Income Tax Return (ITR) filing is an important part of tax compliance for individuals, Hindu Undivided Families (HUFs), and eligible businesses. The Income Tax Department provides different ITR forms depending on the taxpayer’s income, residential status, business activities, and other financial circumstances.
ITR-4, also known as Sugam, is designed for certain resident individuals, HUFs, and firms other than LLPs who have eligible business or professional income that is calculated under the presumptive taxation scheme.
For Assessment Year (AY) 2026-27, eligible taxpayers using ITR-4 can have total income up to ₹50 lakh and can report eligible presumptive business or professional income under Sections 44AD, 44ADA, or 44AE. The form can also include certain income from salary or pension, house property, other sources, agricultural income, and specified long-term capital gains.
Understanding ITR-4 and the presumptive taxation scheme is important before selecting this form.
What Is ITR-4?
ITR-4 (Sugam) is a simplified Income Tax Return form for eligible taxpayers whose business or professional income is calculated under specified presumptive taxation provisions.
Under presumptive taxation, eligible taxpayers can calculate their taxable business or professional income using prescribed rules rather than maintaining detailed calculations of every individual business expense for the purpose of determining income under the regular provisions.
The relevant provisions include:
- Section 44AD – eligible businesses
- Section 44ADA – specified professionals
- Section 44AE – business of plying, hiring, or leasing goods carriages
The scheme is intended to simplify tax compliance for eligible taxpayers.
Who Can File ITR-4?
For AY 2026-27, ITR-4 can generally be filed by:
- A resident individual, other than a Not Ordinarily Resident (RNOR)
- A resident HUF, other than a non-resident HUF
- A resident firm other than an LLP
The taxpayer must generally have total income not exceeding ₹50 lakh and business or professional income computed on a presumptive basis under the applicable provisions.
ITR-4 is not mandatory for every eligible taxpayer. It is a simplified return option for taxpayers who satisfy the prescribed conditions and choose to use presumptive taxation.
What Is Presumptive Taxation?
Presumptive taxation is a method under which eligible taxpayers can calculate business or professional income according to prescribed rules.
Instead of calculating taxable profit solely by deducting every eligible business expense from actual receipts, the taxpayer declares income according to the applicable presumptive provisions, subject to their conditions.
The main provisions relevant to ITR-4 are:
Section 44AD
Section 44AD applies to eligible taxpayers carrying on certain businesses.
For AY 2026-27, the turnover or gross-receipts limit under Section 44AD is generally ₹2 crore, with the limit increasing to ₹3 crore where the prescribed condition relating to cash receipts not exceeding 5% of total gross receipts is satisfied.
Section 44ADA
Section 44ADA applies to eligible resident individuals and partnership firms, other than LLPs, carrying on specified professions.
The general gross-receipts limit is ₹50 lakh, which can increase to ₹75 lakh where the prescribed cash-receipt condition is satisfied.
Specified professions include areas such as:
- Legal
- Medical
- Engineering
- Architectural
- Accountancy
- Technical consultancy
- Interior decoration
The eligibility conditions should be checked before choosing Section 44ADA.
Section 44AE
Section 44AE applies to eligible taxpayers engaged in the business of plying, hiring, or leasing goods carriages, subject to the prescribed conditions.
The scheme can apply where the taxpayer owns not more than 10 goods carriages at any time during the previous year.
What Other Income Can Be Reported in ITR-4?
ITR-4 is not limited to presumptive business or professional income.
For AY 2026-27, eligible taxpayers can also report certain income such as:
- Salary or pension
- Income from up to two house properties
- Interest income
- Family pension
- Dividend income
- Agricultural income up to ₹5,000
- Eligible long-term capital gains under Section 112A up to ₹1.25 lakh
These additional income categories are subject to the conditions applicable to ITR-4.
Who Cannot File ITR-4?
Not every individual or business taxpayer can use ITR-4.
For AY 2026-27, ITR-4 generally cannot be used where the taxpayer:
- Has total income exceeding ₹50 lakh
- Is a non-resident or RNOR
- Has short-term capital gains
- Has Section 112A long-term capital gains exceeding ₹1.25 lakh
- Has agricultural income exceeding ₹5,000
- Is a director in a company
- Has held unlisted equity shares during the relevant previous year
- Has certain foreign assets or foreign income
- Has signing authority in a foreign account
- Has certain deferred ESOP tax
- Has certain brought-forward or carry-forward losses
- Has income taxable at specified special rates
- Otherwise does not satisfy the eligibility requirements for ITR-4
Therefore, taxpayers should check their complete financial situation before selecting ITR-4.
ITR-3 vs ITR-4
The difference between ITR-3 and ITR-4 is important for taxpayers with business or professional income.
ITR-3 is generally used where an individual or HUF has business or professional income and does not qualify for or use ITR-4.
ITR-4 is a simplified return available to eligible taxpayers who declare business or professional income under the specified presumptive taxation provisions.
For example, an eligible small business may use Section 44AD and file ITR-4, while a taxpayer whose circumstances require reporting under regular business-income provisions may need ITR-3.
The appropriate form depends on the taxpayer’s actual circumstances.
Documents and Information Required for ITR-4
Before filing ITR-4, taxpayers should keep relevant financial and tax information available.
This may include:
- PAN
- Aadhaar
- Bank account details
- Business turnover or gross receipts
- Professional receipts, where applicable
- Salary or pension details
- House-property information
- Interest and dividend details
- Capital-gain information, where applicable
- Form 16, where applicable
- Form 26AS
- Annual Information Statement (AIS)
- Taxpayer Information Summary (TIS)
- TDS details
- Advance tax details, where applicable
Accurate records can help taxpayers report their income correctly.
How to File ITR-4?
Eligible taxpayers can file ITR-4 electronically through the Income Tax Department’s e-Filing portal.
Step 1: Log In
Log in to your account on the Income Tax e-Filing portal.
Step 2: Select the Assessment Year
Choose the relevant assessment year and select the option to file an Income Tax Return.
Step 3: Select ITR-4
Select ITR-4 after confirming that you satisfy the applicable eligibility conditions.
Step 4: Enter Personal Information
Review the pre-filled personal and bank-account information.
Step 5: Report Business or Professional Income
Enter the applicable turnover, gross receipts, and presumptive income details.
Step 6: Report Other Income
Add salary, pension, house-property income, interest, dividends, or other applicable income.
Step 7: Review Tax Details
Check TDS, advance tax, deductions, tax payable, or refund information.
Step 8: Submit and Verify
Review the return carefully, submit it, and complete the required verification process.
The Income Tax Department has released the ITR-4 utility for AY 2026-27, including the applicable online filing resources.
Common Mistakes While Filing ITR-4
Some common mistakes include:
- Choosing ITR-4 without checking eligibility
- Selecting presumptive taxation incorrectly
- Reporting incorrect turnover or gross receipts
- Ignoring cash-receipt conditions
- Missing interest or dividend income
- Not checking AIS and Form 26AS
- Reporting capital gains incorrectly
- Selecting ITR-4 despite having disqualifying income
- Not reviewing tax calculations
- Failing to verify the return after filing
Careful review before submission can help avoid many filing issues.
How Seguro Advisors Can Help
Tax compliance can become difficult for individuals, professionals, and small businesses when financial records and tax requirements are not properly organised.
Seguro Advisors provides professional services including:
- Accounting
- Bookkeeping
- Tax services
- Payroll services
- Compliance services
Professional assistance can help eligible taxpayers organise financial information, understand applicable tax requirements, maintain proper records, and manage their tax-related responsibilities.
The appropriate service depends on the taxpayer’s business structure, income, and individual circumstances.
Conclusion
ITR-4 (Sugam) is a simplified Income Tax Return form for eligible resident individuals, HUFs, and firms other than LLPs who have qualifying business or professional income computed under the presumptive taxation provisions of Sections 44AD, 44ADA, or 44AE.
For AY 2026-27, eligible taxpayers generally need to have total income of ₹50 lakh or less and must satisfy the other conditions prescribed for ITR-4.
ITR-4 can simplify tax reporting for eligible taxpayers, but it should not be selected automatically simply because a person has business or professional income. The taxpayer should first determine whether the presumptive taxation provisions and ITR-4 eligibility conditions apply.
Seguro Advisors can support individuals and businesses with accounting, bookkeeping, tax, payroll, and compliance-related requirements, helping them manage their financial records and tax responsibilities effectively.
Frequently Asked Questions
What is ITR-4?
ITR-4, also known as Sugam, is a simplified Income Tax Return form for eligible individuals, HUFs, and firms other than LLPs having qualifying presumptive business or professional income.
Who can file ITR-4?
Eligible resident individuals, HUFs, and resident firms other than LLPs can generally file ITR-4 if their total income does not exceed ₹50 lakh and they satisfy the other prescribed conditions.
What is presumptive taxation?
Presumptive taxation is a simplified method of calculating eligible business or professional income according to prescribed provisions rather than determining income entirely through regular profit-and-loss calculations.
What are Sections 44AD, 44ADA and 44AE?
These are presumptive taxation provisions covering specified eligible businesses, specified professions, and eligible businesses involving goods carriages, respectively.
Can ITR-4 be filed by a salaried person?
An eligible individual can use ITR-4 where the person also has qualifying presumptive business or professional income and satisfies all other conditions. Salary or pension income can also be reported where permitted.
Is ITR-4 mandatory?
No. ITR-4 is a simplified return form that can be used by an eligible taxpayer as an option when the applicable presumptive taxation conditions are satisfied.
Can an LLP file ITR-4?
No. ITR-4 is applicable to firms other than LLPs. An LLP needs to consider the appropriate return form applicable to its status.
Can Seguro Advisors help with ITR-4 requirements?
Yes. Seguro Advisors provides accounting, bookkeeping, tax, payroll, and compliance-related services to help individuals and businesses manage their financial and tax requirements.
