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ITR – 4 Return

ITR – 4 Return

ITR - 04

ITR 4, known as Sugam, can be used by any individual, HUF or a partnership firm which wishes is eligible to offer its income on presumptive basis. Under presumptive scheme of taxation a taxpayer is presumed to have earned a minimum income expressed as percentage of gross receipts of business or profession or as a fixed amount based on number of commercial vehicles owned. Please note that though a partnership can use ITR 4 if it is eligible for presumptive taxation but an LLP is not eligible to use ITR 4. This form can only be used by a person who is resident for income tax purposes. So a non resident cannot use it even if his income is below 50 lakhs and has income taxable on presumptive basis. In case you are director in any company or own shares in any unlisted companies you cannot use ITR 4.

Likewise, if you have any income under the head “Capital gains" or “Income from other sources" other than interest and family pension or have income from source outside India, you cannot use ITR 4 and you have to use ITR 3 where you have option to offer your income on presumptive basis.

In case your actual business or professional income is lower than that was is presumed by law, you cannot use ITR 4 and you have to use ITR 3 and in which case you have to get your accounts audited and get the report it submitted to the income tax department before submission of the ITR.

Eligibility for filing ITR4 form

Tax payers with an income that comes from the following sources are required to file ITR 4 Form:

  • Income from a business in accordance with Section 44AD/Section 44AE.
  • Professional Income in accordance with Section 44ADA.
  • Salary or Pension Income up to INR 50 lakh.
  • An individual with an income from other sources up to INR 50 lakh (this excludes the winning amounts from horse racing or lotteries or any other legal gamble.)
  • An individual earning an Income from One house property up to INR 50 lakh (this excludes the losses carried forward)
  • Freelancers whose income has not exceeded the INR 50 Lakhs mark also should file the ITR4.
Budget 2023 Update
Category Previous limits Revised limits
Sec 44AD: For small businesses Rs. 2 crore Rs. 3 crore
Sec 44ADA: For professionals like doctors, lawyers, engineers, etc. Rs. 50 lakh Rs. 75 lakh
Presumptive Taxation Scheme
Small businessmen Professionals Transporters
Applicable Income Tax Section Section 44AD Section44ADA Section44AE
Eligible business The taxpayer may be in any wholesaling, retailing, trading, civil construction, or any other business
  • ⦁ Legal services
  • ⦁ Technical consultancy
  • ⦁ Interior decoration
  • ⦁ Engineering and architectural
  • ⦁ Medical
 Entities of business involved in hiring, plying, or leasing of goods carriages
Maximum turnover limit Up to Rs 2 crore in a year Annual receipts of not more than Rs.50 lakh. Owning not more than 10 goods vehicles during the year.
Computation 8% of total receipts and electronic receipts shall be charged at 6% of gross turnover during the year. 50% of gross receipts. A higher income of more than 50% can be declared 7,500 per vehicle per month or part thereof based on the duration for which the vehicle was owned by the person during the year
Deductions allowed No further deductions and exemptions are allowed No further deductions and exemptions are allowed No further deductions and exemptions are allowed (A partnership can claim deduction and interest to the partners from the computed income at RS. 7500 vehicle per month)
What is the eligibility criteria for filing ITR-4?
  • The taxpayer should be an individual, HUF, or partnership firm.
  • The taxpayer should be a resident of India.
  • The taxpayer should have income from business or profession.
  • The taxpayer should have opted for the presumptive taxation scheme under Section 44AD, Section 44ADA, or Section 44AE.
  • The total income of the taxpayer should not exceed Rs. 50 lakh.
  • The taxpayer should not have income from more than one house property.
  • The taxpayer should not have income from capital gains except from the sale of assets mentioned in Section 44AD(1).
  • The taxpayer should not have any income from lottery, racehorses, legal gambling, or any other speculative business.
ITR 4 DOCUMENT REQUIREMENT
  • PAN (Permanent Account Number): Your PAN is your unique identification number for tax purposes. You will need this for filing your tax return.
  • Aadhaar Number: Linking your Aadhaar number to your PAN is mandatory for filing income tax returns.
  • Bank Details: You'll need the details of the bank account where you want to receive your tax refund, if applicable. This includes the bank name, branch, account number, and IFSC code.
  • Form 16/16A: If you have received salary or income from fixed deposits, you will need Form 16 from your employer or Form 16A from the entity that deducted TDS (Tax Deducted at Source) on your income.
  • TDS Certificates: Any other TDS certificates received during the financial year for income other than salary, like TDS on interest income.
  • Details of Income: For business income, you'll need details of your turnover, gross receipts, and any other income earned through business or profession.
  • Expenses Details: Details of deductible expenses related to your business or profession. This can include rent, salaries, office expenses, etc.
  • GST Details: If you are registered under GST (Goods and Services Tax), you may need to provide GST-related information.
  • Savings and Investments: Details of savings account interest, any other income like interest from fixed deposits, savings account balances, and details of investments like mutual funds, stocks, insurance policies, etc.
  • Proof of Tax-Exempt Investments: If you have investments under Section 80C, 80D, or any other section for which you are claiming exemptions, you need documents related to those investments. This can include receipts for life insurance premiums, ELSS (Equity Linked Savings Scheme) certificates, health insurance premium receipts, etc.
  • Details of Property: If you own property, details of income from house property, including rental income, and home loan interest certificates.
  • Other Documents: Any other documents related to your income, such as income from other sources or capital gains.