Introduction
Every year, taxpayers in India enter the familiar cycle of gathering documents, crunching numbers, and hoping the smoothest of tax return filings. Among the forms available, the ITR-4 can seem daunting for those unfamiliar with its intricacies. Whether you are a small business owner, a, or part of a Hindu Undivided Family (HUF), understanding the nuances of the ITR-4 form is crucial. This article is your go-to guide to unraveling the mysteries of the ITR-4, making your tax filing experience as seamless as possible.
Understanding the ITR-4 Form
The ITR-4, also known as Sugam, is specifically designed for taxpayers who have opted for the presumptive income scheme under Section 44AD, 44ADA, or 44AE of the Income Tax Act. This form caters to taxpayers with:
- Business income calculated on a presumptive basis
- Professional income under the presumptive taxation scheme
Who Should File ITR-4?
ITR-4 can be filed by a Resident Individual, Hindu Undivided Family (HUF), or a Firm (other than a Limited Liability Partnership – LLP) who meets the following criteria:
– Total income does not exceed ₹50 lakh during the financial year.
– Income from Business and Profession that is computed on a presumptive basis under sections 44AD, 44ADA, or 44AE.
– Income from Salary or Pension, one House Property, and Agricultural Income (up to ₹5,000).
– Other sources of income (excluding winnings from lotteries and income from race horses) which may include:
– Interest from Savings Accounts
– Interest from Deposits (Bank, Post Office, or Cooperative Society)
– Interest from Income Tax Refunds
– Family Pension
– Interest received on enhanced compensation
– Any other Interest Income (e.g., Interest Income from Unsecured Loans)
Make sure to review your eligibility before filing the form.
Who Should Not File ITR-4?
ITR-4 cannot be filed by an individual / HUF / Firm (Other than LLP) who:
- is a Resident but Not Ordinarily Resident , or NRI
- has total income exceeding ₹ 50 Lakhs
- has agricultural income in excess of ₹5,000/-
- is Director of a Company
- has income from more than one House Property;
- has income of the following nature:winnings from lottery;activity of owning and maintaining race horses;income taxable at special rates u/s115BBDA or Section 115BBE;
- has held unlisted equity shares at any time during the year
- has deferred income tax on ESOP received from employer being an eligible start-up
- is not covered by eligibility conditions for ITR-4
The Presumptive Taxation Scheme: A Brief Overview
The presumptive taxation scheme simplifies taxes for small taxpayers, allowing them to declare income at a prescribed rate without the need for detailed books of accounts.
Key Features
- Minimal Record-Keeping: No detailed bookkeeping is required.
- Assured Tax Amounts: Declare incomewith a presumed profit percentage of total turnover or receipt.
- Ease of Compliance: A simpler tax calculation mechanism benefits both professionals and business owners.
“The presumptive taxation scheme offers a streamlined process, ultimately saving time and effort during tax season.”
Step-by-Step Guide to Filing ITR-4
Step 1: Gather Necessary Documents
To start, compile all relevant documents, such as:
- Form 16A or 16B
- Profit and loss statements
- Bank statements
- Aadhaar and PAN cards
- Previous year’s return copies (if needed)
Step 2: Online Registration
Visit the official government’s income tax e-filing portal and register/login using your credentials.
Step 3: Fill Out the ITR-4 Form
- Personal Information Section : Complete this section by verifying the prefilled information. Some information can be edited wheareas some information c]needs to be changed by visiting profile. You can change information such as name, contact details, bank details, etc
For AY 2024-25 New Tax Regime is the default Tax Regime. Option “No” will be Auto Selected. So if you want to opt for old regime form 10 IEA needs to be filed before due date.
- Gross Total Income: Breakdown income under various heads, ensuring the figures correlate with source documents. In the Gross Total Income section, you need to verify the pre-filled information and your income source from salary or pension, house property, business profession and other sources (such as interest of saving account, FD, family pension, etc.). You will also be required to enter the remaining details if any.
- Disclosures and Exempt Income : You may enter exempt income if any.
- Total Deductions :
You need to add deductions under Chapter VI-A pertaining 80c,80D,80TTA, 80ccd(1b), etc
These include life insurance premiums, tution fees, ELSS, PPF, NPS, Mediclaim, Donations,etc
- Tax Details: Include any advance tax, TDS deducted, advance tax , self assessment tax, etc.You need to verify if taxes deducted by employer , banks, or other vendors have been accurately reflecting so that you ll get credit for it without any issues.
- Declaration: Verify and submit with your e-verification or digital signature certificate.
Step 4: Verification
After submission, e-verify your return using available methods such as Aadhaar OTP, Net Banking, EVC, or by sending the ITR-V form to the Centralized Processing Center (CPC).
“Make sure your contact information is updated in the e-filing system to avoid missing out on important notifications.”
Common Challenges and How to Overcome Them
Inaccurate Record-Keeping
- Maintain basic records such as invoices and transaction copies to ease the filing process.
- Use digital accounting tools to automate and track your income and expenses.
Misunderstanding of Presumptive Tax Scheme
- Consult with a tax professional to validate that your business qualifies for this scheme, as some people cannot opt for presumptive taxation such as commission/agency business among others.
- Regularly update yourself with tax law changes via trusted government publications.
Conclusion
For many taxpayers, the ITR-4 is a savior during the tax season. Its straightforward, presumptive taxation approach reduces stress while ensuring compliance. By following the steps outlined above, understanding who should file, and avoiding common pitfalls, you can transform tax filing from a daunting task to a seamless, manageable process. As you prepare for your next filing, remember: staying informed and organized is your best strategy.
Have questions or experiences filing ITR-4? Share your thoughts with us and join the conversation below!
Note: This blog post aims to provide general guidance and should not substitute detailed consultancy from tax professionals. Always refer to Income Tax Department’s official resources for the latest updates or changes.
Source: Incometax
File ITR-4 (Sugam) Online FAQs | Income Tax Department. https://www.incometax.gov.in/iec/foportal/help/e-filing-itr4-form-sugam-faq
Disclaimer :
The information presented here is for informational purposes only and should not be interpreted as advice. While we strive to provide accurate and up-to-date information, errors or omissions may occur. Tax Laws change frequently. Please verify any information before relying on it. We are not responsible for any gain or loss as a result of the content of our website. The information provided is as is without any warranty.