As the income tax return filing season begins, one of the most important decisions taxpayers need to make is selecting the correct ITR form. Filing the wrong return form can result in defective return notices, delayed refunds, and additional compliance requirements.
For small business owners, freelancers, professionals, and taxpayers opting for the presumptive taxation scheme, ITR-4 (Sugam) is one of the simplest and most convenient return forms available.
If your income is computed under Sections 44AD, 44ADA, or 44AE of the Income Tax Act 1961, ITR-4 may be the right form for you.
What is ITR-4 (Sugam)?
ITR-4, also known as Sugam, is a simplified Income Tax Return form designed for small tax payers.
ITR-4 can be filed by Resident Individuals, Hindu Undivided Families (HUFs), and Firms (other than LLPs) having Total Income under Business or Profession which is computed on a presumptive basis (u/s 44AD / 44ADA / 44AE of Income Tax Act,1961)
AND/ OR having income from any of the following sources
- Salary / Pension
- Two House Properties
- Other sources (Interest, Family Pension, Dividend etc.)
- Agricultural Income up to ₹ 5,000
- Capital Gain income u/s 112 A (Income Tax Act,1961) up to ₹ 1,25,000
Under the presumptive taxation scheme, eligible taxpayers can declare income at a prescribed percentage of turnover or gross receipts without maintaining detailed books of accounts.
The objective of ITR-4 is to reduce the compliance burden on small taxpayers and encourage easier tax filing.
Who Can File ITR-4 (Sugam) for AY 2026-27?
You can file ITR-4 if all the prescribed conditions are satisfied.
1. Resident Individuals
Resident individuals earning income up to ₹50 Lakh from:
- Business under Section 44AD
- Profession under Section 44ADA ( Professional income that depends on personal qualifications (therefore Section 44ADA is usually not applicable in practice in case of HUFs/ Partnership Firms)
- Goods carriage business under Section 44AE
AND have income from any of the sources
- Salary or pension
- Two House Properties
- Other sources such as interest income
- Agricultural Income up to ₹ 5,000
- Capital Gain income u/s 112 A (Income Tax Act,1961) up to ₹ 1,25,000
- can file ITR-4.
Example : Rohit runs a small retail shop with annual turnover of ₹70 lakh and opts for presumptive taxation under Section 44AD. He can file ITR-4.
2. Hindu Undivided Families (HUFs)
Resident HUF earning income up to ₹50 Lakh from:
- Business under Section 44AD
- Profession under Section 44ADA ( Professional income that depends on personal qualifications (therefore Section 44ADA is usually not applicable in practice in case of HUFs)
- Goods carriage business under Section 44AE
AND have income from any of the sources
- Salary or pension ( ITR-4 allows this income head, but an HUF itself normally does not earn salary/pension)
- Two House Properties
- Other sources such as interest income
- Agricultural Income up to ₹ 5,000
- Capital Gain income u/s 112 A (Income Tax Act,1961) up to ₹ 1,25,000
Example : A HUF operating a family-owned trading business with turnover below the prescribed limit and opting for Section 44AD can file ITR-4.
3. Partnership Firms ( other than LLP)
Resident Partnership Firms ( Other than LLP) earning income up to ₹50 Lakh from:
Business under Section 44AD
Profession under Section 44ADA ( Professional income that depends on personal qualifications (therefore Section 44ADA is usually not applicable in practice in case of Partnership Firm)
Goods carriage business under Section 44AE
AND have income from any of the sources
- Salary or pension ( ITR-4 allows this income head, but a Partnership Firm itself normally does not earn salary/pension)
- Two House Properties
- Other sources such as interest income
- Agricultural Income up to ₹ 5,000
- Capital Gain income u/s 112 A (Income Tax Act,1961) up to ₹ 1,25,000
Example: Partnership firm engaged in a small trading business and declaring income under Section 44AD may use ITR-4.
4. Taxpayers Opting for Section 44AD
Section 44AD applies to eligible businesses.
The eligibility for Section 44AD depends on the amount of turnover or gross receipts during the financial year:
If cash receipts exceed 5% of total receipts — Maximum Turnover / Gross Receipts Up to ₹2 Crore.
If cash receipts do not exceed 5% of total receipts and at least 95% of receipts are received through banking channels or digital modes. —Maximum Turnover / Gross Receipts Up to ₹3 Crore.
Under Section 44AD
- The business Income is presumed at 8% of turnover/sales received in cash.
- The business Income is presumed at 6% of turnover/sales received through banking channels or digital modes.
Example: A grocery store owner with annual turnover of ₹1.5 crore declares profits under Section 44AD instead of maintaining detailed books of accounts.
5. Taxpayers Opting for Section 44ADA
Eligible professionals can opt for Section 44ADA.
The eligibility for Section 44ADA depends on the amount of gross receipts earned during the financial year:
if cash receipts do not exceed 5% of total gross receipts — Maximum Gross Receipts must be Up to ₹75 lakh
If cash receipts do not exceed 5% of total receipts – Maximum Gross Receipts must be Up to ₹50 lakh
Section 44ADA applies to specified professionals such as:
- Doctors
- Lawyers
- Chartered Accountants
- Architects
- Engineers
- Interior Decorators
- Technical Consultants
Eligible professionals can declare 50% of gross receipts as their income from profession.
Example: A Chartered Accountant earning professional receipts of ₹40 lakh can opt for Section 44ADA and declare ₹20 lakh as his professional income and file ITR-4.
6. Taxpayers Opting for Section 44AE
Section 44AE applies to taxpayers engaged in the business of plying, hiring, or leasing goods carriages.
The eligibility for Section 44AE depends on the number of goods vehicles owned by the taxpayer during the financial year:
The taxpayer should own not more than 10 goods carriages at any time during the financial year.
There is no turnover or gross receipt limit under Section 44AE.
Example: A transporter owning a limited number of goods vehicles can compute income under Section 44AE and file ITR-4.
Conditions for Filing ITR-4
Generally, ITR-4 can be filed if:
- Total income does not exceed ₹50 lakh.
- Income is computed under Sections 44AD, 44ADA, or 44AE.
- Income includes:
- Business or professional income under presumptive taxation
- Salary or pension
- Two house properties
- Other sources such as interest income
Who Cannot File ITR-4 (Sugam)?
The following taxpayers are not eligible to file ITR-4.
1. Non-Residents and Resident Not Ordinarily Residents (RNORs)
Only resident taxpayers can use ITR-4.
Example: An NRI earning business income in India cannot file ITR-4. For this the applicable return form is generally ITR-3.
2. Having Total Income Above ₹ 50 lakh (excluding LTCG u/s 112A upto ₹1,25,000)
Taxpayers whose income exceeds ₹ 50 lakh (excluding LTCG u/s 112A upto ₹1,25,000) will need to file another applicable return form. The correct form depends on the nature of income.
3. Directors in Companies
Individuals who served as directors in any company during the financial year cannot file ITR-4.
Example: A salaried director earning professional income cannot use ITR-4. The correct form depends on the nature of the director’s income.
4. Individuals Holding Unlisted Equity Shares
Taxpayers holding unlisted equity shares during the financial year are not eligible for ITR-4. The applicable form depends on the taxpayer’s income.
Example: A professional holding shares in a startup company must choose another applicable ITR form.
5. Taxpayers Having Capital Gains Income
If you earn:
- Short-term capital gains
- Long-term capital gains u/s 112A of Income Tax Act,1961 exceeding ₹1,25,000
you cannot use ITR-4.
Example: A shop owner who sold mutual funds and earned capital gains cannot file ITR-4. The correct form depends on the type of income.
6. Taxpayers Having More Than Two House Properties
Individuals owning more than two house properties cannot use ITR-4.
Example: A professional with rental income from three properties cannot file ITR-4. The correct form depends on the situation.
7. Individuals Having Foreign Assets or Foreign Income
Taxpayers holding foreign assets or earning foreign income are not eligible for ITR-4.
Taxpayer has signing authority in any account located outside India are also not eligible for ITR-4.
Example: A consultant owning shares in a foreign company cannot file ITR-4. The correct form depends on the type of income.
8. Brought forward loss or loss to be carried forward
A taxpayer having brought forward losses or losses to be carried forward under any head of income cannot file ITR-4. If any loss is being carried forward under any head of income, use ITR-2 / ITR-3 / ITR-5 depending on the taxpayer and income type.
9. Limited Liability Partnerships (LLPs)
LLPs are specifically excluded from filing ITR-4. For an LLP, the applicable form is ITR-5.
Example: A consulting LLP must file the applicable return form other than ITR-4.
ITR-4 (Sugam) is not mandatory. It is a simplified return form to be used by an Assessee, at his option, if he is eligible to declare Profits and Gains from Business or Profession on presumptive basis u/s 44AD, 44ADA or 44AE of Income Tax Act,1961.
Due Date for Filing ITR-4 for AY 2026-27
The due date generally depends on whether audit provisions apply.
| Category | Due Date |
| Taxpayers not requiring audit | 31 July 2026* |
| Revised Return Section 139(5) | 31 December 2026* or the date of completion of assessment, whichever is earlier. |
| Updated Return (ITR-U) | As per applicable provisions |
Subject to extension by the Income Tax Department.
Filing early helps avoid last-minute issues and ensures faster processing of refunds.
Documents Required for Filing ITR-4
Before starting the return filing process, keep the following documents ready.
Personal Documents
- PAN Card
- Aadhaar Card
- Mobile Number
- Email ID
- Bank Account Details
Business and Professional Documents
- Gross turnover details
- Gross receipts details
- Business income summary
- Presumptive income calculation
Salary Documents (If Applicable)
- Form 16
- Salary slips
- Pension statements
House Property Documents
- Rental income details
- Home loan interest certificate
Other Income Documents
- Bank interest certificates
- Fixed deposit statements
- Savings account interest details
Tax Documents
- Form 26AS
- Annual Information Statement (AIS)
- Tax Information Statement (TIS)
- Advance tax challans
- Self-assessment tax challans
Step-by-Step Process to File ITR-4 Online
The Income Tax Department provides a simple online process for filing ITR-4.
Step 1: Log in to the Income Tax e-Filing Portal
Visit the Income Tax e-Filing Portal and log in using your PAN and password.
Step 2: Select “File Income Tax Return”
Navigate to:
e-File → Income Tax Return → File Income Tax Return
Select:
- Assessment Year: AY 2026-27
- Filing Mode: Online
Step 3: Select Taxpayer Category
Choose:
- Individual
- HUF
- Firm (other than LLP)
as applicable.
Step 4: Select ITR-4 (Sugam)
Choose ITR-4 from the available return forms.
Step 5: Verify Personal Information
Review and confirm:
- PAN
- Aadhaar
- Address
- Residential status
- Bank account details
Step 6: Enter Business or Professional Income
Provide details of:
- Turnover
- Gross receipts
- Presumptive income
- Business category
under the applicable section.
Step 7: Disclose other Income
Disclose income from:
- Salary/Pension
- House property
- Interest income
- Other eligible sources
Step 8: Enter Financial Particulars of the Business
- Partners/ Members own capital
- Secured loans
- Unsecured loans
- Advances
- Sundry creditors (Mandatory)
- Other liabilities
- Total capital and liabilities
- Fixed assets
- Investments
- Inventories (Mandatory)
- Sundry debtors (Mandatory)
- Balance with banks (Mandatory)
- Cash-in-hand (Mandatory)
- Loans and advances
- Other Assets
- Total assets
Step 9: Claim Deductions
Claim deductions under eligible provisions such as:
- Section 80C
- Section 80CCD(1B)
- Section 80D
- Section 80G
- Section 80TTA
- Section 80TTB
Step 10: Verify Tax Liability
The portal automatically computes:
- Total income
- Tax liability
- Interest payable
- Tax credits available
Review all calculations carefully.
Step 11: Submit and E-Verify
After reviewing the return, submit it and complete e-verification through:
- Aadhaar OTP
- Net Banking
- Bank Account EVC
- Demat Account EVC
- Digital Signature Certificate (DSC)
Your return filing process is complete only after successful e-verification.
Common Mistakes to Avoid While Filing ITR-4
Many taxpayers make avoidable mistakes while filing ITR-4.
- Choosing the Wrong Presumptive Scheme: Ensure that the correct section – 44AD, 44ADA, or 44AE – is selected.
- Incorrect Turnover Reporting: Always report actual turnover or gross receipts.
- Not Matching AIS and Form 26AS: Verify all income and tax credit details before submission.
- Claiming Ineligible Deductions: Maintain proper documentation for deductions claimed.
- Ignoring Advance Tax Liability: Presumptive taxpayers may still need to pay advance tax in certain situations
- Forgetting E-Verification: An unverified return is treated as invalid.
Benefits of Filing ITR-4
Choosing ITR-4 offers several advantages:
- Simplified tax filing process
- Reduced compliance burden
- No requirement to maintain detailed books of accounts (subject to conditions)
- Lower accounting costs
- Faster return preparation
- Easy online filing
For small businesses and professionals, ITR-4 significantly reduces the complexity of tax compliance.
Conclusion
ITR-4 (Sugam) is a simplified return form designed for small businesses, professionals, and eligible firms opting for the presumptive taxation scheme under Sections 44AD, 44ADA, and 44AE. It offers a convenient way to comply with tax laws without maintaining extensive books of accounts.
Before filing ITR-4 for AY 2026-27, ensure that you meet all eligibility conditions, keep the required documents ready, accurately report turnover and income, verify tax credits through Form 26AS and AIS, and complete e-verification after submission.
Filing the correct return form not only ensures compliance with tax regulations but also helps avoid notices, penalties, and unnecessary complications in the future.
