The Government of India has made Income Tax Return (ITR) filing Mandatory for high spenders whether their Taxable income is underneath the edge exception limit of ₹5 lakh.
Those mandated to file returns whose spending is more than ₹2 lakh on an Foreign trips or depositing ₹1 crore in a year in a Bank or paying Electricity bill of more than ₹1 lakh in a year.
“Right now, an individual other than an organization or a firm is required to furnish the income tax return only if the income surpasses the maximum amount not chargeable to Tax, subject to specific exemptions. Therefore, an individual going into certain high-esteem transactions isn’t really required to furnish his/her Income Tax Return,” the Budget archives said.
It proposed to amend segment 139 of the Income Tax Act to ensure that people who enter into certain high-esteem transactions need to file Income Tax Return.
So, any person who has in the previous year “deposited an amount or aggregate of the amounts exceeding ₹one crore in one or more current account maintained with a banking company or a co-operative bank; or has incurred expenditure of an amount or aggregate of the amounts exceeding ₹2 lakh for himself or any other person for travel to a foreign country; or has incurred expenditure of an amount or aggregate of the amounts exceeding ₹1 lakh towards consumption of electricity” will have to file a tax return.
Also, any person claiming the benefits of tax exemption from long term capital gains under various provisions under section 54 of the Income Tax Act will have to file a tax return.
“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, 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,” it said.
These amendments will take effect from 1 April 2020, and will, accordingly apply in relation to the assessment year 2020-21 and subsequent assessment years.
To discourage cash transactions and move towards a less-cash economy, the Budget also proposed to insert a new section 194N in the Income Tax Act to provide for levy of TDS at the rate of 2 per cent on cash payments in excess of ₹1 crore in aggregate made during the year by a banking company or cooperative bank or post office to any person from an account maintained by the recipient.
“It is proposed to exempt payment made to certain recipients, such as the Government, banking company, cooperative society engaged in carrying on the business of banking, post office, banking correspondents and white label ATM operators, who are involved in the handling of substantial amounts of cash as a part of their business operation, from the application of this provision,” the Budget documents said.
It is proposed to empower the Central government to exempt other recipients, through a notification in the official Gazette in consultation with the Reserve Bank of India.
This amendment will take effect from 1 September 2019.