Late ITR Filing: A Comprehensive Guide on Section 139(1) of Income Tax Act
Updated: Dec 12, 2023
As a taxpayer, you need to understand the significance of income tax return (ITR) deadlines. Every year, taxpayers are mandated to file their return) within the stipulated dates. Remember that missing out on these dates can be as problematic as not paying your taxes. However, taxpayers may still end up missing the due date or failing to file their returns altogether.
Table Of Contents
The Income Tax Act, of 1961 has provisions in place to address such situations. Section 139 of the Income Tax Act lays down guidelines for taxpayers to help them with late ITR filing and prevent the potential implications of delays. We have a comprehensive guide to address the questions and concerns of novice taxpayers.
Understanding the Basics: Section 139(1) of Income Tax Act
Section 139(1) of the Income Tax Act lays down the basics of filing late returns for taxpayers who miss the prescribed deadline. It provides an alternative to rectify the non-submission of ITR. The section has various sub-sections to cover different areas of late ITR filing. Before digging deep into these sub-sections, you should understand mandatory return policies. The following entities need to file their ITR:
Every person having a total income exceeding the exemption limit
Firms, including ULP (Unlimited Liability Partnership) and LLP (Limited Liability Partnership)
Any public, private, domestic, or foreign entity doing business in India or located in India
Residents with assets outside of India or any entity retaining authority for an account based outside India
Every BOI (Body of Individuals), AOP (Association of Persons), and HUF (Hindu Undivided Family) with income exceeding the prescribed exception limit
Voluntary Tax Returns in case individuals or entities are essentially required to file the return
Section 139(1c) of the act exempts certain classes of people fulfilling a condition from filing the return.
Potential Consequences of Non-Filing or Late Filing of Returns
Taxpayers who file their ITR within the stipulated date can file a belated return. It can be done under Section 139(4) of the IT Act. However, you must file it up to the end of the relevant assessment year (31st March of the following year). Not filing your return after this date means you may have to pay a penalty under Section 271F. The amount is up to Rs. 10,000, but it varies depending on factors such as your income and the delay in filing the return. You will also be required to pay interest under Section 234A if you have any tax payable.
Due Dates
At this point, it is also crucial to understand the due dates for filing returns. Since people attain their income through different methods, Section 139 prescribes due dates for the specific demand. These dates are:
July 31st is the due date for people and entities that do not need an audit report to validate accounts. These entities mainly include a paid employee, a consultant, a freelancer, or a self-employed professional.
September 30th is the due date for other entities mandated to undergo account book auditing. These include business entities, self-employed professionals, consultants, and working partners employed with firms.
Section 139(3)- Filing ITR in the Case of a Loss
Section 139(3) applies if you need to file your ITR in the case of a loss. The loss can be carried forward, lowering your tax liability in subsequent years. Here are the cases this section covers:
The tax return is not mandatory for an individual taxpayer in case of loss incurred in the previous financial year. However, return for a loss is mandatory for loss in companies and firms.
For a loss arising under the head of ‘Capital Gains’ or ‘Profits and Gains of Business and Profession’ for companies, filing the return is mandatory to carry the loss ahead and offset it with future income. But the company can avail of it only if it files the return by the due date.
Loss occurring in ‘House or residential property’ can be carried forward even for a tax return beyond the due date.
Other losses filed under Section 142(1) (except ‘House and Property’) cannot be carried forward
Losses for previous years can be carried forward if the ITR is filed by the due dates
An offset is allowed in the alternative case of loss offset against income in another category if the ITR is filed beyond the due date.
Section 139(4)- Belated Income Tax Return
Taxpayers (whether individuals or entities) should ideally file their ITR before the due date according to Section 139(1). However, they have the option to file a belated return for prior years if the return file is delayed. They can do it until the expiry date of the current applicable assessment year or before the conclusion of the financial year.
If they fail to fail again, they have to pay a penalty of Rs. 5,000 under Section 271F. They can escape the penalty if their income does not require the mandatory filing defined under Section 139(1) and the ITR was filed after the due date.
Section 139(4A)- Charitable Trusts
Some people get their income from property falling fully or partially under religious or charitable purposes. The income may also come from voluntary contributions, referred to in subsection 2(24)(iia). In these cases, the ITR is filed under the guidelines of Section 139(4A) if the individual’s income is more than the maximum permissible amount not considered taxable.
Section 139(4B)- Political Parties
Political parties need to file an Income Tax return under Section 139(4B) if their total income exceeds the maximum permissible tax-exempt limit. Notably, these parties majorly make their income from voluntary contributions by the public. The responsibility to file the tax return by the due date falls on the Chief Executive Officer or the Secretary.
Section 139(4C) and 139(4D)- Section 10 with relation to ITR
According to Section 10 of the IT Act, certain institutions can claim some benefits. Section 139(4C) and Section 139(4D) lay the guidelines for the tax return of these institutions. Section 139(4C) explains that one must necessarily file a tax return if the maximum permissible limit exceeds the maximum cap of tax exemption. These include:
Institutions or associations under Section 10(23A)
Institutions under Section 10(23B)
Associations engaged in scientific research
Educational and medical institutions, hospitals, and universities
News agencies
Section 139(4D) states that return filing is not applicable to all institutions, colleges, and universities. They do not have to file under any specific provision.
Section 139(5)-Revised Income Tax Return
At times, taxpayers file the ITR on time but make some mistakes. They can correct these mistakes by revising the ITR under Section 139(5). They can file at any time with the relevant assessment years or before completion of the assessment (whichever comes). As long as revisions are within the time frame, there are no limits to the frequency of revising the ITR.
The taxpayer can do it in the same or different return form. Once a new return is filed, the original one is considered to be withdrawn. Also, Section 139(5) is valid only for ‘Omissions and Wrong Statements’ and does not apply to ‘Concealment or false statements.’ It means that one can revise only unintentional mistakes, or the penalty shall be imposed.
Section 139(9)- Defective Returns
A tax return with missing documents can be considered defective under Section 139(9). The taxpayer will be notified about the defect via a simple letter. They are given a time slot of fifteen days to rectify the problem and provide the missing documents, though they can request an extension by providing valid reasons. The following documents can prevent the defect in the ITR in the first place:
Statement showing the computation of payable taxes
Filed ITR in the required form
Proofs of claims of the taxes paid
Report of auditing under Section 44AB
Copies of the audit report, auditor's profit and loss accounts, and balance sheet in case the taxpayer's account is audited
Relevant report of Cost Audit
A statement showing gross receipts, turnover amount, stocks, cash, bank balance, expenses and net profit, and debtors’ or creditors’ information if the taxpayer does not maintain a book for accounts
Profit and Loss accounts, trading accounts, manufacturing accounts, accounts of all income and expenses, and balance sheet if the taxpayer maintains a book of the accounts (personal accounts of partners in partnerships, proprietor’s personal account, and members’ personal accounts in AOP/BOI)
Form ITR 7
Form ITR 7 has been released by the IT Department for individuals, entities, and institutions required to file their returns under Section 139(4A), 139(4B), 139(4C), and 139(4D). Taxpayers should match the amounts of tax paid and deducted with the Tax Credit Statement or Form 26AS. The methods employed to file the Form ITR-7 include:
Paper form
Electronic transmission of data in Form ITR-V
E-Form using a digital signature
Barcoded return
Section 139 (4E) applies to business trusts that do not have to provide their profit and loss accounts.
Seventh Proviso to Section 139 (1)
The Finance (No. 2) Act, 2019 added a 7th Proviso to Section 139 (1) of the IT Act with effect from 1st April 2020. According to the 7th Proviso to Section 139 (1), a certain class of people carrying out high-value transactions during the financial year is mandated to file the ITR even though their total income may be below the basic exemption limit.
It covers individuals mentioned in clause (b) of section 139 (1). These are individuals, Hindu undivided families (HUF), bodies of individuals (whether incorporated or not), associations of persons, and artificial juridical persons. However, filing ITR under 7th Proviso to Section 139 (1) is not applicable for companies and firms as they do not come under clause (b) of section 139 (1).
High-Value Transactions under 7th Proviso to Section 139 (1)
The following transactions are considered high-value transactions under the 7th Proviso to Section 139 (1) of the IT Act:
Aggregate of current account(s) deposits exceeding Rs. 1 crore
Aggregate of foreign travel expenditure exceeding Rs. 2 lakhs
Aggregate of electricity expenditure exceeding Rs.1 lakh
Error Codes in Section 139
Here is a list of the error codes included in Section 139 along with their detailed explanation:
Error Code 8 – This code applies when the assessee filed ITR-4S even if their total presumptive income under Section 44AD does not exceed 8% of Gross turnover
Error Code 14- ITR is regarded defective if the assessee enters a negative amount in the gross/net profits section
Error Code 31 – This code is applicable for a taxpayer having income from the head ‘profits and gains from business/profession’ but failing to file a profit and loss statement
Error Code 38 – This code works when tax is determined as payable but not paid
If you have made an error while filing your ITR, you can use Section 139 to modify your ITR and file a revised version. Consider collaborating with an expert to do it without hassles or stress about making a mistake.
FAQ
Q1. How does the Indian government collect income tax?
In India, the Income Tax Department collects income tax from eligible taxpayers. It uses the following means:
Voluntary payment by taxpayers, such as through advanced tax and self-assessment tax
Taxes deducted at source (TDS)
Taxes collected at source (TCS)
Every person earning income beyond a specific threshold is required to compute his income and pay taxes correctly and on time. Failing to do it can lead to legal action and penalties.
Q2.What is the administrative framework of Income Tax?
The Ministry of Finance manages the revenue functions of the Government of India. The Ministry relies on the Central Board of Direct Taxes (CBDT) to administer direct taxes such as Income tax and Wealth tax. CBDT provides essential inputs for the planning of direct taxes and policy framing. Additionally, it enforces tax laws through the Income Tax Department.
Q3. What constitutes income as per the Income-tax Law?
The word income has a broad meaning under the Income-tax Law. For example, for a salaried employee, it includes everything an employer pays in cash, kind, or as a facility. For a businessman, income refers to the net profit earned. Interest, Dividends, Commission, and the amount received through the sale of capital assets are also deemed as income. It is computed according to the relevant provision of the Income-tax Act, 1961.
Q4. What is a tax on regular assessment and how does a taxpayer pay it?
Every eligible taxpayer is responsible for correctly computing and paying due taxes under the IT Act. In case they make an understatement of income and tax due, the IT Department computes the actual amount an assessee needs to pay. They raise a demand called Tax on the regular assessment that the taxpayer is required to pay within 30 days of receipt of the notice.
Q5. What is the meaning of completion of assessment?
Completion of assessment indicates that the assessment proceedings of the assessee are complete and closed.
Q6. What are the various forms for filing income tax returns?
Income tax is filed using different forms. These include ITR 1/2/3/4/5.
Q7. Where are ITR forms available?
ITR forms are available on the official website of the Income Tax Department, making them accessible in a few clicks.
Q8. Can income tax returns be filed manually?
Yes, you can file ITR1 and ITR4 manually. This method is apt for seniors.
Q9. What are the outcomes of not filing tax returns?
Not filing your income tax returns can have serious consequences. You may get a notice from the IT Department and also have to pay a hefty penalty in the long run. Alternatively, you can opt for late filing under Section 139(1) of the Income Tax Act.
Q10. Do I have to e-verify the Belated Return filed u/s 139(4)?
Yes, you have to verify the income tax return to complete the return filing process. A belated return filed u/s 139(4) is no exception to the rule.
Q11. Can I claim a refund through a belated return?
Yes, it is possible to claim a tax refund through a belated return u/s 139(4). The process entails pre-validating your bank account to get the refund, as the refund is directly credited to the account added on the e-filing portal.
Q11. Will I need to bear a penalty for filing a belated return?
You will have to pay a late fee of Rs 5,000 under Section 234F while filing a belated return. The late fee is reduced to Rs 1000 for individuals with a total income of less than Rs 5 lakh. No late fee is levied u/s 234F for individuals with income less than the taxable limit.
Q12. How many times can you e-file your return after being rejected?
You can re-submit your ITR as many times as required until the filing deadline. However, experts suggest that printing, signing, and mailing your return after three unsuccessful attempts because such issues may not be resolved on the e-filing portal.
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