Section 139(4C) of the Income Tax Act: The Mandatory Return Filing Rule for Institutions You Can’t Ignore

The Income Tax Act, 1961 lays down different provisions for different taxpayers. While individuals, firms, and companies fall under general return filing provisions, there are certain specialized entities like universities, hospitals, research bodies, and funds that come under Section 139(4C) of Income Tax Act. This section ensures transparency and compliance by requiring such institutions to file tax returns, even if they claim exemptions under various sections. The key objective is to bring all kinds of income and institutions into the reporting framework, thereby reducing the chances of misuse.

What is Section 139(4C) of Income Tax Act?

Section 139(4C) mandates that certain institutions must furnish a return of such income of the previous year in the prescribed form, within the due dates mentioned under the Act. Unlike individual taxpayers, these institutions might not always have taxable income because of exemptions available to them, but they are still required to file returns for reporting purposes.

For instance, an approved scientific research association or a medical institution may claim full exemption on its income. Still, as per return filing section 139(4C), they must report their income & expenses formally to the Income Tax Department. This provision ensures accountability & allows tax authorities to verify that the exemptions are not being misused."

Institutions Required to File Return under Section 139(4C)

The Income Tax Act has notified several institutions that come under this section. Return under Section 139(4C) is required to be filed by:

• Universities and educational institutions not required to file under any other section.
• Hospitals, medical institutions, and similar organizations.
• Scientific research associations.
• News agencies.
• Funds, trusts, or institutions referred under specific exemption provisions like Section 10.
• Any other entity notified by the Central Board of Direct Taxes (CBDT).

The inclusion of these categories ensures that while they may be exempt from paying tax, they are not exempt from reporting income.

Due Date for Filing Return under Section 139(4C)

Just like other taxpayers, institutions covered under this section must file their returns by the prescribed due dates. Typically:

• If the institution is required to audit its accounts – the due date is 30th September of the assessment year.
• If audit is not required – the due date is 15th September 2025 of the assessment year.

Missing these dates attracts consequences, & the Income Tax Department can impose penalties or interest.

Also Read: Incomes Not Included in Total Income

Implications of Late Filing under Section 139(4C)

One of the key highlights is that Section 139(4C) deals with the implications of late filing of income tax returns. If an institution fails to file within the prescribed timeline, it may face:

• Penalty under Section 234F – ranging from ₹1,000 to ₹5,000 depending on delay.
• Loss of exemption – in some cases, delayed filing can lead to denial of exemption claims under other sections.
• Increased scrutiny – late or non-filing often attracts notices from the Income Tax Department.

Thus, even if the income is exempt, institutions cannot afford to ignore this compliance requirement.

Why Section 139(4C) is Important?

The government introduced this section to prevent misuse of exemptions & ensure that all income, even if exempt, is properly disclosed. For example, a charitable hospital may have donations, grants, and income from services. Without mandatory filing, there would be no official record. Section 139(4C) of Income Tax Act bridges this gap.

It provides transparency, reduces chances of fraud, and helps the government maintain accurate data on the flow of funds across charitable & educational organizations."

Furnish a Return of Such Income in Prescribed Form

The law specifically requires institutions to furnish a return of such income of the previous year in the prescribed form. Currently, most institutions file their returns using ITR-7 Form, which is designed for entities claiming exemptions under various provisions of the Act.

This form asks for details like:

• Nature of activities (education, medical relief, research, etc.)
• Income received and applied during the year
• Exemption sections claimed
• Details of trustees, office-bearers, or key persons
• Utilization of funds for charitable purposes

By collecting these details, the department ensures that institutions are genuinely working for the objectives they were established for.

Also Read: Are Religious & Charitable Trusts Exempt?

Section 139(4C) vs Other Return Filing Provisions

It’s important to understand how return filing section 139(4C) is different from other provisions:

• 139(1): Applies to individuals, firms, companies, etc., with taxable income.
• 139(4): Deals with belated returns by regular taxpayers.
• 139(4C): Specifically designed for institutions like universities, hospitals, & funds, even if their income is exempt.

This differentiation makes compliance more targeted and efficient.

Practical Example of Section 139(4C)

Suppose XYZ Medical Trust runs a charitable hospital. It receives ₹2 crores in donations & earns ₹50 lakhs from medical services. All of this income is exempt under Section 10 because the hospital is registered as a charitable trust.

However, Return under Section 139(4C) is required to be filed by the hospital. If XYZ Medical Trust does not file, it may face penalty and lose exemption in future years. This shows that exemption from tax is not exemption from filing.

Consequences of Non-Compliance

Non-compliance under this section can lead to:

• Penalties under Section 271F or 234F.
• Reopening of assessments by the Assessing Officer.
• Rejection of exemption claims under Sections 10 or 11.

Therefore, institutions must ensure timely compliance.

Key Takeaways

1. Section 139(4C) of Income Tax Act applies to specific institutions like universities, hospitals, and research bodies.
2. These entities must furnish a return of such income of the previous year in the prescribed form, usually ITR-7."
3. Return filing section 139(4C) ensures reporting even if income is exempt.
4. Delay or non-compliance leads to penalties & loss of benefits.
5. Institutions must plan return filing well in advance to avoid last-minute errors.

Also Read: Penalty for Late Filing You Can’t Ignore

Conclusion

Section 139(4C) plays a crucial role in strengthening India’s tax framework. By mandating return filing for specific institutions, it ensures transparency, accountability, and compliance. Exempt income does not mean exempt reporting, & institutions must adhere strictly to these provisions to avoid penalties.

👉 If you run a hospital, university, or charitable trust, compliance under Section 139(4C) is non-negotiable. And if you need professional help, Callmyca.com can simplify the entire process—from filing ITR-7 to claiming exemptions—ensuring peace of mind and 100% compliance.