ITR 4 Form (Sugam): What is ITR 4, Who Should File, Applicability and How to File For AY 2024-25
Updated: Nov 13
The ITR 4 (Sugam) form is a simplified tax return designed for small businesses and professionals under the presumptive taxation scheme, making tax filing straightforward. It is relevant for individuals, Hindu Undivided Families (HUFs), and partnership firms (excluding LLPs) with income under INR 3 crore and opting for Sections 44AD, 44ADA, and 44AE of the Income Tax Act.
This article explains the updated details of ITR 4 for AY 2024-25, eligibility, structure, and the filing process, incorporating recent updates from Budget 2023.
Table of Content
What is ITR 4 (Sugam)?
ITR 4 is a simplified return form applicable for taxpayers who opt for presumptive taxation under Sections 44AD, 44ADA, or 44AE. These sections allow small businesses and professionals to calculate their taxable income based on a predetermined percentage of gross receipts or turnover. The goal of ITR 4 is to reduce the burden of maintaining detailed financial records while ensuring compliance with the Income Tax Act. It is particularly beneficial for individuals and businesses with simple financial transactions that fall within the presumptive taxation limits.
Benefits of ITR 4
Simplifies income reporting under presumptive schemes.
Eliminates the need for maintaining detailed accounts and conducting audits.
Ensures a streamlined filing process for those with straightforward financials.
ITR 4 Applicability: Who is Eligible to File ITR 4?
Individuals, HUFs, and Firms (Excluding LLPs):The ITR 4 form applies to individuals, HUFs, and firms that are not Limited Liability Partnerships (LLPs). This form is specifically designed for small taxpayers who are not required to maintain elaborate records due to their modest income levels.
Business Income (Section 44AD):Individuals or entities with income from business can file ITR 4 if they choose the presumptive taxation scheme under Section 44AD. Under the revised limits in Budget 2023, this section is applicable to small businesses with a turnover or gross receipts up to INR 3 crore. Taxpayers can declare income at a presumptive rate of 8% (6% for digital transactions).
Professional Income (Section 44ADA):Professionals, such as doctors, architects, and lawyers, can file ITR 4 under the presumptive taxation scheme of Section 44ADA. Following the updated limits in Budget 2023, this applies to specified professions with gross receipts up to INR 75 lakh, allowing them to declare 50% of gross receipts as presumptive income.
Transport Business Income (Section 44AE):Taxpayers with income from goods transport can use presumptive taxation under Section 44AE. This is applicable for those owning up to 10 goods vehicles, with a presumptive income rate of INR 7,500 per month per vehicle.
Income Exclusions for ITR 4 Eligibility:Taxpayers with income from salary, one house property, or other sources (like interest) can file ITR 4. However, if income sources include capital gains, foreign assets, or foreign income, the taxpayer must use other ITR forms such as ITR-2 or ITR-3.
Non-Applicability to LLPs and High-Turnover Entities:Limited Liability Partnerships (LLPs) and entities with turnover exceeding INR 3 crore for businesses under Section 44AD or INR 75 lakh for professionals under Section 44ADA cannot use ITR 4 and must file using other ITR forms.
Who Cannot File ITR 4?
You cannot file ITR 4 if:
Your total income exceeds INR 50 lakh.
You have income from capital gains or speculative business income.
You own more than one house property.
You have foreign income or hold foreign assets.
You are involved in a company or LLP.
You earn from activities or professions that do not qualify under Sections 44AD, 44ADA, or 44AE.
Taxpayers with income from complex sources such as capital gains, businesses that are not covered under presumptive taxation, or foreign income should use other forms like ITR-3 or ITR-5.
Key Changes for AY 2024-25
For the Assessment Year (AY) 2024-25, the following changes are relevant for taxpayers filing ITR 4:
Presumptive Taxation Limits Revised: Section 44AD limit for small businesses has increased from INR 2 crore to INR 3 crore; Section 44ADA limit for professionals has increased from INR 50 lakh to INR 75 lakh.
New Tax Regime Compatibility: If opting for the new tax regime, income under Sections 44AD, 44ADA, or 44AE must be reported separately.
Agniveer Corpus Fund Contributions: New provisions are included for contributions to the Agniveer Corpus Fund by eligible taxpayers.
Structure of the ITR 4 Form
The ITR 4 form is structured to make tax filing easy and clear, covering all the essential financial details:
Part A – General Information:
Personal details: Name, PAN, address, email, phone number, etc.
Filing status: Whether the return is being filed for the current year or as a revised return.
Part B – Gross Total Income:
Income from business or profession under the presumptive taxation scheme.
Income from house property and other sources (like interest).
Part C – Tax Deductions (Chapter VI-A):
Deductions available under Sections 80C, 80D, 80G, and other parts of Chapter VI-A.
Calculating total deductions to reduce taxable income.
Tax Calculation:
Compute the tax payable based on total income.
Apply Section 87A rebate for taxpayers whose income is under INR 5 lakh.
Schedules:
Schedule BP: Income from business or profession under presumptive taxation.
Schedule TDS: Details of tax deducted at source (TDS) from income.
Verification:
Declaration by the taxpayer, confirming the accuracy of the information.
How to File ITR 4 Online
Filing ITR 4 online is a straightforward process. Follow these steps:
Login to the Income Tax e-filing portal using your PAN number and password.
Select the “File ITR” option and choose ITR 4 for AY 2024-25.
Enter personal details such as name, PAN, address, etc.
Report income details under presumptive taxation for business or profession. Include income from house property and other sources.
Claim deductions under Chapter VI-A, if opted for the old tax regime, and compute total tax payable.
Review all details and submit the return.
After submission, verify the return by generating an ITR V (Income Tax Return Verification) and submitting it within 30 days either electronically through Aadhaar OTP or physically by sending a signed ITRV to CPC Bangalore.
Verification and Submission
Once you have submitted your return, you need to verify it to complete the filing process. Verification must be completed within 30 days of filing, or else your return will be considered invalid.
You can verify your ITR using one of the following methods:
Aadhaar OTP
Net banking (through an Electronic Verification Code)
Sending a signed ITR-V form to the Income Tax Centralized Processing Centre (CPC) in Bangalore.
If not verified within 30 days, the return will be considered invalid, and you’ll need to refile.
Additional Deductions and Benefits
ITR 4 allows taxpayers to claim deductions under Chapter VI-A, including:
Section 80C: Investments in ELSS, PPF, life insurance premiums, etc.
Section 80D: Premiums paid for medical insurance.
Section 80G: Donations to charitable organizations.
For taxpayers whose income is below INR 5 lakh, a rebate under Section 87A provides relief of up to INR 12,500, reducing the tax payable to zero.
Key Points and Penalties for Late Filing
If you fail to file ITR 4 by the due date of July 31, you can still file a belated return by December 31. However, a late filing fee applies:
INR 1,000 if income is below INR 5 lakh.
INR 5,000 if income exceeds INR 5 lakh.
In addition, interest under Sections 234A, 234B, and 234C may be charged on the outstanding tax amount.
FAQ
Q1. Can I file ITR 4 if I have income from speculative business?
No, income from speculative business cannot be declared under presumptive taxation. You would need to file ITR-3 for such income.
Q2. Is a tax audit required for businesses filing ITR 4?
No tax audit is required if you file under presumptive taxation and your turnover is within the revised prescribed limits. However, if you declare income lower than the presumptive rates, an audit may be necessary.
Q3. Can I claim deductions under Section 80C in ITR 4?
Yes, deductions under Chapter VI-A, including 80C, 80D, and 80G, are available in ITR 4, subject to income and investment eligibility.
Q4. Can I declare income from multiple businesses in ITR 4?
Yes, provided all businesses fall under the presumptive taxation scheme (Sections 44AD, 44ADA, or 44AE) and the combined turnover does not exceed INR 3 crore for businesses or INR 75 lakh for professionals, as per Budget 2023 updates.
Q5. What happens if I miss the due date for filing ITR 4?
You can file a belated return until December 31, but a late fee and possible interest on unpaid taxes will apply.
Q6. Can I revise ITR 4 after submission?
Yes, you can revise the return if you find an error or omission before the end of the assessment year or before the assessment is completed, whichever is earlier.
Q7. Can I carry forward losses under ITR 4?
No, losses cannot be carried forward under presumptive taxation. If you wish to carry forward losses, you must file ITR-3.
Q8. Is GST applicable under presumptive taxation?
Yes, if your business exceeds the GST threshold, you must still comply with GST regulations, even if filing ITR 4.
Q9. How do I compute income for transport businesses under Section 44AE?
Income from transport businesses is calculated as INR 7,500 per month for each goods vehicle, regardless of actual income or expenses.
Q10. Can I declare lower income under presumptive taxation?
Yes, but declaring income lower than the presumptive rate would require maintaining regular books of accounts and conducting a tax audit.
Q11. Is ITR 4 applicable for rental income?
Yes, ITR 4 can be used if you have rental income from a single house property, provided your total income is within the specified limit of INR 3 crore for businesses and INR 75 lakh for professionals.
Q1 12 Can I claim depreciation on assets in ITR 4?
No, depreciation is not separately claimed in ITR 4 as presumptive income includes all expenses, including depreciation.
Q13. What is the turnover limit for declaring presumptive income under Section 44AE?
There is no turnover limit under Section 44AE, but it applies only to businesses owning goods carriages.
Q14. Is agricultural income taxable under ITR 4?
Agricultural income up to INR 5,000 can be declared in ITR 4. If agricultural income exceeds INR 5,000, you will need to file another form.
Q15. Can I use ITR 4 for income from consultancy services?
Yes, professionals offering consultancy services with receipts up to INR 75 lakh can file under Section 44ADA using ITR 4.
Q16. What is presumptive taxation?
Presumptive taxation is a scheme that allows small businesses and professionals to declare a fixed percentage of income under Sections 44AD, 44ADA, or 44AE, simplifying tax calculations.
Q17. Can freelancers file ITR 4?
Yes, freelancers earning less than INR 75 lakh annually can file ITR 4 under Section 44ADA.
Q18. Can I claim business expenses under presumptive taxation?
No, presumptive taxation assumes all expenses are accounted for in the fixed income percentage.
Q19. What happens if my turnover exceeds INR 3 crore?
You will need to switch to ITR-3 or ITR-5 for filing, depending on your business type.
Q20. Can I switch back to presumptive taxation if I opt out?
No, once you opt out of presumptive taxation, you must remain out of the scheme for the next five years.
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