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Overview of ITR-4 Form Filing
Income Tax Return (ITR) filing is an essential process that ensures individuals and businesses report their income and comply with tax laws. ITR-4 (Sugam) is a simplified tax return form for individuals, Hindu Undivided Families (HUFs), and firms (excluding LLPs) who opt for the presumptive taxation scheme under Sections 44AD, 44ADA, or 44AE of the Income Tax Act, 1961. This form is specifically designed for small businesses and professionals who wish to avoid the complexity of maintaining detailed books of accounts.
Instead of reporting actual income and expenses, taxpayers under presumptive taxation declare a fixed percentage of their gross receipts or turnover as taxable income. ITR-4 is suitable for small traders, shopkeepers, service providers, freelancers, doctors, lawyers, and other professionals whose income does not exceed ₹50 lakh for professionals and ₹2 crore for businesses. It also covers rental income, interest income, and other earnings. Filing ITR-4 helps taxpayers avoid penalties, claim eligible deductions, and maintain a clean financial record for loans and financial approvals.
What is ITR-4 Form?
ITR-4 is an income tax return form used by individuals, HUFs, and firms (excluding LLPs) who have opted for presumptive taxation under Sections 44AD, 44ADA, or 44AE of the Income Tax Act, 1961. This return includes the following types of income:
- Business income under Section 44AD (presumptive taxation for small businesses).
- Professional income under Section 44ADA (presumptive taxation for self-employed professionals like doctors, architects, consultants, etc.).
- Income from house property (rental earnings).
- Income from other sources (interest, dividends, family pension, etc.).
- Agricultural income up to ₹5,000.
It is important to note that ITR-4 cannot be used by individuals with income from capital gains, foreign assets, or speculative business transactions (e.g., F&O trading). In such cases, ITR-3 should be filed instead.
Who Can File ITR-4?
ITR-4 is designed for individuals, Hindu Undivided Families (HUFs), and firms (excluding LLPs) who have opted for presumptive taxation under:
- Section 44AD: For businesses with annual turnover up to ₹3 crores (provided cash receipts do not exceed 5% of total gross receipts; otherwise, the limit remains at ₹2 crores).
- Section 44ADA: For professionals (doctors, lawyers, architects, consultants, freelancers) with gross receipts up to ₹75 lakhs (provided cash receipts do not exceed 5% of total gross receipts; otherwise, the limit is ₹50 lakhs, where income is presumed as 50% of total receipts).
- Section 44AE: For taxpayers owning up to 10 commercial vehicles and declaring presumptive income per vehicle per month.
Eligible Taxpayers for ITR-4
The following taxpayers are eligible to file ITR-4:
- Small business owners (retail shops, traders, wholesalers, commission agents).
- Self-employed professionals (freelancers, architects, consultants, etc.).
- Transporters owning up to 10 commercial vehicles.
- Individuals earning rental income along with presumptive business income.
- Taxpayers with interest income, dividend income, or family pension.
- Individuals with agricultural income up to ₹5,000.
Who Cannot File ITR-4?
The following individuals and entities cannot file ITR-4:
- Individuals with total business turnover exceeding ₹2 crore (must file ITR-3).
- Professionals earning more than ₹50 lakh per year.
- Businesses or professionals opting out of presumptive taxation.
- Individuals earning income from capital gains.
- Taxpayers involved in speculative business transactions (F&O trading, cryptocurrency trading, etc.).
- Taxpayers with foreign income or foreign assets.
- Partners in a partnership firm (must file ITR-3).
- Companies, LLPs, and corporate entities.
- Taxpayers who are directors of a company.
Advantages of Filing ITR-4 Form
Filing ITR-4 offers multiple benefits, such as:
- Simplified Tax Compliance: ITR-4 filers declare a fixed percentage of income under presumptive taxation, reducing paperwork and compliance efforts.
- No Need for Tax Audits: Businesses with turnover up to ₹2 crore (under Section 44AD) and professionals with income up to ₹50 lakh (under Section 44ADA) are exempt from tax audits, saving both time and money.
- Lower Tax Liability: Presumptive taxation allows businesses to declare 8% (or 6% for digital transactions) of turnover as taxable income, while professionals declare 50% of gross receipts as taxable income, resulting in lower tax outgo.
- Easier Loan and Credit Approvals: Filing ITR-4 serves as proof of income, helping individuals qualify for business loans, home loans, and credit cards without detailed financial statements.
- Faster and Hassle-Free Filing: With minimal documentation requirements, ITR-4 can be filed quickly without professional assistance, making tax compliance stress-free for small business owners and freelancers.
Documents Required to File ITR-4 SUGAM Form
Filing the ITR-4 SUGAM form for income tax returns requires submitting specific documents to ensure a smooth and compliant process. The following is a comprehensive list of the essential documents you need to file ITR-4:
- Aadhar Card and PAN Card of the Taxpayer: These are mandatory identity proofs to verify the taxpayer’s personal details.
- Form 16: This is the certificate issued by the employer, detailing the salary earned and the tax deducted at source (TDS) during the financial year.
- Form 26AS & AIS: Form 26AS is a consolidated tax statement that shows tax deducted, tax collected, and advance tax paid. The AIS (Annual Information Statement) provides a comprehensive record of all your financial transactions reported to the Income Tax Department.
- Form 16A: This form is issued for TDS deducted on income other than salary, such as interest income or payments for professional services.
- Bank Statements: Bank statements for the financial year are essential to confirm income from interest or other sources and ensure correct reporting of the financial details.
- Housing Loan Interest Certificates: If you have taken a housing loan, this certificate provides details of the interest paid during the financial year, which may be eligible for tax deductions under Section 24.
- Receipts for Donations Made: If you have made any charitable donations, the receipts from these donations are necessary to claim tax deductions under Section 80G.
- Rental Agreement: A rental agreement is required if you are reporting rental income from house property. This document verifies the terms of the rental arrangement.
- Rent Receipts: If you receive rental income, the rent receipts are needed to substantiate the income earned from the property.
- Investment Premium Payment Receipts: If you have invested in insurance policies like LIC or ULIP, the premium payment receipts will help claim deductions under Section 80C.
By gathering these essential documents, you can efficiently file your ITR-4 form and ensure that all eligible deductions and exemptions are properly claimed, reducing your tax liability.
Process for Filing ITR-4 (SUGAM) Form Online
Filing the ITR-4 (SUGAM) form online is a straightforward process that can be completed through the Income Tax Department's official e-filing portal. Below is a step-by-step guide on how to file your ITR-4 form:
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Step 1: Login to the Income Tax Portal
Visit the official Income Tax e-Filing portal and log in using your PAN, password, and Captcha code. For first-time users, link your PAN by entering your PAN, Date of Birth, and OTP received on your registered mobile number. For returning users, proceed directly to the filing dashboard.
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Step 2: Select the Correct ITR Form
Go to the 'File Income Tax Return' section. Select the appropriate Assessment Year (e.g., AY 2024-25 for FY 2023-24) and choose ‘ITR-4’ as the applicable form.
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Step 3: Fill General Information
Enter personal details such as PAN, Name, Date of Birth, Contact details, and Residential Status. Select the type of filing (Original / Revised return) and choose your Tax Regime (New vs. Old Tax Regime).
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Step 4: Report Business or Professional Income
Enter total turnover or gross receipts for your business or profession. Declare presumptive income under Section 44AD (8% for cash transactions / 6% for digital transactions) or Section 44ADA (50% for professionals). If applicable, select the Nature of Business Code and provide a brief business description.
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Step 5: Report Other Income Sources
Declare any additional income sources, such as salary income (if applicable), income from house property (e.g., rental income), other income (e.g., interest, fixed deposits), and ensure capital gains are not reported in ITR-4 (use ITR-3 if applicable).
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Step 6: Report Professional & Freelancing Income (Section 44ADA)
For self-employed professionals, choose Section 44ADA for presumptive taxation, declare at least 50% of gross receipts as income, and select the relevant profession code from the list. Professions include legal, medical, engineering, architecture, and other fields.
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Step 7: Report Small Business Income (Section 44AD)
If you are a business owner, select Section 44AD for presumptive taxation, declare at least 8% of turnover as profit (6% for digital transactions), and ensure that sales do not exceed ₹3 crores.
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Step 8: Claim Deductions Under the Income Tax Act
Claim deductions under sections such as 80C (investments in PPF, LIC, EPF, etc.), 80D (health insurance premiums), 80E (education loan interest), 80G (donations), and 24(b) (home loan interest). Note that business expenses cannot be separately claimed under presumptive taxation, but personal tax-saving investments can be deducted.
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Step 9: Verify Tax Paid (TDS & Advance Tax)
The system will auto-fetch TDS details from Form 26AS and AIS. Verify TDS or TCS (Tax Collected at Source) details for any tax deducted by clients or banks.
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Step 10: Compute Tax Liability & Pay Tax
The system will calculate your tax based on your reported income and deductions. If you have pending dues, pay online using Net Banking, Debit Card, or Challan (ITNS 280). Advance tax must be paid by March 15 for presumptive taxation filers.
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Step 11: Final Review & Submission
Review all sections, cross-check the prefilled details, and confirm your Tax Regime selection. Once confirmed, click ‘File Tax’ to submit your return.
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Step 12: Verify Your ITR-4 Submission
Verification is mandatory within 30 days of submission. Use one of the following methods: Aadhaar OTP, Net Banking, Electronic Verification Code (EVC), or Physical Verification via ITR-V sent to CPC Bangalore.
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Step 13: Confirmation & Refund Processing
After successful submission, you will receive a confirmation email and SMS. If eligible for a refund, it will be credited within 15-30 days after e-verification. You can track the refund status in the 'My Account' section of the e-filing portal.
Common Mistakes to Avoid While Filing ITR-4
- Incorrect selection of ITR form
- Wrong turnover declaration
- Failure to claim eligible deductions
- Not reporting other income sources
- Not e-verifying the return
Tax-Saving Tips While Filing ITR-4
- Invest in tax-saving schemes under Section 80C (PPF, LIC, ELSS, NSC)
- Claim home loan interest deduction (up to ₹2 lakh) under Section 24(b)
- Take advantage of health insurance premium deductions under Section 80D
- Opt for presumptive taxation to avoid audits and reduce compliance burdens
Why Choose Kanakkupillai for ITR-4 Form Filing?
Kanakkupillai is your trusted partner for ITR-4 filing. We offer personalized support, timely filing, expert guidance, and hassle-free compliance. With transparent pricing and years of experience, we ensure that your tax filings are done accurately and on time, with no hidden charges.
- Personalized Approach: Customized solutions tailored to your financial situation.
- Expertise and Experience: Our knowledgeable team ensures accurate filings and maximum tax benefits.
- Timely Filing and Compliance: Avoid penalties and ensure your tax return is filed within deadlines.
- Hassle-Free Process: We handle the paperwork, calculations, and submissions for you.
- Transparent Pricing: Clear and upfront pricing with no hidden fees.
- Peace of Mind: Trust Kanakkupillai for worry-free ITR-4 filing and tax management.
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