ITR-3 vs ITR-4: Which One is Right for You?

Filing your income tax return isn’t just about uploading numbers. The form you choose determines how smooth (or stressful) your filing experience is. Especially for self-employed individuals, professionals, and small business owners—choosing between ITR-3 and ITR-4 can make all the difference.

Let’s simplify this comparison so you can file confidently and avoid unnecessary audits, penalties, or delays in refunds.

ITR-3 is meant for individuals and Hindu Undivided Families (HUFs) who earn income from business or profession and do not opt for the presumptive taxation scheme.

This includes income from:

• Proprietorship businesses
• Freelance or consultancy work
• Multiple house properties
• Capital gains and dividends
• Salary or pension (in addition to professional income)

If your business requires maintaining books of accounts or undergoing audits, ITR-3 is your go-to form.

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ITR-4 is a simplified return form for resident individuals, HUFs, and partnership firms (excluding LLPs) who choose the presumptive taxation scheme under Sections 44AD, 44ADA, or 44AE.

Eligibility:

• Annual income up to Rs. 50 lakhs
• Income from only one house property
• Business or professional income under presumptive basis
• Capital gains not reportable (Not allowed even under Section 112A)
• Interest and dividend income

If you prefer ease over detailed compliance, ITR-4 is built for you.

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Who should file ITR-3?

Choose ITR-3 if you:

• Earn from a proprietary business or profession
• Have income from capital gains, dividends, or multiple house properties
• Maintain books of accounts
• Are subject to audit under Section 44AB
• Are a partner in a firm (excluding LLPs) whose accounts are subject to audit

You must use this form if you don’t qualify for presumptive taxation.

Who should not file ITR-3?

Avoid ITR-3 if you:

• Do not have business/professional income
• Are salaried with no additional income from a business
• Opt for presumptive taxation (use ITR-4 instead)
• Are an LLP, company, or trust—these have separate forms

Who should file ITR-4?

Use ITR-4 if you:

• Are a resident individual or HUF with income up to Rs. 50 lakhs
• Run a small business or practice a profession (like doctors, CA, architects) under presumptive tax
• Own only one house property
• Have additional income from interest or dividends
• Do not hold foreign assets or earn foreign income
• Do not hold unlisted shares

Note: As per the latest Income Tax portal update, you cannot file ITR-4 if you have any capital gains income.

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Who should not File ITR-4?

You’re ineligible for ITR-4 if you:

• Are an NRI or have foreign income/assets
• Hold unlisted equity shares
• Earn income from more than one house property
• Have income exceeding Rs. 50 lakh
• Are a director in a company
• Have capital gains (including from shares or mutual funds)
• Have winnings from lotteries or racehorses

Filing Deadlines: ITR-3 vs ITR-4

Filing after the deadline? You may face late fees, lose carry-forward benefits, or even trigger scrutiny.

Filing tax late? Don’t delay saving too.
You can open a Bajaj Finance FD online in minutes—even after the tax season is over. Start now!

Also Read: Benefits of ITR Filing

Choosing between ITR-3 and ITR-4 depends on how you earn, how much you earn, and whether you want to simplify filing or go in-depth. ITR-3 offers wider coverage but demands more documentation. ITR-4 simplifies things, but only for those who meet its criteria.

Evaluate your income streams, reporting complexity, and compliance capacity—and choose the return form that works best for you.

And while you're planning your taxes, make sure you're investing wisely. Pair your market-linked or tax-saving investments with low-risk FDs from Bajaj Finance to create a balanced financial plan.

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