The ITR-4 (Sugam) is an Income Tax Return form in India designed for individuals and Hindu Undivided Families (HUFs) earning income from a proprietary business or profession. It serves as the designated Income Tax Return form for taxpayers who choose the presumptive income scheme outlined in Section 44D, Section 44DA, and Section 44AE of the Income Tax Act.
- Section 44AD: Computation of income and tax payable in case of taxpayers engaged in any business other than plying, hiring and leasing referred to in section 44AE of the Act.
- Section 44ADA: Computation of income and tax payable in case of taxpayers engaged in the specified profession as referred in section 44AA.
- Section 44AE: Computation of income and tax payable in case of taxpayers engaged in the business of plying, leasing or hiring good carriages, who own up to ten good carriages at any time during the previous year.
Who can file ITR-4?
Eligibility for filing ITR-4 extends to Resident Individuals, Hindu Undivided Families (HUFs), and firms (excluding LLPs) meeting the following criteria:
- Total income not exceeding ₹50 lahks in the relevant Financial Year.
Income derived from Business and Profession, computed under presumptive taxation rules as per sections 44AD, 44ADA, or 44AE of the Income Tax Act, 1961.
- Earnings from Salary or Pension, House Property, Agricultural Income (up to ₹5,000/-).
- Additional sources, excluding winnings from Lottery and Income from Race Horses, such as:
- Interest from savings accounts or fixed deposits.
- Interest from savings accounts or fixed deposits.
- Interest from Income Tax Refund.
- Interest received on enhanced compensation.
- Any other Interest Income (e.g., Interest Income from unsecured loans)
Who is not eligible to file ITR-4:
- Directors of a company.
- Individuals with income exceeding ₹50 lakh from salary, house property, or other sources.
- Individuals holding unlisted equity shares in the previous year.
- Assesses possessing assets, including financial interests, in an entity outside India.
- Individuals with signing authority in accounts situated outside the country.
- Persons earning income from sources outside India.
- Individuals with agricultural income exceeding ₹5,000/-.
Individuals who cannot utilize ITR Form 4 for the previous year are those with:
- Profits and gains from business and professions that cannot be computed under Section 44AD, 44ADA, or 44AE of the Income-tax Act. Examples include income from agency business, speculative business, commission, or brokerage income.
- Income from more than one house property.
- Capital gains.
- Income from winning a lottery.
- Involvement in the activity of owning and maintaining racehorses.
- Income is subject to taxation at special rates under Section 115BBDA or Section 115BBE.
- Income that needs to be apportioned according to the provisions of Section 5A.
- Agricultural Income exceeding ₹5,000/-.
Whether an individual can opt for a new tax regime at the time of filing ITR-4?
Yes, an individual can file ITR-4 while opting for a new tax regime. However, if a taxpayer wishes to opt-in to the new tax regime, they must communicate the same to the income tax department by filing Form 10IE. The taxpayer can submit Form 10IE on or before the due date for filing the Income Tax Return, which is the 31st of July for non-audit cases and the 31st of October for audit cases.
What are the documents required for filing ITR-4?
An assessee needs to maintain below mentioned documents:
- Form 16 for a person having income from salary.
- Income Tax Credentials for accessing Form 26AS & AIS.
- Form 16A for a person having income from business or profession.
- Bank Statements for ascertaining income received during the previous year.
- Housing Loan Interest Certificates for claiming deductions.
- Receipts for Donation Made for claiming deductions.
- Rent Agreement for taking benefit of HRA.
- Rent Receipts as proof of rental payments.
- Investment premium payment receipts – LIC, ULIP etc.
Can an individual with business gross receipts exceeding ₹2 Crores choose presumptive taxation under Section 44AD?
- AY 2023-24 – Section 44AD for Business: Not applicable if gross receipts exceed ₹2 Crores.
- AY 2024-25 – Section 44AD for Business: Option available if gross receipts up to ₹3 Crores.
- AY 2023-24 – Section 44ADA for Profession: Applicable for professions if gross receipts not exceeding ₹50 Lacs.
- AY 2024-25 – Section 44ADA for Profession: Applicable for professions if gross receipts not exceeding ₹75 Lacs.
Whether any person opting for presumptive taxation is liable to pay advance tax?
Yes, a person opting for presumptive taxation, would be liable to pay advance tax.
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