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.
What is the Eligibility Criteria for Filing ITR-4?
A taxpayer can file ITR-4 if the following conditions are satisfied:
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
The following documents and information are required while filing ITR-4:
PAN (Permanent Account Number): Your PAN is your unique identification number for tax purposes
Aadhaar Number: Linking Aadhaar with PAN is mandatory for filing income tax returns
Bank Details: Bank name, branch, account number, and IFSC code for refund purposes
Form 16/16A: Required if salary income or TDS deducted income is received
TDS Certificates: Other TDS certificates received during the financial year
Details of Income: Turnover, gross receipts, and income from business or profession
Expenses Details: Rent, salaries, office expenses, and other deductible expenses
GST Details: GST-related information if registered under GST
Savings and Investments: Details of savings account interest, fixed deposits, mutual funds, stocks, insurance policies, etc.
Proof of Tax-Exempt Investments: Documents related to deductions under Section 80C, 80D, or other sections
Details of Property: Rental income, home loan interest certificates, and house property details
Other Documents: Any additional documents related to income from other sources or capital gains
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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
| Criteria | 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 |
|
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) |
