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Exempt income

15 March 2019

if any person have income of only exempt income of Rs. 10 lakhs, is he liable to file ROI as per sec 139(1) of the IT Act, 1961?

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22 Replies

CA Buddies (53 Points)
Replied 15 March 2019

A person is liable to file his income tax return as per section 139(1) only if his gross total income [ before giving exemption under section 10(AA) and section 10 (38) ] exceeds the basic exemption limit of that previous year.
As in your question the gross total income will be nil as the income is exempt . so that person is not bound to file his income tax return but he can do so voluntarily if he wants.

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PRABHAT KUMAR (142 Points)
Replied 15 March 2019

*u mean after giving....... right??? one thing, is it irrespective of quantum and nature of exempt income.?

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CA Buddies (53 Points)
Replied 15 March 2019

No i mean before giving exemption under the above mentioned two sections. Nature of exempt income is only relevant for the above mentioned two sections, for all other sections it is not relevant. As gross total income is computed after giving exemptions.

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PRABHAT KUMAR (142 Points)
Replied 15 March 2019

please consider a scenerio
a person have been only agricultural income, which is exempt, of Rs. 1 cr per year from last 10 yrs. As his total income was nil in all the years, he did not filed his ROI for any of the years since he was not liable to file it. Now, when tax sleuths raid his home, decleares it blackmoney. what is the way out for him.

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CA Buddies (53 Points)
Replied 15 March 2019

In such a scenario as his gross receipts had exceeded Rs 1 crore ,so he must get his books of accounts audited as per section 44AB of the IT Act 1961. So at the time of raid he can show his audited books of accounts, and definitely he is required to maintain books of accounts as per section 44AA of the same Act.

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PRABHAT KUMAR (142 Points)
Replied 15 March 2019

ok thankyou so much. it was really helful.
Thanks once again

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CA Buddies (53 Points)
Replied 15 March 2019

Actually this is my first answer in this aap, although i am using it from 6 months. Thank u for asking questions.

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PRABHAT KUMAR (142 Points)
Replied 15 March 2019

is agricultural activity a business? because sec 44AA/44AB strats with business or profession.

CA Buddies (53 Points)
Replied 15 March 2019

any trade(buying and selling) is a business. Thus agriculture activity is a business.

PRABHAT KUMAR (142 Points)
Replied 16 March 2019

as per my knowledge, basic business activity is not a trade.

RAMAKRISHNAN R (INCOME TAX OFFICER) (1736 Points)
Replied 16 March 2019

agricultural activities are not business unless you convert the agricultural produce in to readable produce. for example if you sell the tea leaves as such after plucking without further business activities such as categorising etc it's agricultural activities and it's exempt

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