Income Tax Return (ITR) Form 4, or Sugam, is a new simplified form applicable specifically to resident individuals, Hindu Undivided Families (HUFs), and partnership firms (not applicable to Limited Liability Partnerships or LLPs) having income from profession or business and choosing the presumptive income scheme under sections 44AD, 44ADA, or 44AE of the Income Tax Act.
Who Should Submit ITR Form 4?
ITR Form 4 is mainly for those taxpayers whose income belongs to one or more of the following categories:
- Business income under presumptive taxation: This comprises business with turnover up to ₹2 crore (₹3 crore if 95% or more transactions are digital) under Section 44AD. Income is calculated as a fixed percentage (8% or 6% if digital) of turnover or gross receipts.
- Professional income under presumptive taxation: Paid by professionals like doctors, lawyers, engineers, architects, and freelancers whose gross receipts are not more than ₹50 lakh (₹75 lakh for digital payments), under Section 44ADA. In this case, 50% of gross receipts are taken as income.
- Income from hiring goods carriages: Companies involved in goods carriage hiring or leasing come under Section 44AE, with profit calculated on the basis of vehicles’ number and type.
- Income from salary or pension: If any income is received from salary or pension, it may be clubbed and reported in this manner.
- From one house property: Income from a sole house property can be disclosed, subject to the fact that there are no brought-forward or carried-forward losses.
- From other sources: Some other incomes like interest on savings accounts, fixed deposits, or family pension, up to ₹50 lakh, can be reported here, excluding winnings from a lottery or a racehorse.
- Agricultural income: Up to ₹5,000.
Who Cannot File ITR Form 4?
Some people and organisations are not entitled to file ITR-4, including:
- Taxpayers with aggregate income of more than ₹50 lakh.
- Taxpayers with income from more than one house property.
- Non-residents or Resident but Not Ordinarily Resident (RNOR) individuals.
- Individuals with foreign assets or foreign income.
- Directors of companies or individuals with investments in unlisted equity shares.
- Taxpayers who have brought-forward losses or carried-forward losses.
- Those with pending tax on Employee Stock Ownership Plans (ESOPs).
ITR Form 4: Filing
ITR 4 should be submitted online on the Income Tax Department’s e-filing portal. Taxpayers may submit using their digital signature or electronic verification code (EVC).
ITR Form 4: Benefits
Simplification is the greatest benefit of ITR Form 4. Taxpayers using pre-assumptive taxation under this form have:
- Exemption from keeping accurate books of accounts.
- Ease in calculation of income based on a predetermined percentage of turnover or receipts.
- Quick and simple filing process.
