Understanding Section 139 of the Income Tax Act

Paying taxes is a duty every earning individual or entity must fulfill. The Income Tax Act of 1961 outlines how taxpayers should report their earnings to the government, and Section 139 specifically deals with the various types of income tax returns (ITRs) that need to be filed. Let us dive into Section 139 and its subsections to understand the intricacies of filing income tax returns in India.

Sub-Sections of Section 139 of Income Tax Act 1961

Section 139 of the Income Tax Act pertains to the duty to file income tax returns. It outlines the various types of returns that individuals and entities must submit, the due dates for filing, and the penalties for non-compliance or late filing.

This section lays down the rules and regulations for taxpayers regarding the filing of income tax returns. Let us take a deeper look at the various sub-sections of Section 139:

1) Section 139(1) – Mandatory and Voluntary Returns

The Income Tax Section 139(1) deals with both mandatory and voluntary filing of income tax returns.

Voluntary Returns: Sometimes, individuals or entities who aren’t required by law to file returns choose to do so voluntarily. This might be done for various reasons, such as establishing a record of income or claiming refunds.

Mandatory Returns: On the other hand, there are certain criteria that make filing returns mandatory:

• Individuals whose total income exceeds the exemption limit.
• Companies and firms, whether domestic or foreign, operate in India.
• Residents with assets outside India.
• Entities such as Hindu Undivided Families (HUFs), Associations of Persons (AOPs), and Bodies of Individuals (BOIs) have income above the exemption threshold.
• Certain exemptions under Section 139(1c) can be granted, but both Houses of Parliament must approve these.

2) Section 139(3) – Filing Income Tax in case of Loss

This section addresses the scenario where an individual or entity incurs a loss. Filing a return, in this case, allows the taxpayer to carry forward the loss to offset it against future income. For instance:

• Losses under ‘Capital Gains’ or ‘Profits and Gains of Business and Profession’ must be reported if they are to be carried forward.

• Losses under ‘House Property’ can be carried forward even if filed late.

3) Section 139(4) – Late Income Tax Return

If you miss the deadline to file your ITR, you can still file a belated return under Section 139(4). This can be done any time before three months before the end of the assessment year or before the assessment is completed, whichever is earlier. However, a penalty of ₹5,000 may be imposed, reduced to ₹1,000 if the total income does not exceed ₹5 lakh. Notably, this penalty does not apply if filing was not mandatory under Section 139(1).

4) Section 139(5) – Revised Return

Mistakes happen, and Section 139(5) allows taxpayers to correct errors in their original returns. If the initial return was filed on time under Section 139(1), it can be revised within one year from the end of the assessment year or before the assessment is completed, whichever comes first. However, late returns cannot be revised.

5) Section 139(4a) – Income Tax Return of Charitable and Religious Trusts

Charitable and religious trusts must file returns if their income exceeds the basic exemption limit before applying for exemptions under Sections 11 and 12. This ensures transparency and accountability in their financial dealings.

6) Section 139(4b) – Political Party to Furnish the Return on Income

Political parties must file returns if their income exceeds the basic exemption limit, regardless of any benefits under Section 13A. This helps maintain transparency in political funding.

7) Section 139(4c) and Section 139(4d) – Income Tax Return of entities claiming Exemption under Section 10

These sections pertain to entities like educational institutions, hospitals, and research associations that claim exemptions under Section 10. They must file returns if their income exceeds the exemption threshold, ensuring they meet all regulatory requirements.

8) Section 139(4f)

Section 139(4f) specifies that certain institutions claiming exemption under Section 10(23C) need to file returns if their income exceeds the exemption limit.

9) Section 139(9) – Defective Returns

A return may be deemed defective if it has certain flaws, such as missing information or incorrect data. The Assessing Officer (AO) can notify the taxpayer of these defects, granting them 15 days to rectify the issues, with possible extensions for valid reasons. Failure to correct the defects can lead to the return being treated as invalid.

Due Dates for Section 139

The due dates for filing returns under Section 139 vary based on the taxpayer category:

• July 31st: This is the deadline for individuals and entities that do not require an audit of their accounts. This includes salaried individuals, freelancers, and some professionals.

• September 30th: This is the deadline for entities required to get their accounts audited. This includes companies, some self-employed individuals, and partnerships.

Relation of Form 7 with Section 139

Form ITR-7 is used by entities required to file returns under Sections 139(4a), 139(4b), 139(4c), and 139(4d). This form caters to various entities, including charitable trusts, political parties, and entities claiming certain exemptions. Filing can be done physically, electronically with a digital signature, or through barcoded returns.

FAQs on Section 139 of the Income Tax Act

1

What is the significance of filing returns under Section 139(1)?

Section 139(1) outlines the general obligation for taxpayers to file income tax returns. It’s crucial for determining tax liability, claiming refunds, carrying forward losses, and avoiding penalties.

2

Can I file my income tax return after the due date?

Yes, you can file a belated return under Section 139(4) within one year from the end of the relevant assessment year. However, you’ll be subject to late filing fees.

3

What happens if I file a defective return under Section 139(9)?

If your return contains errors or omissions, the Income Tax Department will issue a notice under Section 139(9). You must rectify the defects within the specified time to avoid penalties.

4

How does Section 139(3) benefit individuals and businesses with losses?

Section 139(3) allows individuals and businesses to carry forward losses to offset future income. However, specific conditions apply, and filing a return is mandatory for businesses to claim this benefit.

5

Are there specific forms required for different types of returns under Section 139?

Different income types (salaried, business, capital gains, etc.) require specific ITR forms. Choosing the correct form is essential for accurate return filing.

Suggested Readings

1. Section 80C Deductions as per Income Tax Act, 1961

2.All about TDS on Salary under Section 192 – Kotak Life