Section 139(4d) of Income Tax Act: Filing Requirements for Universities, Colleges, and Institutions

The Income Tax Act, 1961 lays down different provisions for different categories of taxpayers. While individuals, businesses, and companies have clear filing obligations, educational institutions and similar entities also fall within the scope of compliance. One such important provision is Section 139(4d) of Income Tax Act.

This section deals specifically with universities, colleges, and institutions. Even though many of these bodies may not operate with a profit motive, they are still required to file income tax returns. The intent is to bring transparency and accountability into the financial dealings of such entities, many of which enjoy tax exemptions under different sections of the Act.

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

Section 139(4d) of Income Tax Act pertains to universities, colleges, and other institutions that are not required to file income tax returns under any other provision of the Act.

In simple terms, this means that if a university or educational institution is otherwise exempt from filing an ITR, it must still do so under this specific section. The section mandates filing of returns for the previous year, ensuring that all transactions & income sources are reported to the Income Tax Department.

This provision was introduced to cover gaps where educational institutions claimed exemptions but were not disclosing their financial information.

Why Section 139(4d) Exists

The primary reasons for introducing Section 139(4d) are:

• Transparency: To make sure universities, colleges, & other institutions disclose their finances.
• Accountability: To track whether the institutions claiming exemptions are using funds for intended purposes.
• Compliance: To align such entities with the larger taxation framework, similar to other taxpayers.

Thus, Section 139(4d) plays an important role in regulating institutions that otherwise might escape reporting obligations.

Who Needs to File Under Section 139(4d)?

The scope of Section 139(4d) is clear. It applies to:

1. Universities established by law.
2. Colleges affiliated with universities or functioning independently.
3. Other institutions engaged in education, research, or similar fields.

Even if these institutions are exempt from paying tax under sections like 10(23C), they are not exempt from filing an Income Tax Return (ITR).

Also Read: Child Education Allowance Exemption Most Parents Forget!

Filing Requirements Under Section 139(4d)

The section specifies that such institutions must file an ITR for the previous year. The filing requirements are:

• Use of the prescribed form for educational institutions.
• Furnishing of audited accounts, if applicable.
• Disclosing sources of income, grants, donations, and expenditure.
• Ensuring filing is done before the due date specified by the Income Tax Act.

This ensures a complete financial picture of the institution is available for regulatory oversight.

Section 139(4d) vs. Other Return Filing Provisions

While Section 139(1) covers individuals & businesses, and Section 139(4) covers belated returns, Section 139(4d) is unique because it addresses institutions not covered elsewhere.

This section makes it clear that even if an entity is not otherwise liable, the duty to file returns still exists. It prevents misuse of exemptions & ensures that institutions remain accountable.

Importance for Universities and Colleges

For universities and colleges, filing under Section 139(4d) is not just about legal compliance. It has broader significance:

• It helps maintain their credibility as transparent institutions.
• It is often a prerequisite for receiving grants & government aid.
• It ensures smooth functioning in case of audits or inspections.
• Non-compliance can result in loss of exemptions and penalties.

Thus, compliance with Section 139(4d) is critical for the long-term functioning of educational institutions."

Penalties for Non-Compliance

If an institution fails to file its return under Section 139(4d):

1. Late fee under Section 234F may be levied (up to ₹5,000 or ₹10,000 depending on delay).
2. Loss of exemption under Section 10(23C) may occur.
3. Interest and penalties may be charged on undisclosed income.
4. Reputational harm to the institution in the eyes of stakeholders.

This makes compliance not only legally necessary but also practically unavoidable.

Also Read: Children Education Allowance: The Overlooked ₹100 Benefit That Saves More Than You Think

Example of Compliance

Suppose a private university receives funding from students, grants, and donations. Even though it enjoys exemption under Section 10(23C), it must file its ITR under Section 139(4d).

The return would disclose:

• Income received.
• Expenses incurred on education & research.
• Surplus, if any, carried forward.

This ensures regulators know the funds are being used for educational purposes.

Step-by-Step Process of Filing

1. Determine Applicability: Check if the institution qualifies under Section 139(4d).
2. Prepare Accounts: Ensure accounts are audited if required.
3. Choose Correct Form: Educational institutions generally file using Form ITR-7.
4. File Before Due Date: Usually 30th September for institutions requiring audit.
5. Maintain Records: Preserve financial statements for future audits.

Broader Impact on Education Sector

Section 139(4d) is not just a compliance requirement. It also strengthens:

• Trust in the education system: Students and parents trust institutions that follow laws."
• Financial governance: Encourages better accounting & fund utilization.
• Policy-making: Helps the government frame better policies based on reported data.

Thus, this section indirectly contributes to improving the quality and credibility of education in India.

FAQs on Section 139(4d)

Q1. Does Section 139(4d) apply even if the institution has nil income?
Yes. The filing requirement exists irrespective of profit or loss.

Q2. Which form is used under Section 139(4d)?
Form ITR-7 is generally applicable for universities, colleges, and institutions.

Q3. Can institutions claim exemptions & still file under Section 139(4d)?
Yes. They must disclose income and claim exemption in the return.

Q4. What if an institution fails to file?
It may face penalties, interest, and risk losing exemptions.

Also Read: Education Loan Tax Benefits under Section 80E of Income Tax Act

Conclusion

Section 139(4d) of Income Tax Act is a critical provision ensuring that universities, colleges, and institutions remain accountable by filing their income tax returns. It specifically applies to entities that may otherwise not be required to file but are covered to maintain transparency and compliance.

The provision ensures that taxpayers file their income tax returns, even if exempt, and must file an ITR for the previous year. By detailing specific filing requirements for such institutions, it strengthens trust in the education sector and enhances financial governance.

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