Section 139(1) of the Income-tax Act, 1961 (IT Act) mandates that a taxpayer (excluding Company and Firm) is required to file his tax return only if his total income or the total income in respect of any other person in respect of which he is assessable under the IT Act during the fiscal year (1 April to 31 March) exceeds the maximum amount, which is not chargeable to tax. This section also provides instances where such exempted persons are mandatorily required to file their tax returns. While expanding the list of conditions for mandatorily filing of tax returns, the Finance Act, 2019 granted powers to the Central Board of Direct Taxes (CBDT) to notify additional conditions for mandatory filing of returns turn. Recently, the CBDT has notified1 additional conditions for mandatory filing of a tax return where the total income does not exceed the basic exemption limit. We, at BDO in India, have summarized this notification and provided our comments on the same hereunder:
Conditions for furnishing return of income
The Notification has inserted Rule 12AB in the Income-tax Rules, 1962 (IT Rules) laying down the following conditions. If the amount exceeds the threshold limit prescribed in the table below, the said person shall be required to mandatorily file the tax return.:
|
Sr. No. |
Condition / Criteria |
Threshold Amount (INR) |
|
1 |
Total sales, turnover, or gross receipts in the business |
6 million |
|
2 |
Total gross receipts in profession |
1 million |
|
3 |
The aggregate of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) |
25,000 (50,000 in case of senior citizen resident in India) |
|
4 |
Deposit in one or more savings bank accounts of the person |
5 million |
BDO COMMENTS
In line with the Indian Government’s intent to increase the base of taxpayers filing their tax returns, these criteria will increase the number of people who are mandatorily required to file their tax returns. One of the criteria for compulsory filing of tax return - aggregate TDS and TCS more than INR 25,000 - is in line with recently introduced section 206AB, which provides for higher tax withholding, if the tax return is not filed. Further, this Notification is effective from 21 April 2022 (being the date of its publication) and accordingly, it will be applicable for tax returns about 2022-23 and subsequent years. Accordingly, if any of the above conditions are satisfied the concerned taxpayer has to file his tax return.
1CBDT Notification No. 37/2022 dated 21 April 2022
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