What is ITR 4 in Income Tax Return filing?

Form ITR 4, also known as Sugam, is an ITR form for those taxpayers, who have opted for the Presumptive Taxation Scheme as per sections 44AD, 44DA and 44AE of the Income Tax Act, 1961^[1]. Still, this is subject to the business turnover limit, i.e., if the turnover exceeds Rs.2 Crore, the taxpayer must file Form ITR 3.

What is Presumptive Taxation in Scheme?

The Presumptive Taxation Scheme is a scheme that exempts all small taxpayers from maintaining the books of accounts.

Features of Presumptive Taxation Scheme

• As per the Presumptive Taxation Scheme, there is no need to maintain the books of accounts.
• Deduction of business expenses against this income is not allowed.
• The net income is ejective to be 8% of gross cash receipts. However, the net income is assumed to be 6% of such gross receipts for payments received via digital mode.
• The businessman has to pay 100% Advance Tax by the 15^th of March. There is no need to comply with quarterly instalments of due dates of advance tax.

Presumptive Taxation Scheme

	Small businessmen	Professionals	Transporters
Applicable Income Tax Section	Section 44AD	Section 44ADA	Section 44AE
Eligible business	The taxpayer’s income may be in any wholesaling, trading, retailing, civil construction, or other business.	Legal servicesTechnical consultancyMedicalEngineering & ArchitecturalInterior decoration	Entities of business involved in plying, hiring, or leasing goods carriages.
Maximum turnover limit	Up to Rs.2 crore in a year	Annual receipts of not more than Rs.50 Lakh.	Owning not more than ten items vehicles during the year.
computation	shall charge 8% of total receipts & electronic receipts at 6% of gross turnover during the year.	50% of gross receipts. A higher income of more than 50% can be declared.	7500 per vehicle every month or part thereof based on the duration for which the person bought the vehicle during the year.
Deduction allowed	No further deductions & exemptions are allowed.	No further deductions & exemptions are allowed.	No further deductions & exemptions are allowed (A partnership can claim deduction & interest to the partners from the computer income at Rs.7500 vehicle per month).

Structure of the ITR 4 Form

The ITR 4 form has been divided into various parts. Every part takes details regarding different aspects of an individual’s tax declaration. Look at the form structure.

• Part A: Contains all the details such as name, DOB & address.
• Part B: Includes the gross income by five heard of pay such as salary, house property and income from other sources.
• Part C: It is for the deductions and total taxable income
• Part D: it is for tax status and tax computations
• Schedule BP details income from Business Section 44AD, 44ADA, & Section 44EA.
• Schedule 80G: Information on donations entitled for deduction under Section 80G.
• Schedule TCS: Statement about Tax collected at source.
• Schedule IT: contains particulars of advance tax & self-assessment tax payments.
• Schedule TDS1: Information of Tax Deducted at Source on Salary.
• Schedule TDS2: It has specifics of tax deducted based on income source except for salary.
• Verification Scheme.

Who can file Form ITR 4?

Individuals whose income comes through the following sources have to file Form ITR 4:

• Income from business under section 44AD/44AE.
• Income from profession calculated under section 44ADA.
• Salary or pension having income up to 50 lakh rupees.
• Other sources have income up to 50 lakh rupees (excluding the brought forward loss to be carried forward cases under this head).
• Other sources have income up to 50 lakh rupees (excluding winning by lottery & income by horseracing).

Note: Freelancers involved in the above profession can opt for this scheme if their receipts are not more than 50 lakhs rupees.

Who can not file Form ITR 4?

• Director of the Company
• Shareholder of an Unlisted Company;
• Total Income is above Rs.50 Lakhs;
• An individual who has signing authority in any account located outside of India.
• Having more than 1 house property;
• A Resident but not Ordinary Resident;
• An individual who has an asset located outside of India;
• An individual who is earning income from any source outside of India.
• Having Foreign Income & Foreign Assets.

Procedure to file the Form ITR 4

You can file your ITR 4 Form either online or offline:

• Online/Electronically
• By providing the return electronically under digital signature- If you submit your Form ITR 4 electronically under digital signature, and the acknowledgement will be sent to your registered email id. You also have the option to download it manually from the income tax portal.
• From transmitting the data digitally & then submitting the verification of the return in Return ITR V Form, then you are required to sign it & send it to the Income Tax Department’s CPC office in Bangalore within 120 days of online filing.

Note: Remember that Form ITR 4 is an annexure-less form, I.e. you don’t have to attach any documents when you send this.

• Offline: This form can be filed offline only in the following case:
• The individual is of the age of 80 or more;
• The individual’s income is less than Rs.5 lakhs, and who don’t have to claim a refund in the Income Tax Return.
• The IT Return can filed offline in the following ways:
• Through furnishing a return in a physical paper form.
• By providing a bar-coded return.

Note: The Income Tax Department shall issue you an acknowledgement when submitting your physical paper return.

Significant changes made in Form ITR 4 for Annual Year 2021-22

1. There are no major alterations in ITR 4 as compared to the last year.
2. Form ITR 4 for the annual year 2021-22 has been updated with a declaration for choosing between old & new tax regimes. The declaration as per Part A- general details as ‘Are you opting for a new tax regime under Section 115AC (Yes/No). If yes, please provide the date of filing of Form 10IE along with the acknowledgement number’.
3. Schedule DI that was inserted for the annual year 2020-21 has been removed.
4. Part B- Income through other sources, drop-down like interest from saving account, and deposit to be provided income, quarterly breakup to be provided for allowing applicable relief from the interest charge for default in payment of advance tax under Section 234C.

Conclusion

At last, the ITR-4 Form is for all those who run a small business and do not have sufficient & enough resources to calculate their profit & loss from their small business.

Read our Article:Income Tax return e-filing: Things you must know