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Budget 2019: Taxpayers beware! FM Sitharaman wants you to mandatorily file ITR on high value transactions

Sanjeev Sinha
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Union Budget 2019 India: Have you done any high value transaction in the previous year or spent more than Rs 2 lakh on a foreign tour, but haven’t shown this in your return of income? Then better beware. For, Finance Minister Nirmala Sitharaman has said in her maiden budget speech that persons doing high value transactions will now be mandatorily required to file income tax return and show these transactions in the ITR.

It may be noted that currently, a person other than a company or a firm is required to furnish ITR only if his total income exceeds the maximum amount not chargeable to tax, subject to certain exceptions. Therefore, a person entering into certain high value transactions is not necessarily required to furnish his return of income.

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However, in order to ensure that persons who enter into certain high value transactions do furnish their return of income, it is proposed to amend Section 139 of the I-T Act so as to provide that a person shall be mandatorily required to file his return of income in certain cases.

For instance, if someone during the previous year has deposited an amount or aggregate of the amounts exceeding Rs 1 crore in one or more current accounts maintained with a banking company or a co-operative bank, he will now be required to mandatorily file ITR.

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Similarly, one will have to file ITR if one has incurred expenditure of an amount or aggregate of the amounts exceeding Rs 2 lakh for travelling to a foreign country.

If someone has incurred expenditure of an amount exceeding Rs 1 lakh towards consumption of electricity, he will have to file income tax return.

Talking about this, CA Abhishek Soni, Founder, tax2win.in, said, "An individual /HUF is required to furnish the return of income if total income exceeds the basic exemption limit, subject to certain other conditions. As per the new proposals, ITR will be mandatory if someone has deposited an amount exceeding Rs 1 crore in one or more current account or incurred expenditure exceeding Rs 2 lakh for travel to a foreign country or incurred expenditure exceeding Rs 1 lakh towards consumption of electricity or total income exceeds the basic exemption limit before providing the benefit of capital gain exemptions like Section 54 etc."

As per the budget proposals, however, 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 ITR, 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 I-T Act to provide that a person who is claiming such rollover benefits on investment in a house or a bond or other assets, under sections 54, 54B, 54D, 54EC, 54F, 54G, 54GA and 54GB of the Act, 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.

These amendments will take effect from 1st April, 2020 and will, accordingly apply in relation to assessment year 2020-2021 and subsequent assessment years.