Filing your Income Tax Return (ITR) is not just a regulatory requirement but a financial responsibility that every taxpayer must fulfil. For individuals, Hindu Undivided Families (HUFs), and firms (other than LLPs) engaged in business or professional activities under the presumptive taxation scheme, the Income Tax Return Form ITR-4 (Sugam) is the designated form. This blog offers a comprehensive and updated explanation of the eligibility, filing requirements, key disclosures, and how a tax consultant can assist you in ensuring compliance for FY 2024–25 (AY 2025–26).
What is ITR-4 Sugam?
Form ITR-4, also known as Sugam, is applicable to resident Individuals, HUFs, and Firms (excluding LLPs) whose total income does not exceed Rs.50 lakh and who have income from business or profession computed under Sections 44AD, 44ADA, or 44AE of the Income Tax Act, 1961. These sections allow taxpayers to adopt the presumptive taxation scheme, simplifying compliance by estimating income at a prescribed rate.
Who Can File ITR-4?
You can file ITR-4 if you are:
- An Individual, HUF, or a Firm (other than LLP)
- A Resident taxpayer
- Earning total income up to ₹50 lakh during the financial year
- Having income from business or profession computed on a presumptive basis under:
- Section 44AD (for small businesses)
- Section 44ADA (for specified professionals)
- Section 44AE (for goods carriage owners)
- Earning long-term capital gains under section 112A up to ₹1.25 lakh
Who Cannot File ITR-4?
ITR-4 cannot be used if you:
- Are a Non-Resident or Resident but Not Ordinarily Resident
- Have total income exceeding Rs.50 lakh
- Are a Director in a company
- Have invested in unlisted equity shares
- Have deferred income tax on ESOPs
- Have agricultural income exceeding ₹5,000
- Own foreign assets or financial interests located outside India
- Need to claim deductions under double taxation avoidance agreements (DTAA)
- Want to carry forward or set off losses
In such cases, you must use ITR-3 or ITR-2, ITR-5
Due Date for Filing ITR-4 for AY 2025–26
The due date for filing ITR-4 is 31st July 2025. However, as per Circular No. 06/2025, the due date has been extended to 15th September 2025.
Presumptive Income Under Section 44AD (Business)
- Applicable to eligible businesses with turnover not exceeding ₹2 crore (or ₹3 crore if cash receipts do not exceed 5%)
- Income is presumed to be:
- 8% of turnover/gross receipts (cash transactions)
- 6% of turnover/gross receipts (non-cash transactions)
- Lower income can be declared, but audit under Section 44AB becomes mandatory
Presumptive Income Under Section 44ADA (Professionals)
- Applicable to specified professionals (legal, medical, engineering, accountancy, etc.)
- Gross receipts must not exceed Rs.50 lakh (extended to ₹75 lakh if cash receipts ≤ 5%)
- Income is presumed to be 50% of gross receipts
- Lower income requires tax audit
Presumptive Income Under Section 44AE (Goods Carriages)
- Applicable to businesses owning goods vehicles
- Up to 10 goods carriages owned at any time during the year
- Income is presumed at:
- ₹7,500/month for each vehicle (up to 12MT)
- ₹1,000/ton/month for vehicles >12MT
- Lower income again requires audit
Key Information Required in ITR-4
Filing ITR-4 involves more than entering your gross receipts and computing presumptive income. Taxpayers are now required to provide a range of additional details to improve transparency and plug tax evasion.
Details of Income
- Turnover/Gross Receipts – segmented by payment mode (cheque, cash, etc.)
- Computed presumptive income
- Long-term capital gains under section 112A (up to ₹1.25 lakh)
Financial Particulars
- Capital and liabilities:
- Partners’ capital
- Loans (secured/unsecured)
- Sundry creditors
- Assets:
- Fixed assets
- Inventories
- Debtors
- Bank balances
- Cash-in-hand
Mandatory fields include sundry creditors, inventories, sundry debtors, and cash-in-hand.
GST-Related Details
- GSTIN-wise turnover as reported in GST returns filed
Bank Account Details
- All active (non-dormant) bank accounts held during the year
- At least one account must be selected for refund credit
Additional Disclosures Under Seventh Proviso to Section 139(1)
Taxpayers not otherwise liable to file a return but meeting certain criteria must still file ITR. These disclosures are compulsory even in presumptive income cases:
- Deposits exceeding ₹1 crore in one or more current accounts
- Foreign travel expenditure exceeding ₹2 lakh
- Electricity bills exceeding ₹1 lakh
- Turnover exceeding ₹60 lakh (business) or receipts exceeding ₹10 lakh (profession)
- TDS/TCS of ₹25,000 or more (₹50,000 for senior citizens)
- Savings account deposits exceeding ₹50 lakh
Reporting of Deductions Under Chapter VIA
Taxpayers opting for the old tax regime can claim deductions under Chapter VIA. The ITR form now asks for detailed disclosures:
- Section 80C: Amount, instrument, and identification number
- Section 80D: Health insurance details (insurer, policy number, premium amount)
- Section 80CCD (1)/(1B): Contribution to NPS, along with PRAN (Permanent Retirement Account Number)
- Section 80EE/80EEA: Interest on housing loan—requires bank name, loan details
- HRA (if applicable): Rent paid, PAN of landlord
Claiming such deductions without evidence can lead to scrutiny. Therefore, disclosures are mandatory and must be supported by documentation.
Confusion Around Which Bank Accounts to Report
Many taxpayers are unclear about which bank accounts to disclose. Here’s the guidance:
- Report all active accounts held at any time during the year
- Do not include dormant accounts
- Select at least one account for refund
- Refund will be credited to any one of the validated accounts selected, as decided by CPC
Importance of Timely and Correct Filing
Timely filing of your ITR helps in:
- Faster processing of refunds
- Avoidance of penalties under Section 234F (₹5,000 for late filing)
- Ease in applying for loans or visas
- Keeping financial records clean and verifiable
Summary: Checklist for ITR-4 Filing
Here is a concise checklist for those planning to file ITR-4 for AY 2025–26:
- Ensure you are a resident individual, HUF, or eligible firm
- Check that your total income is within ₹50 lakh
- Confirm that you qualify for presumptive taxation under Sections 44AD, 44ADA, or 44AE
- Disclose turnover, bank details, GST information, and financial particulars
- Assess applicability of seventh proviso disclosures
- Choose old tax regime if deductions are to be claimed
- Collect and report all supporting documents for deductions
- Get your return verified electronically or by sending ITR-V to CPC
Final Words
While the presumptive taxation scheme simplifies compliance for small taxpayers, the updated ITR-4 form for AY 2025–26 demands a higher level of transparency and reporting. It is no longer sufficient to just estimate income; one must also back it with detailed disclosures. Given the complexity, it is highly recommended to consult a qualified tax consultant who can help ensure accurate, compliant, and timely filing.
