 2018 then his income shall be taxable in the year April, 2018 to March, 2019.

Section 139 of the Income Tax Act

The various types of income tax return to be filed under Section 139 are:

Mandatory & Voluntary Return- Section 139(1)

  • As per this Section, it is mandatory for a company or a firm to file income tax return.

It means if a company or a firm does not have any income then also it will be mandatory to file ITR.

  • It is mandatory for a person other than a company or a firm to file income tax return if his or her income exceeds the basic exemption limit.

  • A resident individual who has an asset located outside of India (might include financial interest in some entity as well) OR any resident who retains signing authority for an account based outside India shall mandatorily file return in the prescribed form.

Note: Basic exemption limit refers to a term which means “maximum amount of income not chargeable to tax”. In simpler words, it means the highest amount of income on which tax shall not be payable.

If Mr. A earns total income of more than INR 2,50,000/- then he or she shall be liable to file ITR. So, the basic exemption limit for the current financial year is 2,50,000/-. Anything over and above 2,50,000/- shall be taxable.

Loss Return – Section 139(3)

To start with, under this Act, there are five heads under which income can be classified. These are:

  • Income From Salaries
  • Income from House Property
  • Profits & gains from Business or Profession
  • Capital gains
  • Income from other sources

When a loss is incurred under the heads “Profits & Gains from Business or Profession” or “Capital gains” during the financial year (period from April to March), the taxpayer has to file a Loss Return. Such loss should be filed within the due date so as to claim maximum benefits as specified under the act.

Benefits of filing within due dateDisadvantages of not filing within due date
1. Eligible to carry forward & set off the loss1. Not eligible to carry forward & set off the loss
2. Pay lesser tax due to setting off loss against income2. Pay higher tax due to non-setting off loss against income

If in the current financial year, Mr. B suffers a loss of Rs 10,000/- in his business, then he shall file his return within the due date so that he can carry forward and set off the loss in the next financial year.

Belated Return - Section 139(4)

As per this section, if a person has not furnished the income tax return as per the specified due date then he may furnish the return

  • Before the end of relevant assessment year Or
  • Completion of assessment; whichever is earlier.

Example: If Mr. C does not file his return for Financial Year 2017-2018 by 31st July 2018 then he shall be able to file the return by 31st March, 2019 or completion of assessment, whichever is earlier.

As per recent changes made in Sec 139, revision of a belated return can now be done.

Revised Return - Section 139(5)

A return filed can be revised if any error or mistake is noticed post filing of return. A return can be revised several times. There is no restriction on it. However, no return can be revised post the:

  • End of relevant assessment year OR
  • Completion of assessment; whichever is earlier.

Defective return - Section 139(9)

A return is considered as defective unless it is accompanied by all documents mentioned in the section. From 2016, return of income shall not be considered as defective even if self-assessment tax has not been paid.

As stated, the above are the types of return that a person can file. However, due to various forms of entities, the above sections do not impose mandatory filing of returns for persons such as charitable organizations, political parties, business trusts etc. To bring such entities under the eye of tax authorities, the following sections have been introduced:

Section No under which return has to be filedType Of PersonFuel
139(4A)Charitable Trust or InstitutionThe total income (without giving effect to the provisions of sections 11 and 12) exceeds the maximum allowable amount which is not chargeable to tax.
139(4B)Political PartyThe total income (without giving effect to the provisions of sections 13A) exceeds the maximum allowable amount which is not chargeable to tax
139(4C)Certain Special InstitutionsThe total income (without giving effect to the provisions of sections 10) exceeds the maximum allowable amount which is not chargeable to tax.
139(4D)Specified InstitutionsThe total income (without giving effect to the provisions of sections 10) exceeds the maximum allowable amount which is not chargeable to tax.
139(4E)Business trustNo such condition
139(4F)Investment FundNo such condition

Due dates to File Return of Income:

Amendments

It is important for tax officials to keep a tab on the changing environment of the business and its processes. This helps the officials to frame laws, rules and regulations as per the current scenario. Due to the increase in quantum of high amount transactions, the authorities have come up with Section 139A, which states that every person required to file returns should apply for PAN. It has also been proposed that every Non-Individual entity, shall obtain PAN, which would be used as Unique Entity Number, if such an entity enters into a financial transaction aggregating to INR 2,50,000/- or more in a financial year.

The law also specifically states that Aadhaar Card Number must be provided while filing tax returns. If any person has applied for his Aadhar Card but has not received it then he or she shall quote the Enrollment ID of Aadhar application form issued to him at the time of enrollment.

How to File Defective Return under Section 139(9)?

In this case, if the assessing officer or the income tax officer considers that the return is defective, then he or she shall intimate the defect to the taxpayer and give the individual an opportunity to rectify this defect within a period of 15 days from date of such intimation.

If the taxpayer does not rectify, then the return shall be treated as Void- ab- initio & it will be deemed that assessee has not filed return of income. However, the officer may allow condonation of delay and treat the return as a valid one.

Detailed Process of filing Defective Return u/s 139(9):

  • The website for rectifying defect is: www.incometaxindiaefiling.gov.in
  • Login with your User ID credentials; Date of Birth/Date of Incorporation will also be required.
  • Click on E-File tab in response to notice under section 139(9).
  • A new screen will be displayed, after successful validation, if there is any defective notice raised by the Income Tax Dept.
  • Click on Submit button under response column.
  • Select the relevant ITR form; attach the XML file and submit.
  • Click on “e-file” and then select “e-File in response to notice u/s 139(9)”.
  • Submit your response under “Yes” if you agree with the defect and upload respective XML.
  • Submit your response under “No” if you do not agree with the defect and justify with reasons.
  • Click on submit and complete the process.
  • A success screen is displayed, on successfully submitting the response.
  • Submitted response can be viewed by clicking on “View” under response column.
  • To know the details of response submitted, click on the “Transaction Id”.

Frequently Asked Questions

What does completion of assessment mean?

After filing of income tax return by the taxpayer, the Income tax department carries out a process of examination. This examination by the tax authorities is called as Assessment of returns.

What are the various Forms through which income tax return can be filed?

Category of persons: Type of form (As per FY 2017-2018) Individuals, HUF: ITR 1,2,3,4 (Depending on specific conditions) Firm: ITR 4 LLP & any other cases: ITR 5 Company: ITR 6 Trust / Political Party/ Certain special Institution/ Specified Institution/ business Trust/ Investment fund: ITR 7

Where are these forms available?

The applicable forms are available on the following website:

www.incometaxindiaefiling.gov.in/downloads

Can income tax return be filed, manually?

No, the tax return cannot be filed manually. Online facilities are available to upload the returns online.

What are the advantages of filing income tax return?

The following are the advantages of filing income tax returns:

It helps the taxpayer to apply for loans easily. In case of refunds from Income Tax department, income tax returns should be filed to claim the refund. It can be used as Income and Address proof. It is a requirement for Visa processing. It helps to carry forward your losses. If return is filed on time then there is no levy of penalty.

What are the consequences of not filing tax returns?

If return has not been filed within the specified due date then the tax payer shall not be able to carry forward and set off the losses. Interest shall be applicable on tax payable and late filing of return Refunds due will be delayed on account of late filing or refunds will not be credited until return has been filed hence in order to avoid non-receipt of refund, return should be filed. Penalty and late filing of fees shall be applicable. Prosecution, in some cases.

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