ITR-4, also known as Sugam, is a simplified Income Tax Return form designed for taxpayers who opt for the Presumptive Taxation Scheme under the Income Tax Act, 1961. It is aimed at reducing the compliance burden for small businesses and professionals by removing the requirement to maintain extensive books of accounts.
1. Eligibility Criteria
Income Sources:
- Business income computed under Section 44AD or Section 44AE.
Salary or Pension.
- One House Property.
- Other sources (Interest income, dividends, etc.).
3. Who Cannot File ITR-4?
Even if the income is below ₹50 lakh, you cannot use this form if you:
- Are a Director in a company.
Hold unlisted equity shares at any time during the year.Have assets (including financial interest in any entity) located outside IndiaHave income from more than one house property.Are a Non-Resident (NR) or Resident Not Ordinarily Resident (RNOR).Need to carry forward losses or claim relief under Section 90/90A/91.
4. Major Advantages
- No Books of Accounts: You are not required to maintain detailed accounting records as per Section 44AA.
- No Audit: You are exempt from getting your accounts audited under Section 44AB, provided your income stays within the presumptive limits.
- Simplicity: The form is significantly shorter and less complex than ITR-3.
5. Important Considerations
- Tax Regime: You must specify whether you are opting for the New Tax Regime (Section 115BAC) or the Old Tax Regime. Since FY 2023-24, the New Tax Regime is the default option.
- Switching Back: If an individual opts out of the presumptive scheme after using it, they may be barred from re-entering the scheme for the next five assessment years (specifically for Section 44AD).
