ITR-4

ITR-4, or Income Tax Return Form 4, is used by individuals and Hindu Undivided Families (HUFs) with income from business or profession under presumptive taxation, requiring simpler reporting of income details.

Click here

What is ITR-4

ITR-4, known as the Sugam form, is designed for individuals and Hindu Undivided Families (HUFs) who operate a business or profession and opt for presumptive taxation under sections 44AD, 44ADA, or 44AE of the Income Tax Act. It simplifies tax filing by allowing taxpayers to report income based on a presumptive basis, calculated as a percentage of gross receipts. This form is suitable for small businesses and professionals with turnover up to ₹2 crore, providing a straightforward method to declare income, claim deductions, and fulfill tax obligations efficiently.

T (34)

Importance of ITR-4

Simplified Reporting:

ITR-4 simplifies tax reporting for small businesses and professionals under presumptive taxation, reducing the complexity of income calculation and compliance requirements.

Presumptive Taxation Benefits:

It allows taxpayers to pay taxes on a presumed income basis, calculated as a percentage of gross receipts, minimizing the need for detailed accounting and audits

Facilitates Business Growth:

By streamlining tax obligations, ITR-4 supports business growth and continuity, allowing entrepreneurs to focus on strategic initiatives rather than administrative tax matters.

Financial Transparency:

Filing ITR-4 enhances financial transparency by accurately disclosing business profits, enabling stakeholders and authorities to assess the taxpayer's financial position.

Who is Required to File ITR-4?

ITR-4 is to be filed by the individuals/HUF/Partnership firm whose total income of FY 2023-24 includes as below:

  • Income from business income calculated under Section 44AD or 44AE
  • Income from profession calculated under Section 44ADA
  • Income filed in  ITR1, the total income from all the sources together should not exceed Rs. 50 Lakhs.

Who is Not Required to File ITR-4 for AY 2024-25?

  • An individual whose total income exceeds rupees 50 lakhs.
  • An individual who is either a director in a company 
  • An individual who has invested in unlisted equity shares cannot use this form.
  • An individual, HUF or partnership firm who is required to maintain the books of accounts under the Income-tax Act, 1961.
  • Resident but not ordinarily residents (RNOR) and Non-residents
  • Individuals  who have earned income through the following means: Lottery, racehorses, legal gambling, etc.
  • Individual who has more than one house property
  • Taxable capital gains (short-term and long-term)
  • Agricultural income exceeding Rs 5,000
  • A resident that has assets (including financial interest in any entity) outside India or is a signing authority in any account located outside India
  • Individuals claiming relief of foreign tax paid or double taxation relief under section 90/90A/91
  • Gains from Virtual Digital Assets (Crypto currency)
  • Individuals for whom the TDS has been deducted under Section 194N

Major Changes in ITR-4 Form for AY 2024-25

  • Below changes are incorporated in the ITR-4 form of the AY 2024-25:

    • The default tax regime has been changed to the new tax regime following amendments introduced by the Finance Act 2023 to Section 115BAC. For individuals, HUFs, AOPs, BOIs, and AJPs, the new tax regime now applies by default. Taxpayers who prefer the old tax regime must explicitly choose to opt-out. An individual filing ITR 4 must submit Form 10-IEA to opt out of the new tax regime. 
    • ITR forms 4 has been updated to include a column for disclosing the amount eligible for deduction under Section 80CCH. Section 80CCH, was \introduced by the Finance Act 2023, allowing individuals enrolled in the Agnipath Scheme and subscribing to the Agniveer Corpus Fund on or after 01-11-2022 to claim a tax deduction for the total amount deposited in the Agniveer Corpus Fund. 
    • The Finance Act 2023 has increased the turnover threshold limit for opting for the presumptive taxation scheme under Section 44AD from Rs. 2 crores to Rs. 3 crores, provided that receipts in cash do not exceed 5% of the total turnover or gross receipts for the previous year. Additionally, Section 44ADA was amended to raise the threshold limit of gross receipts from Rs. 50 lakhs to Rs. 75 lakhs, given that receipts in cash do not exceed 5% of the total gross receipts for the previous year. To reflect these changes, ITR-4 has been updated to include a new column for disclosing “receipts in cash” under Schedule BP. The definition of cash includes cheques or bank drafts that are not account payee. 

What is the Structure of ITR-4?

  • ITR-4 is divided into parts as mentioned below: 

    PART A: General Information
    PART B: Gross total income from the five heads of income
    PART C: Deduction and total taxable income
    PART D: Tax computation and tax status
    Schedule BP: Details of income from Business-Section 44AD, 44ADA and 44EA
    Information regarding turnover/Gross receipts reported for GST: Furnish the GSTIN
    Financial Particulars of Business: Mention the asset and liabilities that you own
    Schedule IT, TCS and TDS 1: Statement of payment of advance tax and tax on self-assessment, tax collected at source and TDS from salary
    Schedule TDS2: Statement of tax deducted at source on income other than salary.
    Verification column: Declare that all your information furnished are true to your knowledge and add your signature.

Documents Required to File ITR-4

  • Aadhaar card
  • Bank statement
  • PAN card
  • Form 16
  • Form 16A
  • Form 26AS & AIS
  • Donation receipts
  • Housing Loan Interest Certificates
  • Insurance premium receipts
  • Rental agreement

How to File ITR-4

Registered users have access to the pre-filling and filing of ITR-4 services on the e-Filing portal. Individual taxpayers, HUFs, and firms (not including LLPs) can use this service to submit their ITR-4 tax returns online through the e-Filing portal. Before submitting the form online, you must complete all six sections of the ITR-4. There is a preview page where you can check the accuracy of the information you have entered. These are the sections:
  • Personal Information
  • Gross Total Income
  • Disclosures and Exempt Income
  • Total Deductions
  • Taxes Paid
  • Total Tax Liability
Step 1: Personal Information – You must double-check the information that is automatically filled in from your e-Filing profile in the ITR’s Personal Information section. Some of your personal information cannot be changed directly in the form. You can, however, visit your e-Filing profile to make the necessary modifications.
 
In your e-Filing profile, you can edit your contact information, filing type information, partner information (if applicable), bank information, and authorised representative.
Step 2: Gross Total Income – You must review the pre-filled information in the section on Gross Total Income to confirm the specifics of your sources of income, including your salary or pension, real estate holdings, business or profession, and other sources.
Step 3: Disclosures and Exempt Income – You must include information about your company’s financial details, gross receipts reported for GST (optional), and exempt income in the Disclosures and Exempt Income section.
Step 4: Total Deductions – You must add and confirm any deductions that you wish to claim under Chapter VI-A of the Income Tax Act in the section labelled ‘Total Deductions.’
Step 5: Taxes Paid – You must confirm the taxes you paid in the previous year in this section. Included in the tax information are TDS from Salary and Other Income as reported by the Payer, Advance Tax, Self-Assessment Tax, and TCS.
Step 6: Total Tax Liability – You can view your income computation, tax computation, total tax, interest, and cess. You must verify your tax liability information according to the fields you had earlier filled out in the computation of tax section.

FAQs on ITR-4

Individuals and HUFs with income from business or profession opting for presumptive taxation under sections 44AD, 44ADA, or 44AE.

It allows taxpayers to declare income at a prescribed rate based on turnover or gross receipts, simplifying income calculation.

Documents include income statements, balance sheets, bank statements, and receipts for expenses and deductions claimed.

Taxpayers under presumptive taxation generally do not require audit unless specific conditions like high turnover or losses are met.

Deductions such as depreciation, salary, interest, and other expenses related to business or profession can be claimed.

The due date for filing ITR-4 is typically July 31st of the assessment year for individuals and HUFs who are not required to undergo tax audit.