Income Tax Return (ITR) filing is an essential process for taxpayers in India. For individuals and businesses opting for the presumptive taxation scheme, ITR-4 (Sugam) is the relevant form. In this blog, we’ll explore everything about ITR-4 for the Assessment Year (AY) 2023-24, covering eligibility, structure, filing process, and recent updates.

What is ITR-4? , Who Should File ITR-4? , Structure of ITR-4 and Presumptive Taxation Scheme

What is ITR-4?

ITR-4, also known as Sugam, is a simplified income tax return form for taxpayers who have opted for the presumptive taxation scheme under sections 44AD, 44ADA, or 44AE of the Income Tax Act. This scheme is designed to provide relief to small taxpayers by reducing the compliance burden.

Who Should File ITR-4?

ITR-4 is applicable to:

·         Individuals, Hindu Undivided Families (HUFs), and firms (other than LLPs) resident in India.

·         Taxpayers whose total income includes:

o   Business income under section 44AD or 44AE.

o   Professional income under section 44ADA.

o   Salary/pension.

o   Income from one house property (excluding cases where loss is brought forward from previous years).

o   Income from other sources (excluding winnings from lottery and income from racehorses).

Structure of ITR-4

The ITR-4 form is divided into the following parts:

Part A: General Information - Basic details of the taxpayer such as name, PAN, address, date of birth, Aadhaar number, etc.

Part B: Gross Total Income - Details of income from various sources including presumptive income, salary/pension, house property, and other sources.

Part C: Deductions and Total Income - Deductions under Chapter VI-A and computation of total income.

Part D:Tax Computation and Tax Status - Computation of tax liability, rebate, and tax payments.

Part E: Other Information - Bank account details and other mandatory disclosures.

Verification - Declaration by the taxpayer regarding the correctness of the information provided.

Presumptive Taxation Scheme: Sections 44AD, 44ADA, and 44AE

1.      Section 44AD:

·         Applicable to small businesses with a turnover of up to ₹2 crores.

·         Income is presumed at 8% of the turnover or gross receipts (6% in case of digital transactions).

2.      Section 44ADA:

·         Applicable to professionals like doctors, lawyers, architects, etc., with gross receipts up to ₹50 lakhs.

·         Income is presumed at 50% of the gross receipts.

Section 44AE:

·         Applicable to taxpayers involved in plying, hiring, or leasing goods carriages.

·         Income is presumed at ₹7,500 per month per vehicle for heavy goods vehicles.

How to File ITR-4? and Key Changes and Updates for AY 2023-24

How to File ITR-4?

Online Mode (Recommended)

1.      Login: Go to the Income Tax e-Filing portal and log in using your user ID and password.

2.      Select ITR-4: Under the 'e-File' section, select 'Income Tax Return' and choose 'ITR-4'.

3.      Fill in Details: Enter the relevant details in each section of the form.

4.      Upload and Submit: After filling in all details, validate the form, generate XML, and upload it on the portal.

5.      E-Verify: Verify the return using Aadhaar OTP, EVC, or by sending a signed physical copy of ITR-V to CPC, Bengaluru.

Key Changes and Updates for AY 2023-24

·         Increased Turnover Limit: The turnover limit for businesses under section 44AD has been increased to ₹2 crores.

·         Digital Transactions Benefit: Lower presumptive income rate (6%) for digital transactions continues.

·         New Disclosure Requirements: Enhanced disclosure requirements for bank account details and other financial information.

Important Points to Remember

·         Timely Filing: Ensure to file the return by the due date to avoid penalties.

·         Accurate Information: Double-check all details and documents to ensure accuracy.

·         Audit Requirements: If your income is more than the prescribed limit under the presumptive scheme, you may need to get your accounts audited.

Conclusion :

Filing ITR-4 can significantly simplify the tax filing process for small businesses and professionals opting for the presumptive taxation scheme. By understanding the eligibility, structure, and filing procedure, taxpayers can ensure compliance and avoid potential penalties. Stay updated with the latest changes to make the most of the benefits offered by the Income Tax Department.

NOTE :

For more information and assistance, you can visit the Income Tax Department’s official website or consult with a tax professional.