To expand income tax payer base, additional conditions to file ITR (income tax returns) even if one's income does not exceed basic exemption limit were introduced at the Union Budget 2019. It will soon include those that make high value transactions.

The budget document said, "Currently, a person other than a company or a firm is required to furnish the return of income 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."

If the proposal is passed by the Parliament, income tax return filing for the financial year 2020-21 will be required if a person:

• Deposits an amount exceeding Rs 1 crore in one or more current accounts maintained with a banking company or co-operative bank
• has incurred expenditure of an amount or aggregate of the amounts exceeding Rs 2 lakh for himself or any other person for travel to a foreign country
• has incurred expenditure of an amount or aggregate of the amounts exceeding ₹1 lakh towards consumption of electricity
• has claimed the benefits of tax exemption from long term capital gains under various provisions under section 54 of the Income Tax Act
• is claiming rollover benefit of exemption from capital gains tax on investment in specified assets like house, bonds etc, even if after claim of such rollover benefits, his total income is not more than the maximum amount not chargeable to tax.

Section 139 of the Income Tax Act is proposed to be amended to ensure these changes and will take effect from 1 April 2020. It will apply in relation to the assessment year 2020-21 and subsequent assessment years.

This will make anyone involved in high spending to file ITR even if their taxable income is below the threshold exemption limit of Rs 5 lakh.

Further, to discourage cash transactions, the Union Budget 2019 also proposed to insert a new section 194N in the Income Tax Act to provide for levy of TDS at the rate of 2 percent on cash payments in excess of Rs 1 crore in aggregate made during the year by a banking company or cooperative bank or post office to any person from an account maintained by the recipient.

However, "It is proposed to exempt payment made to certain recipients, such as the Government, banking company, cooperative society engaged in carrying on the business of banking, post office, banking correspondents and white label ATM operators, who are involved in the handling of substantial amounts of cash as a part of their business operation, from the application of this provision," the Budget documents said.

A Times of India report said that this decision to regulate cash transactions was taken by the government after withdrawals of over Rs 1 crore were made by more than 1.75 lakh entities in the financial year 2017-18.