Rule 86B Income Tax paid more than one lakh in updated return under Section 189(8A)

[DILEEP SINGH]

Dear Sir(s)/Madam (s)

One taxpayer has paid Income Tax less than one lakh in F.Y. 2020-21. Thereafter, he updated his return in the month of March, 2023. In updated return he paid income tax more than one lakh. In F.Y. 2021-22 he has already paid Income Tax more than one lakh in original returns. Now my question is :-

(1) Can he avail benefit of exemption from 86B as per restriction (Income Tax payment) during the F.Y. 2022-23?

 

[Yash Shah]

As per clause (a) of the first proviso of rule 86B read with section 49(4) of the CGST act, the restriction shall not apply to said person or the proprietor or karta or the managing director or any of its two partners, whole-time directors, member of managing committee of associations as the case may be have paid more than 1 lakh rupees under Income tax act in each of two financial year for which the time limit to file return of income under subsection (1) of section 139 of said act has expired.

As per the analysis of rule 86B, it is inferred that there should be a payment of rupees 1 lakh in the financial year not for the financial year  As in our case payment of Rs 1 lakh is made in the financial year 22-23 for the F.Y.20-21. While conditions state that the income tax paid more than 1 lakh in each of the two financial years for which the time limit to file a return of income tax u/s 139(1) has expired.

Hence, we can not avail of the benefit of exemption from restriction in FY 2022-23 as income tax was not paid more than 1 lakh in FY2020-21.

[Shilpi Jain]

WHat is the constitution of the taxpayer? Individual, company, partnership....?

AI Summary

Rule 86B payment condition requires tax paid in the relevant financial years to qualify for exemption.
Rule 86B conditions exemption on payment of income tax above the prescribed threshold in each of two financial years for which the time to file income-tax returns has expired; payments must be made in respect of those financial years themselves, not merely recorded later via an updated return, so a tax payment made later for an earlier year does not satisfy the two-year payment requirement.