Section 80AC of the Income Tax Act: What Came Ahead in the Budget 2018
Under the current provisions of Section 80AC of the Income Tax Act, unless the assessee's income return is submitted on or before the deadline set forth in Section 139(1), no deduction under Sections 80IA, 80IAB, 80IB, 80IC, 80ID, or 80IE would be allowed. Section 80AC does not apply to other taxpayers who are making comparable deductions. The government proposed in Budget 2018 to expand the scope of Section 80AC to include all similar deductions covered under the heading "C—Deductions in respect of certain incomes" under Chapter VIA, i.e., from Sections 80IA to 80RRB, in an effort to bring uniformity to all income-based deductions. If the income tax return is not filed on or before the deadline specified under Section 139(1) of the Income Tax Act, the modification will have the effect of preventing a taxpayer from receiving any deduction under these provisions. In this article, we will explain how Section 80AC works and affects the status of tax deductions.
Table of Contents:
What is Section 80AC of the Income Tax Act?
The Indian Income Tax Act, 1961's Section 80AC serves as a vital conduit between timely income tax return filing and tax deductions. It highlights that taxpayers must meet the deadlines for filing returns in order to qualify for several deductions. Maintaining compliance and maximising tax benefits need an understanding of this Section.
Deduction Not Allowed Until the Return is Furnished
When calculating an assessee's total income from any prior year that is pertinent to the assessment year that starts on or after:
any deduction is allowable under Section 80-IA, Section 80-IAB, Section 80-IB, Section 80-IC, Section 80-ID, or Section 80-IE as of the first day of April 2006, but prior to the first day of April 2018;
(ii) any deduction under any of the provisions of this Chapter under the heading "C.—Deductions in respect of certain incomes" is allowable as of April 1, 2018.
Sections for Which Deductions are Not Available under Section 80AC
There is a misconception that the proposed modification would apply even to Section 80C, meaning that if the income return is not filed by the deadline specified in Section 139(1), the deduction under Section 80C would not be accessible. The truth is that the benefit of claiming a deduction is not limited to the parts listed below.
Section 80IA: Deductions for earnings and gains from businesses involved in infrastructure construction or other industrial endeavours.
Section 80IAB: Deductions for earnings and gains made by a project or business involved in the creation of a Special Economic Zone.
Section 80IAC: Special provisions pertaining to certain types of businesses.
Section 80IB: Deduction for earnings and gains from specific industrial projects, except projects involving infrastructure development.
Section 80IBA: Tax deductions for gains and earnings from real estate ventures.
Section 80IC: Special rules pertaining to certain projects or businesses in a particular category States.
Section 80ID: Deduction for earnings and gains from hotels and conference centres operating in a designated region.
Section 80IE: Special rules pertaining to certain projects in the Northeastern States.
Section 80JJA: Deduction for earnings and profits from a company that collects and processes biodegradable waste.
Section 80JJAA: Deduction related to hiring new employees.
Section 80LA: Deductions for specific revenue earned by International Financial Services Centres and Offshore Banking Units.
Section 80M: Deduction for specific dividends paid between corporations.
Section 80O: Reduction from some foreign businesses for royalties, etc.
Section 80P: Deduction for cooperative societies' earnings.
Section 80PA: Deduction for specific producer company revenue.
Section 80Q: Deduction for earnings and gains from the book publishing industry.
Section 80QQA: Deduction for authors of Indian language textbooks based on their professional income.
Section 80QQB: Deduction for authors of specific works other than textbooks based on royalties, etc.
Section 80R: Deduction for compensation from specific foreign sources for instructors, professors, etc.
Section 80RR: In some circumstances, a deduction for professional income received from overseas sources.
Section 80RRA: Deduction for compensation for services performed outside of India.
Section 80RRB: Deduction for patent royalties.
The income tax return for the applicable assessment year must be filed on or before the deadline given in Section 139, sub-Section (1), in order to be eligible for these deductions. Further, these deductions may be denied if there is even a small delay in filing the return over the deadline.
Illustrations:
When a manufacturing business purchases new equipment and a plant, it can claim a deduction under Section 80-IA. The business forfeits the deduction and has a larger tax obligation if it doesn't file its return by the deadline.
A person invests in a qualified start-up business in order to qualify for a Section 80-IAC deduction. They would not be entitled to the deduction if they missed the return filing deadline, which would increase their tax burden.
Conclusion
Being aware of Section 80AC of the Income Tax Act is vital as it reminds taxpayers to furnish their returns on time and never miss the deadline. Failing to follow the deadline means you may end up losing the deduction that you can legitimately claim. Missing out on deductions can increase your tax liability, which is the last thing any taxpayer wants to encounter.
FAQ
Q1. What is Section 80AC of the Income Tax Act?
According to Section 80AC of the Income Tax Act, a taxpayer will not be eligible for this deduction unless he provides a return of his income for the assessment year by the deadline set forth in Section 139, sub-Section (1).
Q2. What is the Section 80AC amendment?
In order to achieve consistency across all income-based deductions, the government has suggested in Budget 2018 that the scope of Section 80AC be expanded to include all comparable deductions that fall under Chapter VIA's "C—Deductions in respect of certain incomes," i.e., Sections 80IA to 80RRB. If a taxpayer fails to file their tax return by the deadline specified in Section 139(1) of the Income Tax Act, they will not be eligible for any deductions under these provisions.
Q3. What is the due date for tax return in India?
The deadline for filing the Income Tax Return (ITR) for the Assessment Year 2024-25 (Financial Year 2023-24) without incurring late costs is July 31, 2024. You can still file a belated return by December 31, 2024, even if you miss the deadline.
Q4. Can I file an income tax return after the due date?
You may file a belated income tax return if you don't file your return by the deadline. However, filing returns after the deadline will result in a penalty of up to Rs. 5,000. The charge is Rs. 1,000 for individuals with total income not exceeding Rs. 5 lakh.
Q5. Can we claim a deduction in a belated return?
Should you postpone submitting your ITR, you will not be eligible for deductions or exemptions under Sections 10A, 10B, 80-IA, 80-IB, 80-IC, 80-ID, and 80-IE. Only if the ITR is filed prior to the initial deadline are these tax-saving advantages permitted.
Q6. What was the major change introduced under Section 80AC in Budget 2018?
Budget 2018 made timely ITR filing mandatory to claim deductions under Chapter VI-A, affecting Sections like 80C, 80D, and 80G.
Q7. Does missing the ITR filing deadline result in complete loss of deductions?
Yes, any taxpayer failing to file before the due date cannot claim deductions under Chapter VI-A for that assessment year.
Q8. Are businesses also affected by the Section 80AC amendment?
Yes, individuals, HUFs, and businesses claiming deductions under Chapter VI-A must adhere to the deadline.
Q9. Can deductions be claimed in a later year if missed due to late filing?
No, the deduction is permanently lost for that particular financial year.
Q10. How does Section 80AC impact salaried individuals?
Salaried taxpayers must file their ITR on time to claim deductions on EPF, insurance, and tuition fees, among others.
Q11. Are there any exceptions or relaxations under Section 80AC?
No, the law applies uniformly, with no provisions for relaxation, even for genuine cases of late filing.
Q12. Does Section 80AC apply to deductions under Section 80P for cooperative societies?
Yes, cooperative societies must file returns on time to claim deductions under 80P.
Q13. How does this section interact with belated return provisions?
Even if a belated return is filed, deductions under Chapter VI-A cannot be claimed if the original due date was missed.
Q14. What documentation is required to prove eligibility for deductions under 80AC?
Proper investment proofs, payment receipts, and bank statements must be retained for verification by tax authorities.
Q15. Can taxpayers challenge the non-availability of deductions due to a late return?
No, once the deadline passes, taxpayers cannot appeal for relaxation under Section 80AC.
Related Posts
See AllIncome can be of different types, from salary to business profits, rent, and interest on investments. The concept of casual income is...
One of the most common tax-related questions salaried employees have is: Can I claim deductions under Section 80C along with House Rent...
Retirement planning is essential to safeguarding your future since it significantly influences the quality of life you will lead in your...
Comments