What to check before Filing ITR-1 Role of electricity bill, bank deposit etc.

To ensure that individuals, entering into certain high value transactions give detailed information, Scope of ITR-1 has been further restricted.

Now, an individual cannot file ITR-1 if:

1. He has deposited more than Rs. 1 crore in one or more current account maintained with a bank or a co-operative bank,
2. He has incurred more than Rs. 2 lakh for himself or any other person for travel to a foreign country, or
3. He has incurred more than Rs. 1 lakh towards payment of electricity bill.

Legal Provisions for above as as follows:

As per newly amended Rule 12 of Income Tax Rules, A person cannot file ITR-1 if he/She is required to furnish a return of income under seventh proviso to sub-section (1) of section 139.

Relevant Extract of Rule 12 is given below:

12. (1) The return of income required to be furnished under sub-section (1) or sub- section (3) or sub-section (4A) or sub-section (4B) or sub-section (4C) or sub-section (4D) or sub-section (4E) or sub-section (4F) of section 139 or clause (i) of sub-section (1) of section 142 or sub-section (1) of section 148 or section 153A relating to the assessment year commencing on the 1st day of April, 1 2020 shall,—

(a) in the case of a person being an individual who is a resident other than not ordinarily resident and where the total income includes income chargeable to income-tax, under the head,—

(i) “Salaries” or income in the nature of family pension as defined in the Explanation to clause (iia) of section 57; or

(ii) “Income from house property”, where assessee does not own more than one house property and does not have any brought forward loss or loss to be carried forward under the head; or

(iii) “Income from other sources”, except winnings from lottery or income from race horses and does not have any loss under the head,

be in Form SAHAJ] (ITR-1) and be verified in the manner indicated therein:

Provided that the provisions of this clause shall not apply to a person who,—

(I) has assets (including financial interest in any entity) located outside India;

(IA) has signing authority in any account located outside India;

(IB) has income from any source outside India;

(IC) has income to be apportioned in accordance with provisions of section 5A;

(ID) has claimed deduction under section 57, other than deduction claimed under clause (iia) thereof;

(IE) is a director in any company;

(IF) has held any unlisted equity share at any time during the previous year;

(IG) is assessable for the whole or any part of the income on which tax has been deducted at source in the hands of a person other than the assessee;

(II) has claimed any relief of tax under section 90 or 90A or deduction of tax under section 91;

(III) has agricultural income, exceeding five thousand rupees;

(IV) has total income, exceeding fifty lakh rupees;

(V) has income taxable under section 115BBDA; or

(VI) has income of the nature referred to in section 115BBE;

(VII) owns a house property in joint-ownership with two or more persons; or

(VIII) is required to furnish a return of income under seventh proviso to sub-section (1) of section 139. 

Seventh proviso to sub-section (1) of section 139 is as follows:

Provided also that a person referred to in clause (b), who is not required to furnish a return under this sub-section, and who during the previous year—

(i) has deposited an amount or aggregate of the amounts exceeding one crore rupees in one or more current accounts maintained with a banking company or a co-operative bank; or

(ii) has incurred expenditure of an amount or aggregate of the amounts exceeding two lakh rupees for himself or any other person for travel to a foreign country; or

(iii) has incurred expenditure of an amount or aggregate of the amounts exceeding one lakh rupees towards consumption of electricity; or

(iv) fulfils such other conditions as may be prescribed,

shall furnish a return of his income on or before the due date in such form and verified in such manner and setting forth such other particulars, as may be prescribed. 

Conclusion:

With Joint reading of Seventh proviso to sub-section (1) of section 139 and Rule 12 one can form an opinion that, Individual

• who has deposited more than Rs. 1 crore in one or more current account maintained with a bank or a co-operative bank or,
• has incurred more than Rs. 2 lakh for himself or any other person for travel to a foreign country, or
• has incurred more than Rs. 1 lakh towards payment of electricity bill

Cannot file ITR-1

Here one need to understand, that only the persons who are filing their ITR as they are falling in Seventh proviso to sub-section (1) of section 139, cannot file ITR-1.

Basically if being a person other than a company or a firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year does not exceed the maximum amount which is not chargeable to income-tax, is not required to file his ITR.

But he is required to file ITR if he falls in Seventh proviso to sub-section (1) of section 139, And in that case intention of Law is that ITR 1 cannot be filed.

In case an individual is required to file ITR because if his Total income is more than slab limit, then Seventh proviso to sub-section (1) of section 139 is not applicable on him and he can File his ITR normally.

What to check before Filing ITR-1 Role of electricity bill, bank deposit etc.

I am explaining this with the help of an example.

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