ITR-4 Return Filing in India
The ITR-4 Form, also known as the Sugam form, is specifically tailored for taxpayers who have chosen the presumptive income scheme under Section 44AD, Section 44ADA, and Section 44AE of the Income Tax Act. This form is mandatory for individuals and Hindu Undivided Families (HUFs) who meet the eligibility criteria for presumptive taxation.
For businesses with an annual turnover exceeding ₹2 Crores, the appropriate form to use is ITR-3. In certain cases, ITR-5 may also be applicable depending on the nature of the income or entity.
WHO CAN FILE ITR-4?
- Individuals: Those who have income from a business or profession and opt for the presumptive taxation scheme under Sections 44AD, 44ADA, or 44AE of the Income Tax Act.
- Hindu Undivided Families (HUFs): HUFs with income from business or profession, and those who choose to file under the presumptive taxation scheme.
- Firms (other than LLPs): Firms (excluding Limited Liability Partnerships) that meet the eligibility criteria and want to opt for presumptive taxation.
- Eligible Professionals: Professionals like doctors, lawyers, consultants, etc., who have income from their profession and prefer the presumptive taxation scheme under Section 44ADA.
- Small Business Owners: Individuals or businesses that have income from a profession or business, and their turnover or gross receipts fall within the prescribed limit for opting for presumptive taxation under Section 44AD.
Note: The taxpayer must not have income from other sources like capital gains, salary, or income from other partnerships. Also, the taxpayer must not have income exceeding the prescribed limits to qualify for presumptive taxation.
ITR-4 simplifies the tax filing process for small businesses, professionals, and taxpayers opting for the presumptive taxation scheme.
WHO CANNOT FILE ITR-4?
- Income from Salary: Taxpayers who have income from salary or pension cannot file ITR-4. They should file ITR-1 or ITR-2 depending on their specific situation.
- Income from Capital Gains: Individuals or entities earning income from capital gains (such as the sale of property or stocks) cannot use ITR-4. They should file ITR-2 instead.
- Income from Other Sources: Taxpayers with income from sources like interest, rent, or dividends that are not part of their business income cannot file ITR-4. They should opt for ITR-1 or ITR-2.
- LLPs (Limited Liability Partnerships): Limited Liability Partnerships (LLPs) are not eligible to file ITR-4. They need to file ITR-5 instead.
- Businesses with Income Above the Prescribed Limit: Taxpayers whose business or profession income exceeds the limit specified under the presumptive taxation schemes (like ₹2 crore for businesses under Section 44AD or ₹50 lakh for professionals under Section 44ADA) cannot file ITR-4. They should file ITR-3 instead.
- Taxpayers with Foreign Income: If you have income from foreign sources or have foreign assets, you cannot file ITR-4. In such cases, ITR-2 or ITR-3 is required.
- Taxpayers with Income from Multiple Businesses or Complex Situations: If you have multiple businesses with complex income sources or significant expenses, ITR-4 may not be suitable, and you might need to file ITR-3.
- Simplified Tax Filing: Since ITR-4 is based on the presumptive taxation scheme, taxpayers do not need to maintain detailed books of accounts, making tax filing easier.
- Lower Compliance Requirements: Unlike ITR-3, there is no need for a detailed profit & loss statement, balance sheet, or audit reports unless turnover exceeds the threshold limits.
- Reduced Tax Liability:
- Under Section 44AD, small businesses can declare 8% (or 6% for digital transactions) of turnover as income, possibly reducing tax liability.
- Under Section 44ADA, professionals can declare 50% of gross receipts as profit and pay tax on that, reducing tax burden.
- Carry Forward of Losses: Business losses can be carried forward for up to 8 years if the normal taxation method is chosen instead of the presumptive scheme.
- No Advance Tax Payment (in Most Cases): Since tax liability is calculated based on presumptive income, taxpayers generally do not need to pay advance tax in installments, simplifying compliance.
- Easier Loan & Credit Approval: Filing ITR-4 acts as proof of income and is useful while applying for loans, credit cards, and visas.
- Claiming Deductions: Taxpayers can still claim deductions under Sections 80C, 80D, 80G, and other eligible sections, reducing total taxable income.
- Avoiding Late Filing Penalties: Timely filing prevents penalties under Section 234F, which can go up to ₹10,000 for late filing.
- Eligibility for Government Benefits: A filed ITR-4 serves as income proof, which is required for government tenders, subsidies, and other financial benefits.
- Quick and Paperless Filing: ITR-4 is easy to file online through the Income Tax e-filing portal, making the process seamless and efficient.
Personal Information:
- PAN card
- Aadhar card (optional but recommended)
- Contact details (email, phone number)
Income Details:
- Profit and Loss statement (for business or profession)
- Balance Sheet (if applicable)
- Details of Presumptive Income (Section 44AD, 44AE, or 44ADA)
- Income from Other Sources (interest, dividends, etc.)
Tax Deducted at Source (TDS):
- TDS certificates (Form 16/16A, etc.)
- TDS details for income from other sources
Bank Statements:
- Bank statements/passbook for the entire financial year, showing income, interest, etc.
Business Details (if applicable):
- GST Returns (if registered under GST)
- Invoices/Receipts for sales and expenses
- Stock details (if required for the business)
Deductions:
- Proof of deductions (Section 80C, 80D, etc.)
- Investment proofs (PPF, NSC, LIC, etc.)
Advance Tax or Self-Assessment Tax:
- Challan details of advance tax/self-assessment tax paid
Other Documents:
- Details of capital gains (if applicable)
- Details of foreign assets (if applicable)
Prepare Documents
- Gather all necessary documents (PAN, Aadhar, income details, TDS certificates, business statements, etc.) as mentioned earlier.
Register/Login to the Income Tax Portal
- Go to the Income Tax e-filing portal.
- Register if you're a new user or Login if you already have an account.
Select the Correct ITR Form
- After logging in, go to the 'e-File' tab.
- Select 'Income Tax Return'.
- Choose Assessment Year (e.g., for FY 2024-25, choose AY 2025-26).
- Select ITR-4 under the "ITR Form" options.
Fill in the Required Details
- Personal Information: Enter your PAN, address, email, phone number, etc.
- Income Details: Enter your business/profession income, income from other sources, and presumptive income if applicable (under Section 44AD, 44ADA, or 44AE).
- Tax Paid Details: Fill in details of tax paid, including TDS, advance tax, and self-assessment tax.
- Deductions: Enter details of deductions under Section 80C, 80D, etc., for applicable investments like LIC, PPF, etc.
- Other Information: Provide any other required details like capital gains, foreign income, etc.
Validate Information
- Check and validate all the information you’ve entered. The portal will notify you of any discrepancies.
Compute Tax Liability
- The tax calculation will be automatically computed based on the data entered. You can see the tax payable or refund status.
Review and Submit
- Once you're satisfied with the details, review the form.
- Submit the form electronically.
E-Verification
- After submission, verify your return through one of the following methods:
- Aadhaar OTP (if linked)
- Net banking
- Digital Signature Certificate (DSC)
- Sending a signed ITR-V to the CPC (if no e-verification method is used).
Acknowledge the Filing
- After successful submission and verification, you will receive an acknowledgment (ITR-V) on your registered email.
- Download the ITR-V for your records.
Track Your Status
- You can track the status of your ITR filing on the Income Tax Portal, and you will also receive updates on processing and any refunds due.
Common Mistakes to Avoid While Filing ITR-4
- Incorrect Income Declaration: Ensure that your income details are accurate and within the prescribed limits.
- Omitting Deductions: Many taxpayers forget to claim eligible deductions under Section 80C, 80D, etc.
- Choosing the Wrong Form: If your income does not fall under presumptive taxation, filing ITR-4 can result in rejection.
- Not Verifying the Return: The return must be verified online or by sending a signed physical copy to the tax department.
- Late filing may attract penalties under Section 234F.
- The due date for filing ITR-4 is generally 31st July of the assessment year.
- Taxpayers must ensure they have linked their PAN with Aadhaar to avoid complications.
Due Date for Filing ITR-4:
- For individuals and HUFs: The due date to file ITR-4 is typically July 31st of the assessment year (for the financial year ending on March 31st).
For example:- For FY 2024-25, the due date for filing ITR-4 is July 31, 2025.
- Extension of Due Date: In certain cases, the Income Tax Department may extend the due date. This is usually announced based on specific circumstances or government orders.
Penalty for Late Filing of ITR-4
- If Filed After the Due Date (but Before December 31st):
- A penalty of ₹5,000 is levied if you file after the due date but before December 31st of the assessment year.
- However, if the total income is less than ₹5 lakh, the penalty is reduced to ₹1,000.
- If Filed After December 31st (but Before March 31st):
- A higher penalty of ₹10,000 applies if the return is filed after December 31st but before March 31st.
- If Filed After March 31st (Assessment Year):
- If you fail to file even by March 31st, the return will be considered a belated return and the penalties can be higher, including the possibility of additional interest charges on tax dues under Section 234A.
- In extreme cases, the Income Tax Department may also initiate legal proceedings for non-compliance.
- Interest on Late Payment (Section 234A, 234B, and 234C):
- Interest under Section 234A: If tax is not paid before the due date, interest of 1% per month is levied on the unpaid tax.
- Section 234B: If advance tax is not paid properly, you may face interest of 1% per month on the tax payable.
- Section 234C: If there’s any shortfall in advance tax, interest will be levied.
Important Notes:
- Filing on time ensures that you avoid penalties and interest, and also keeps you eligible for any refunds.
- For presumptive taxpayers (Section 44AD/44ADA), the penalties remain the same.
Understanding income tax slabs is key to effectively managing your tax obligations in India. These slabs are structured to align with the principle of progressive taxation, where higher income leads to higher tax rates. This ensures an equitable distribution of the tax burden across the population.
Categories of Income Taxpayers in India
India’s tax system divides taxpayers into three primary categories based on age:
- Individuals Under 60 Years: Regular working individuals and professionals.
- Senior Citizens (60–80 Years): Enjoy higher exemption limits due to lower earning
potential in retirement. - Super Senior Citizens (Above 80 Years): Further increased exemptions to reduce tax
burdens on the elderly.
Direct Tax System in India
The government introduced the new tax regime alongside the old one to provide taxpayers flexibility:
- Old Regime: Offers various deductions and exemptions.
- New Regime: Simplified but with fewer exemptions.
Old Regime:
Slabs (Rs.) |
Individuals (Age < 60 years) |
Resident Senior Citizens(60 to 80 years) |
Resident Super Senior Citizens(80 years and above) |
|---|---|---|---|
New Regime:
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Frequently Asked Questions in India
What is ITR-4?
ITR-4 is a tax return form designed for individuals and Hindu Undivided Families (HUFs) who have income from business or profession, and have opted for presumptive taxation under Section 44AD, 44ADA, or 44AE
Who should file ITR-4?
Individuals/HUFs with business/profession income opting for presumptive taxation and having income from other sources (like interest, dividends, etc.)
What is presumptive taxation?
Presumptive taxation under Section 44AD, 44ADA, or 44AE allows small businesses or professionals to report income at a presumed rate (e.g., 8% of turnover) without maintaining detailed books of accounts.
What income can be reported in ITR-4?
Business income (under presumptive taxation), income from other sources (interest, dividends), presumptive business income under Section 44AD, 44ADA, or 44AE.
Can I use ITR-4 if my business turnover exceeds ₹2 Crore?
No, if your business turnover exceeds ₹2 Crore, you must file ITR-3 instead of ITR-4
Can I claim deductions under Section 80C in ITR-4?
Yes, deductions under Section 80C, 80D, 80G, and others can be claimed in ITR-4
Can I claim HRA (House Rent Allowance) in ITR-4?
Yes, you can claim HRA as an exemption if you meet the required conditions and your income qualifies
Can I file ITR-4 without a business?
No, ITR-4 is for individuals or HUFs having business or profession income, even if it’s under presumptive taxation
What documents do I need to file ITR-4?
PAN card, Aadhar, business income details, TDS certificates, bank statements, investment proofs, and advance tax details
Can I report foreign income in ITR-4?
Yes, foreign income (like salary or business income from abroad) must be reported in ITR-4
Is it necessary to file ITR-4 if my income is below the taxable limit?
Yes, if you have any business/profession income, filing ITR-4 is mandatory, even if your income is below the taxable threshold
What happens if I don’t file ITR-4 on time?
Late filing may attract a penalty under Section 234F, along with interest under Sections 234A, 234B, and 234C for delayed payments
Can I file ITR-4 after the due date?
Yes, but the return will be considered belated, and late fees and interest may apply
Can I file ITR-4 online?
Yes, ITR-4 can be filed online through the Income Tax e-filing portal
How can I verify my ITR-4?
You can verify your return using Aadhaar OTP, Net Banking, or a Digital Signature. Alternatively, you can send a signed ITR-V to the CPC
What is the due date for filing ITR-4?
The due date is generally July 31st of the assessment year, unless extended by the government
What if I don’t have an Aadhaar for e-verification?
You can still verify by using Net Banking or a Digital Signature. Alternatively, you can mail the signed ITR-V to the CPC
Is it mandatory to maintain books of accounts if I file ITR-4?
For those opting for presumptive taxation (Section 44AD/44ADA), maintaining books is not mandatory unless the turnover exceeds the prescribed limits
Can I file ITR-4 if I am a non-resident?
Non-residents can file ITR-4 if they have income from business/profession in India, but they must also disclose foreign income/assets if applicable
Can I amend my ITR-4 after filing?
Yes, you can revise your return within one year from the end of the relevant assessment year if there are any mistakes or omissions
