Rules of Section 139 of Income Tax Act, 1961:
Updated: Oct 4
Rule 12: Return of income and return of fringe benefits.
The Income Tax (Second Amendment) Rules, 2019 were announced by the Central Board of Direct Taxes via notification no. 32/2019 dated 1st April 2019, and they became effective on that date. Rule 12 of the Income Tax Rules, 1962 has been modified as a result of the aforementioned Income Tax (Second Amendment) Rules, 2019, and the formats for Forms ITR-1 (SAHAJ), Form ITR-2, Form ITR-3, Form ITR-4 (SUGAM), Form ITR-5, Form ITR-6, Form ITR-7, and Form ITR-V have been updated. In this article, we examine the various modifications made to the 1962 Income Tax Rules by the addition of Rule 12.
ITR-1 form (Sahaj)
In addition, the following groups of people will no longer be able to file an income tax return in Form ITR-1 as of April 1, 2019:
1. Individuals holding unlisted equity shares at any time during the previous year;
2. Individuals claiming a deduction under Section 57 (aside from the deduction claimed under Section 57 (iia);
3. Individuals holding unlisted equity shares;
4. Individuals who are assessable for the entirety or a portion of the income on which TDS has been deducted in the hands of a person other than the assessee.
ITR-4 form (Sugam)
Additionally, as of April 1, 2019, the following groups of people will not be able to submit an ITR-4 return: SUGAM
1. a person with property outside of India (property includes financial stakes in any entities)
2. whoever is located outside of India and has signing authority on any account;
3. The person who receives income from any source outside of India;
4. The person whose income must be divided in accordance with Section 5A;
5. person serving as a director of any corporation;
6. who at any time during the previous year held any unlisted equity shares;
7. a person whose annual gross income exceeds 50 lakh rupees;
8. The person who is assessable for the entirety or a portion of the income on which TDS has been deducted in the hands of a person other than the assessee;
9. The person who is the owner of more than one house property and the income from such house property is chargeable under the head "Income from House Property."
Amendment in Mandatory Electronic Filing of Income Tax Return
As everyone is aware, electronic filing of income tax returns is required, but the following groups of people are exempt from the requirement:
1. a person who was 80 years old or older at any point in the previous year; and
2. Any person submitting a Form ITR-1 (SAHAJ) or Form ITR-4 income tax return (SUGAM).
The individuals in the aforementioned categories may submit their income tax returns in one of the following ways:
1. digitally signed electronically;
2. electronically filing the return using an EVC (electronic verification code);
3. electronically filing the return and submitting the Form ITR-V for return verification;
4. submitting the return on paper.
Rule 12AB: Conditions for furnishing return of income by persons referred to in clause (b) of sub-section (1) of section 139
The CBDT has announced the Income-tax (Ninth Amendment) Rules, 2022, to insert new IT Rule 12AB on conditions for mandatory filing of tax return (ITR) by persons referred to in section 139(1)(b). These conditions include business sale/turnover/receipts exceeding Rs.60 lacs, professional receipts exceeding Rs.10 lacs, aggregate TDS/ TCS exceeding Rs.25,000 (Rs.50,000 in the case of a senior/very senior citizens) and saving banks deposits exceeding Rs.50 lacs, during the previous year.
It should be noted that the Finance Act of 2019 introduced the seventh proviso to IT Section 139, which established certain requirements for mandatory tax return (ITR) filing even if an individual's income did not exceed the basic exemption limit. These requirements include deposits of Rs.1 crore or more in current accounts, foreign travel expenses exceeding Rs.2 lacs, and electricity consumption exceeding Rs.1 lac during the previous year.
The following criteria must be met in order to provide a return of income for the individuals covered by clause (b) of sub-section (1) of section 139 in accordance with clause (iv) of the seventh proviso to sub-section (1) of section 139:
1. if the person's total sales, turnover, or gross receipts for his business, as applicable, exceeded sixty lakh rupees during the previous year;
2. if the person's total gross receipts for his profession, as applicable, exceeded ten lakh rupees during the previous year; or
3. if the person's total source-tax deductions and source-tax collections during the previous year totaled twenty-five thousand rupees or more; or
4. the deposit in one or more of the person's savings bank accounts during the previous year was at least Rs.50 lakh:
With the caveat that the clause in clause (iii) shall apply as if the words "twenty-five thousand" had been substituted for the words "fifty thousand" in the case of a person residing in India who is sixty years of age or older, at any time during the relevant previous year.
Rule 12AC: Updated Return of Income
The Central Board of Direct Taxes hereby promulgates the following rules to further amend the Income-tax Rules of 1962 in accordance with the authority granted by subsection (8A) of section 139 read in conjunction with section 295 of the Income-tax Act of 1961 (43 of 1961):
The following rule shall be inserted after rule 12AB in the Income-tax Rules of 1962 (hereinafter referred to as the principal rules):
12AC- Updated income tax return (1) The income tax return that must be provided by anyone who is qualified to do so under Section 139's Subsection (8A) relating to the applicable to the assessment year beginning on April 1, 2020, and all subsequent assessment years, shall be in the Form ITR-U and be verified in accordance with its instructions.
(2) The individual listed in column (2) of the following Table must provide the return of income required by sub-rule (1) in the manner described in column (3) of that table.
Sl. No. Person Manner of furnishing return of income
1. Individual, or Hindu undivided family or a firm or limited liability partnership or an association of persons or a body of individuals, whether incorporated or not, or a local authority or an artificial juridical person in whose case accounts are required to be audited under section 44AB of the Act or a Company or a political party required to furnish a return in Form ITR-7 Electronically under digital signature.
2. Individual, or Hindu undivided family, or firm, or limited liability partnership, or an association of persons or a body of individuals, whether incorporated or not, or a local authority or an artificial juridical person, or a person required to file a return under sub-section (4A) or sub-section (4B) or sub-section (4C) or sub-section (4D) of section 139, other than a person mentioned in column (2) of Sl. No. (1) above.
(A) Electronically under digital signature; (B) Transmitting the data electronically in the return under electronic verification code.
Rule 117A: Reduction or waiver of interest payable under section 139.
[With regard to assessments for an assessment year beginning on or before April 1, 1988, the Assessing Officer] may reduce or waive the interest payable under section 139 in the cases and in the circumstances mentioned below, namely:—
1. where the return of income is furnished by a person who has been treated under section 163 as an agent of a non-resident and is assessed in respect of the latter's income;
2. when the return of income is provided by an assessee whose only source of income during the relevant prior year was a portion of the income of an unregistered firm that was assessed on its total income in regard to that prior year under clause (b) of section 183;
3. when the return of income of a deceased individual is provided by his legal representative and the legal representative convinces the [Assessing Officer] that he had sufficient cause for no other source of income during the relevant prior year
4. Any instance in which the assessee provides proof to the [Assessing Officer satisfaction] that he was prevented by sufficient cause from furnishing the return within time.
Rule 125: Electronic Payment of Tax
(1) Beginning on or after April 1st, 2008, the following individuals must make their tax payments online:
(a) A business; and
(b) A person (other than a company) to whom section 44AB's provisions apply.
(2) In accordance with this rule:
(a) "Pay tax electronically" means making a tax payment using—
(i)The authority bank's online banking service; or
(ii)Credit or debit cards
(b) Interest and penalties are included in the definition of "tax" given in clause (43) of section 2 of the Act.