Filing Income Tax return (ITR) is a crucial annual obligation for taxpayers in India. The ITR-4 form, specifically designed for individuals and Hindu Undivided Families (HUFs) having income from a proprietary business or profession, requires careful attention to detail and adherence to specific guidelines. This comprehensive guide will walk you through the process of filling out and filing the ITR-4 form, ensuring compliance with tax regulations and maximizing deductions where applicable.
Latest update on ITR 4 form
- The Income Tax Department has published the latest version of the schema, Excel utility, and validation rules for ITR-4 for Assessment Year 2025-26. Taxpayers can now download and use it for return filing.
- The Central Board of Direct Taxes (CBDT) has rolled out this update for individual residents, Hindu Undivided Families (HUFs), and firms (excluding LLPs).
- This form applies if the total income is up to Rs. 50 lakh.
- It covers income from business or profession under Sections 44AD, 44ADA, and 44AE.
- Taxpayers with agricultural income up to Rs. 5,000 are eligible to use this form.
- This update aims to simplify and streamline the e-filing process for eligible small taxpayers.
Overview of ITR-4
The Income Tax Return ITR-4, also known as Sugam, is designed for individuals, Hindu Undivided Families (HUFs), and firms (excluding LLPs) who choose the presumptive income scheme under Sections 44AD, 44ADA, and 44AE of the Income Tax Act. This scheme simplifies the tax filing process by allowing eligible taxpayers to declare income at a fixed rate, significantly reducing the need for maintaining detailed books of accounts. The presumptive income scheme is particularly beneficial for small businesses and professionals, as it streamlines compliance and lowers administrative burdens. By opting for ITR-4, taxpayers can focus more on their business activities rather than the complexities of tax documentation. This form is an efficient tool for those looking to ease their tax filing process while ensuring compliance with the Income Tax Act.
What is the ITR 4 Sugam form?
ITR-4, also known as the Sugam Form, is used by those who declare income using the presumptive taxation scheme under Sections 44AD, 44ADA, and 44AE of the Income Tax Act. It’s meant for small businesses, certain professionals, and those in the transport business.
Taxpayers can use this form if their annual turnover does not exceed Rs. 2 crore. However, as per the latest provisions, this limit is now extended to Rs. 3 crore under Section 44AD and Rs. 75 lakh under Section 44ADA—provided that no more than 5% of total receipts are in cash.
If the turnover goes beyond these revised limits, the taxpayer must file a different ITR form. ITR-4 is designed to help simplify tax filing for small businesses and professionals by allowing them to pay tax at a fixed rate without maintaining detailed books of accounts or undergoing audits.
Who can file the ITR 4 Sugam form?
- Individuals, HUFs, or partnership firms (except LLPs) who are residents of India.
- Total annual income must not exceed Rs. 50 lakh.
- Taxpayers earning through a business or profession under Section 44AD, 44ADA, or 44AE.
- Those with income from savings like interest, family pension, etc.
- Agricultural income, if any, should not exceed Rs. 5,000.
- The taxpayer should own only one house property.
- Can include long-term capital gains under Section 112A only if the gain does not exceed Rs. 1.25 lakh and no losses are to be carried forward.
- Freelancers offering services under eligible professions may also opt for ITR-4 if their total receipts are within Rs. 50 lakh.
Who is not eligible to file ITR-4?
- Individuals with total income exceeding Rs. 50 lakh.
- Those holding directorship in any company.
- Individuals who hold unlisted equity shares.
- Taxpayers (individuals, HUFs, or firms) required to maintain books of accounts under tax laws.
- Resident but not ordinarily resident (RNOR) and non-resident individuals.
- Individuals with income from lotteries, horse races, or gambling.
- Those owning more than one residential property.
- Taxpayers with capital gains beyond the limits mentioned.
- Agricultural income exceeding Rs. 5,000.
- Anyone having assets or signing authority in a foreign country.
- Those claiming tax relief under sections 90, 90A, or 91.
- Income from cryptocurrencies or other virtual digital assets.
- Individuals subject to TDS under Section 194N.
Types of incomes covered
ITR-4 covers various types of incomes, including:
- Income from business or profession under the presumptive income scheme.
- Salary or pension.
- Income from one house property (excluding cases where loss is brought forward from previous years).
- Income from other sources (excluding lottery winnings and racehorses).
Step-by-step guide on how to file ITR-4
Step 1: Collect the necessary documents
Gather all relevant documents, including your PAN card, Aadhaar card, bank statements, TDS certificates, and proof of investments. Ensure you have the details of any home loan, especially if you are claiming deductions for the same.
Step 2: Download the ITR-4 form
Visit the official Income Tax Department website and download the ITR-4 form. You can also use the online e-filing portal for a more streamlined process.
Step 3: Fill in personal information
Enter your personal information, such as name, address, PAN, Aadhaar number, and contact details, in the ITR-4 form.
Step 4: Provide income details
Input your income details from various sources:
- For business income under the presumptive scheme, declare the gross turnover and calculate the presumptive income.
- For salary income, provide the salary details as per Form 16.
- For house property income, mention the rental income and any deductions.
- For other sources of income, specify the interest earned and other relevant details.
Step 5: Claim deductions
Claim deductions under various sections such as:
- Section 80C for investments in PPF, NSC, life insurance, etc.
- Section 80D for medical insurance premiums.
- Section 24(b) for interest on home loans. Ensure you understand how to claim HRA while filing ITR, as it can significantly reduce your taxable income
While claiming deductions for home loan interest under Section 24(b), many taxpayers realise they could benefit from better loan terms or additional financing for property investments. If you are considering a home purchase or looking to refinance your existing home loan, Bajaj Finserv offers competitive rates starting from 7.49%* p.a with flexible repayment options up to 32 years. Check your eligibility today. You may already be eligible, find out by entering your mobile number and OTP.
Step 6: Compute tax liability
Calculate your total income and apply the appropriate tax rates to compute your tax liability. Ensure you account for any advance tax paid or TDS deducted.
Step 7: Verify and submit
Review all the details entered in the ITR-4 form to ensure accuracy. Submit the form online and verify it using Aadhaar OTP, EVC (Electronic Verification Code), or by sending a signed copy to the Centralised Processing Centre (CPC) of the Income Tax Department.
Filing and submission
The process of filing and submission of ITR-4 can be done electronically through the Income Tax Department's e-filing portal. Once the form is submitted, it needs to be verified. You can verify your return electronically through Aadhaar OTP, net banking, or by sending a physical copy of the ITR-V (Verification) to the CPC within 120 days of filing the return. Proper verification ensures your return is processed promptly.
What is presumptive taxation?
Presumptive taxation is a simplified method for small businesses and professionals to calculate their taxable income. Normally, businesses must maintain detailed accounts and compute their profits as per standard rules. But under the presumptive scheme, income is estimated as a fixed percentage of the total turnover, allowing taxpayers to skip maintaining books or undergoing audits.
This scheme is especially beneficial for small businesses and independent professionals, helping them reduce compliance burdens.
Here’s how different presumptive sections work:
Section |
Who can use it? |
Profit calculation method |
Section 44AD |
Small businesses with turnover up to Rs. 2 crore (or Rs. 3 crore for mostly digital payments) |
8% of turnover (6% for digital receipts) |
Section 44ADA |
Professionals with receipts up to Rs. 50 lakh (or Rs. 75 lakh if cash receipts are under 5%) |
50% of gross receipts |
Section 44AE |
Those engaged in goods carriage business |
Based on number and type of vehicles owned |
Note: Since profits are presumed, no further deductions for expenses like rent, electricity, etc. can be claimed under this scheme.
For small business owners and professionals using the presumptive taxation scheme, managing cash flow effectively often involves strategic financial planning, including property investments that can provide both personal satisfaction and tax benefits. Bajaj Finserv can help you secure your dream property with loan amounts up to Rs. 15 Crore* and EMIs starting at just Rs. 687/lakh*. Check your loan offers with Bajaj Finserv today. You may already be eligible, find out by entering your mobile number and OTP.
What is the structure of ITR-4 form?
- Part A – Basic personal and contact information
- Part B – Gross total income details from all heads
- Part C – Deductions claimed and net taxable income
- Part D – Computation of tax and refund/payment status
- Schedule BP – Business income under Sections 44AD, 44ADA, or 44AE
- GST Information – Declare turnover and GSTIN if applicable
- Financial Details – Report assets and liabilities of the business
- Schedule IT, TDS 1, and TCS – Advance tax, TDS on salary, and tax collected at source
- Schedule TDS 2 – Tax deducted on income other than salary
- Verification Section – Self-declaration and signature
Other topics you might find interesting |
||
Major changes in ITR-4 form from AY 2024-25
1. Reporting of capital gains under section 112A
Taxpayers can now report long-term capital gains (LTCG) from listed shares or equity mutual funds under Section 112A in ITR-1—provided:
- The total LTCG does not exceed Rs. 1.25 lakh, and
- There are no carry-forward losses under capital gains.
This shift allows eligible taxpayers to file the simpler ITR-1 form instead of ITR-2.
2. Tax regime selection disclosure (section 115BAC)
From AY 2025-26, the new tax regime becomes the default option. However, taxpayers can choose the old regime by indicating their preference in the ITR form.
- If the old regime was selected in the previous year (AY 2024-25), that choice must be confirmed or changed.
- New opt-outs for AY 2025-26 must include Form 10-IEA acknowledgement number, submitted before the due date.
3. New disclosure requirements
- Deductions under Sections 80C to 80U must now be selected from a dropdown and detailed with specific clauses on the e-filing portal.
- Relief under Section 89A for retirement income from foreign accounts includes new reporting fields.
4. Aadhaar details update
The 28-digit Aadhaar Enrolment ID will no longer be accepted. Only the 12-digit Aadhaar number will be valid for filing.
5. TDS schedule updated
A new column has been added in the TDS section to specify the applicable section under which tax was deducted.
These updates aim to improve clarity, reduce errors, and provide a more structured filing experience for taxpayers.
As tax regulations evolve to become more taxpayer-friendly, it is also an opportune time to consider major financial decisions like homeownership, which offers significant long-term tax benefits under sections like 80C and 24(b). With Bajaj Finserv, you can take advantage of attractive interest rates starting from 7.49%* p.a and convenient processing with approval in just 48 hours*. Check your eligibility for a home loan from Bajaj Finserv right away. You may already be eligible, find out by entering your mobile number and OTP.
Explore Bajaj Housing Finance Home Loan
Having mastered the complexities of managing taxes and filing ITR-4, it's time to focus on your dream of homeownership. With a Bajaj Housing Finance Home Loan, achieving this goal is remarkably straightforward. Bajaj Housing Finance provides convenient home loans that simplify the process, making homeownership both attainable and rewarding.
Here are a few reasons why you should apply for a home loan from Bajaj Housing Finance:
- Extended repayment tenures: Benefit from repayment periods of up to 32 years, enabling you to select a plan aligned with your financial circumstances for more manageable repayments.
- Competitive interest rates: Initiate your journey to homeownership with attractive interest rates starting at just 7.49%* p.a, accompanied by EMIs as low as Rs. 687/lakh*, making homeownership more affordable.
- Tailored loan options: Customise your home loan to suit your specific requirements with flexible loan amounts and repayment terms, granting you greater control over the home-buying process.
- Top-up loan facility: Enhance your financial flexibility with a top-up loan, providing additional funds of up to Rs. 1 crore* or higher at competitive interest rates and minimal documentation, simplifying balance transfer management.
With Bajaj Housing Finance, transforming your dream of owning a home into reality is now simpler than ever.
Other topics you might find interesting |
|||
Conclusion
Filing the ITR-4 form is an efficient and straightforward process for small businesses, freelancers, and professionals who meet the eligibility under the presumptive taxation scheme. With updated thresholds, new disclosures, and simplified structures, the government has aimed to reduce paperwork and compliance hassle. Understanding who can file, what is required, and how the scheme benefits the taxpayer is crucial for smooth return filing. Always ensure accuracy in reporting and be mindful of deadlines. For added ease, use the updated ITR utilities and e-filing portal features to stay compliant and avoid unnecessary notices or delays.
Having successfully navigated your tax obligations, you are now better positioned to make informed decisions about major investments like purchasing a home, which can provide substantial tax benefits in future ITR filings. Bajaj Finserv offers seamless home financing solutions with competitive rates, flexible tenure options up to 32 years, and quick approval processes. Check your eligibility for a home loan from Bajaj Finserv today. You may already be eligible, find out by entering your mobile number and OTP.
Popular calculators for your financial calculations |
||
