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Income below taxable limit: Is return to be filed?
May, 24th 2010

Please refer to your answer to the first query on Income-tax return when should it be filed? You have indicated that persons having income below taxable limit consequent on relief under Chapter VI-A need not file a voluntary return. You have overlooked the amendment to Sec. 139(1) by insertion of a proviso by the Finance Act, 2005, with effect from April 1, 2006, providing for voluntary returns for persons having income, which would be taxable, if provisions under Sections 10A/ 10B/ 10BA or Chapter-VI-A had not been availed.

There have been many responses from readers pointing out this mistake in the answers. The answer in this regard in The Hindu dated May 17, 2010, would need correction, though the correct position of law had been mentioned in earlier responses. The law needs some explanation. Proviso to Sec. 139(1) provides that those with income below the taxable limit because of deduction under Sec. 10A, 10B and 10BA, besides Chapter VI-A have to file voluntary return within the prescribed time limit. This position of law is made clear in paragraph 8 in the instruction annexed to Saral-II Form in the following words:

Every individual whose total income before allowing deductions under Chapter VI-A of the Income-tax Act, exceeds the maximum amount which is not chargeable to income tax is obligated to furnish his return of income.

The same Finance Act, 2005, had also made another amendment to the law by inserting Sec. 80AC requiring voluntary returns from persons whose income falls below the taxable limit because of deduction broadly for industrial undertaking under Sections 80IA, 80IAB, 80IB, 80IC, 80ID and 80IE also falls under Chapter VI-A.

The difference between these provisions is that those claiming deduction under the provision in Chapter VI-A listed in Sec. 80AC would stand to lose the deduction under the provisions listed therein, if voluntary return is not filed within the due date. But in the case of other deductions for individuals under Chapter VI-A being Sections 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80G, 80GG, 80GGA, 80GGC and 80-U, the deductions themselves will not be lost, even if the returns are not filed within time, but all the same, voluntary returns are expected on the due date for filing returns, if the income would have been taxable, but for these deductions. If the return is filed beyond the due date, but before the end of the assessment year (AY), the provision for levy of penalty of Rs. 5,000 on non-filers under Sec. 271F would be spared. If it is filed beyond even this extended date (end of AY), there should be reasonable cause for the delay to avoid penalty. The law allows a belated return or revised return within a year from the end of the AY.

I have income liable to tax but no tax is payable because of tax deduction at source. Am I required to file a return?

A person with taxable income should file return voluntarily in time, even if no tax is payable, because of tax deduction at source or payment of advance tax or self-assessment tax.

 
 
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