Introduction
The Income Tax Act, 1961 contains various provisions for the assessment of income and payment of taxes in India. Section 139(4a) is one such provision that deals with the filing of income tax returns by certain taxpayers. In this blog, we will discuss section 139(4a) in detail, including its provisions, applicability, and consequences of non-compliance.
What is Section 139(4a)?
Section 139(4a) of the Income Tax Act, 1961 was introduced by the Finance Act, 2020, and it applies to certain taxpayers who are required to furnish a return of income under Section 139(1) of the Act. This provision mandates that these taxpayers must furnish their return of income for the relevant assessment year before the due date of filing the return.
Applicability of Section 139(4a)
Section 139(4a) applies to the following taxpayers:
- An individual (other than an individual who is a resident and has total income which does not exceed Rs. 2.5 lakhs) who is not required to furnish a return of income under Section 139(1) due to the fact that their income is below the taxable limit.
- An individual who is a director in a company or who holds unlisted equity shares or both, as on the last day of the previous year, and has income exceeding Rs. 2.5 lakhs.
- A person who has deposited an amount or aggregate of amounts exceeding Rs. 1 crore in one or more current accounts maintained with a bank or a co-operative bank during the previous year.
- A person who has incurred expenditure of an amount or aggregate of amounts exceeding Rs. 2 lakhs for travel to a foreign country during the previous year for themselves or any other person.
- A person who has paid an amount or aggregate of amounts exceeding Rs. 1 lakh towards consumption of electricity during the previous year.
Consequences of Non-Compliance
If a taxpayer covered under Section 139(4a) fails to furnish their return of income before the due date, the following consequences will apply:
- The taxpayer will be liable to pay a late filing fee of Rs. 5,000 if the return is filed after the due date but on or before December 31st of the assessment year. If the return is filed after December 31st, the late filing fee will be Rs. 10,000.
- The taxpayer will also be liable to pay interest under Section 234A of the Income Tax Act, 1961 on the amount of tax payable from the due date of filing the return till the date of actual filing of the return.
- The taxpayer may also be liable to penalty or prosecution under the provisions of the Income Tax Act, 1961.
Impact of Section 139(4a) on Tax Compliance
The introduction of Section 139(4a) has had a significant impact on tax compliance in India. It has increased the number of taxpayers who are required to file their income tax returns, which has helped the government in widening the tax base. This provision has also encouraged taxpayers to disclose their income and pay taxes on time, which is beneficial for the overall economic growth of the country.
Challenges in Compliance with Section 139(4a)
Despite the benefits of Section 139(4a), there are some challenges in its compliance. One of the main challenges is the lack of awareness among taxpayers about the provision. Many taxpayers who fall under the ambit of this provision are not aware of their obligations, which leads to non-compliance. There is a need for more awareness campaigns and education programs to ensure that taxpayers understand the requirements of Section 139(4a).
Another challenge is the complexity of the provision. The provisions of Section 139(4a) are not straightforward, and taxpayers may find it difficult to understand the requirements and comply with them. The government should simplify the provisions and make them more user-friendly to encourage compliance.
Apart from the applicability and consequences of non-compliance, there are a few more important points to consider regarding Section 139(4a):
Extension of due date: In case of a delay or inability to furnish the return of income before the due date, the taxpayer can request an extension of the due date under Section 119(2)(a) of the Income Tax Act, 1961. However, the extension is not automatic, and the taxpayer has to provide valid reasons for the delay.
Belated return: If a taxpayer fails to furnish the return of income before the due date, they can still file a belated return under Section 139(4) of the Income Tax Act, 1961. However, the late filing fee and interest under Section 234A will still be applicable, and the taxpayer may also lose certain benefits, such as carry forward of losses.
Revised return: If a taxpayer has already filed their return of income but later discovers an error or omission, they can file a revised return under Section 139(5) of the Income Tax Act, 1961. However, the revised return must be filed before the end of the relevant assessment year or before the completion of assessment, whichever is earlier.
Electronic filing: All taxpayers covered under Section 139(4a) must file their return of income electronically through the income tax department’s e-filing portal. Paper returns are not accepted for these taxpayers.
Exemption for certain individuals: Section 139(4a) does not apply to individuals who are senior citizens and have income from pension and interest only. Such individuals are exempt from the requirement of filing a return of income under Section 139(1) if their income does not exceed Rs. 5 lakhs.
Conclusion
Section 139(4a) of the Income Tax Act, 1961 is a new provision introduced by the Finance Act, 2020, which mandates certain taxpayers to file their income tax returns before the due date. The provision aims to widen the tax base by bringing in more taxpayers under the ambit of the Income Tax Act, 1961. Taxpayers covered under this provision must ensure timely compliance to avoid the consequences of non-compliance.
Read more useful content:
Frequently Asked Questions (FAQ’s)
- Who is covered under Section 139(4a) of the Income Tax Act, 1961?
Section 139(4a) applies to individuals who are required to get their accounts audited under Section 44AB of the Income Tax Act, 1961.
2. What is the due date for filing a return of income under Section 139(4a)?
The due date for filing a return of income under Section 139(4a) is 30th September of the relevant assessment year.
3. What are the consequences of non-compliance with Section 139(4a)?
If a taxpayer covered under Section 139(4a) fails to furnish their return of income before the due date, they may be liable to pay a penalty of Rs. 10,000 or 0.5% of their total income, whichever is lower.
4. Can a taxpayer covered under Section 139(4a) file their return of income manually?
No, taxpayers covered under Section 139(4a) must file their return of income electronically through the income tax department’s e-filing portal.
5. Is it possible to get an extension of the due date for filing a return of income under Section 139(4a)?
Yes, taxpayers can request an extension of the due date under Section 119(2)(a) of the Income Tax Act, 1961. However, the extension is not automatic, and the taxpayer has to provide valid reasons for the delay.
6. Can a taxpayer file a belated return of income under Section 139(4a)?
Yes, taxpayers can file a belated return of income under Section 139(4) of the Income Tax Act, 1961, but they will be liable to pay a late filing fee and interest under Section 234A.
7. Can a taxpayer revise their return of income filed under Section 139(4a)?
Yes, taxpayers can revise their return of income filed under Section 139(4a) under Section 139(5) of the Income Tax Act, 1961, provided it is done before the end of the relevant assessment year or before the completion of assessment, whichever is earlier.
8. Is there any exemption for senior citizens from the requirement of filing a return of income under Section 139(4a)?
No, senior citizens who are required to get their accounts audited under Section 44AB of the Income Tax Act, 1961 are also covered under Section 139(4a). However, senior citizens with income from pension and interest only and whose income does not exceed Rs. 5 lakhs are exempt from filing a return of income under Section 139(1).
9. Are there any penalties for incorrect or false statements in the return of income filed under Section 139(4a)?
Yes, if a taxpayer furnishes incorrect or false statements in their return of income filed under Section 139(4a), they may be liable to pay a penalty under Section 271(1)(c) of the Income Tax Act, 1961.
10. Can a taxpayer claim a refund of excess tax paid in their return of income filed under Section 139(4a)?
Yes, taxpayers can claim a refund of excess tax paid in their return of income filed under Section 139(4a), provided they have furnished their return of income before the due date and their claim for refund is within the time limit specified under Section 139(5).
