For individuals and HUFs having income from profits and gains of business or professionThe ITR-4 Form is the Income Tax Return form for those taxpayers, who have opted for the presumptive income scheme as per Section 44AD, Section 44ADA and Section 44AE of the Income Tax Act.
- Gross receipts or turnover of the business for which you want to avail this scheme should be less than Rs 2 crores.
- You must be a Resident in India.
- This scheme is allowed to an individual, a HUF or a partnership firm. It is not available to a Company or LLP.
- The scheme cannot be adopted by the taxpayer, if he has claimed deduction under section 10, 10A, 10B, Section 10BA, or Section 80HH to 80RRB in the relevant year.
Other Points to be considered
ITR 4 is to be filed by the individuals/HUF/ partnership firm whose total income includes:
- Business income under section 44AD or 44AE
- Income from profession calculated under section 44ADA
- Salary/pension having income up to Rs 50 lakh
- Income from One House Property having income up to Rs 50 lakh (excluding the brought forward loss or loss to be carried forward cases under this head);
- Income from Other Sources having income up to Rs 50 lakh (Excluding winning from lottery and income from horse races).
Features of this scheme:-
- If assessee Net Income is estimated to be 8% of the gross receipts of your business. But From FY 2016-17 onwards, if gross receipts are received through a digital mode of payment, then Net Income is estimated at 6% of such gross receipts and for cash receipts. However, the rate is the same at 8% of such cash receipts.
- In case of assessee if PGBP is more than Rs 1, 20,000/- or total Sales/Gross receipt is more than Rs 10, 00,000 in any of 3 years preceding the previous year or likely to exceeding in case of newly setup business, then assessee is required to maintain any books of accounts and documents from which AO is able to complete the assessments. If assessee doesn’t declares income for P.Y. As per Sec 44AD then also he is required to maintain books of account and get it audited.
- In case of profession if Gross receipt is more than Rs 1, 50,000 in all 3 years preceding the previous year or likely to exceeding in case of newly setup business, then assessee is required to maintain any books of accounts as per rule 6F. As per rule 6F Books of accounts required to be maintain are Cash book, Journal and Ledgers. Carbon copies of bill exceeding Rs 25/-, original bill for expenditure exceeding Rs 50/- .If assessee declares income lower than 50% and his NTI is more than basic exemption limit then he is required to maintain books of accounts and get it audited.
- For those who are in the business of plying, leasing or hiring of trucks can also opt the scheme ofpresumptive Income under section 44A.
- Assessee should be in the business of plying, leasing or hiring goods carriages.
- You should not own more than 10 goods carriages at any time during the year. Include carriages taken on hire purchase or on instalments.
- Net taxable income u/s 44AE for the goods carriage shall be computed @Rs. 1000 per ton per month in case tonnage exceeds 12mt or else Rs 7500 for the month or part of a month or amount claimed to have been actually earned whichever is higher.
- Partners remuneration, salary, Interest etc as per 40(b) shall be deductible while computing income u/s 44AE.
- The assessee can also declare a higher amount in his return of Income.
- Assessee has to pay 100% Advance Tax by 15th March for such a business. No need to comply with the requirement of quarterly instalments due dates (June, Sep, Dec) of advance tax.
- Assessee not allowed to deduct any business expenses against the income.
Who cannot file ITR 4?
- An individual having income from salary, house property or other sources above Rs 50 lakh cannot use this form.
- An individual who is either a director in a company and has invested in unlisted equity shares cannot use this form.
ITR-4 form must be filed by individuals and HUFs on or before 31st July of every year. Therefore, file your return timely to avoid any interest or penalty.