ITR-4, commonly known as Sugam, is a simplified Income Tax Return form designed primarily for eligible resident individuals, HUFs and partnership firms (other than LLPs) who declare eligible business or professional income under the presumptive taxation provisions of Sections 44AD, 44ADA or 44AE of the Income Tax Act.

For AY 2026-27 (FY 2025-26), the Income Tax Department confirms that ITR-4 is available where total income is within the applicable ₹50 lakh limit and the taxpayer meets the prescribed conditions. The current ITR-4 also permits eligible Section 112A long-term capital gains up to ₹1.25 lakh. (Income Tax Department)

What is ITR-4 (Sugam)?

ITR-4 is intended to simplify tax filing for eligible small taxpayers who use the presumptive taxation scheme.

Instead of calculating business profit by maintaining and reporting detailed books in the normal manner, eligible taxpayers can declare income using the prescribed presumptive method.

This can make tax compliance simpler for:

• Small business owners
• Traders
• Shopkeepers
• Freelancers
• Eligible consultants and professionals
• Small transport operators
• Eligible partnership firms

The source material describes ITR-4 as a simplified return for small businesses and professionals using presumptive taxation.

For AY 2026-27, the Income Tax Department specifically describes ITR-4 as applicable to resident individuals, HUFs and firms other than LLPs, subject to the prescribed conditions. (Income Tax Department)

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Who Can File ITR-4?

You generally need to satisfy the following conditions.

1. You must be an eligible taxpayer

ITR-4 can be used by:

• Resident Individual
• Resident HUF
• Resident partnership firm other than an LLP

The total income generally must not exceed ₹50 lakh, subject to the specific provisions applicable to AY 2026-27. (Income Tax Department)

2. Business or professional income must qualify for presumptive taxation

Your business or professional income should be computed under:

• Section 44AD
• Section 44ADA
• Section 44AE

The Income Tax Department confirms these three presumptive provisions for ITR-4. (Income Tax Department)

3. Other permitted income

Depending on eligibility, ITR-4 can also include income such as:

• Salary/Pension
• House property income
• Interest and other permitted sources
• Agricultural income up to ₹5,000
• Eligible Section 112A LTCG up to ₹1.25 lakh

The exact exclusions and conditions must also be checked before selecting ITR-4. (Income Tax Department)

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What is Presumptive Taxation?

Presumptive taxation is a simplified method for calculating taxable business or professional income.

Instead of determining actual profit after detailed accounting, eligible taxpayers declare income according to the prescribed percentage or calculation method.

There are three important sections.

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Section 44AD – Small Business

Section 44AD is intended for eligible businesses.

Under the source material, the presumptive rate is:

• 8% of eligible turnover/receipts for cash receipts
• 6% for eligible digital receipts

The turnover threshold described in the source is:

• Up to ₹2 crore
• Up to ₹3 crore where cash receipts do not exceed 5% of total receipts.

Example

Suppose an eligible business has turnover of:

₹50 lakh

Assume the applicable presumptive rate is 6%:

₹50,00,000 × 6% = ₹3,00,000

The presumptive business income would therefore be ₹3 lakh under this illustration.

The actual tax calculation will also depend on the taxpayer’s other income, deductions where applicable, tax regime and applicable tax rates.

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Section 44ADA – Professionals

Section 44ADA applies to specified professionals who satisfy the prescribed conditions.

Examples can include eligible:

• Doctors
• Lawyers
• Architects
• Engineers
• Accountants
• Consultants
• Other specified professionals

The source material states that income is generally presumed at 50% of gross receipts.

The gross-receipt threshold described is:

• ₹50 lakh
• ₹75 lakh where cash receipts do not exceed 5% of total receipts.

Example

Professional receipts:

₹40 lakh

Presumptive income:

₹40 lakh × 50%

= ₹20 lakh

This ₹20 lakh is the presumptive professional income before considering the rest of the taxpayer’s income-tax computation.

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Section 44AE – Goods Transport Business

Section 44AE applies to eligible taxpayers engaged in:

• Plying
• Hiring
• Leasing

of goods carriages.

For eligible operators owning up to 10 goods vehicles, income is determined using the prescribed amount per vehicle/per month rather than simply calculating actual profit.

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Who Cannot File ITR-4?

ITR-4 is not available to everyone who has a small business.

You may need another ITR form, such as ITR-3, if you fall into a disqualifying category.

Examples include:

• Total income above ₹50 lakh
• Short-term capital gains
• Section 112A LTCG above ₹1.25 lakh
• Foreign assets
• Foreign income
• Signing authority in an overseas account
• Unlisted equity shares
• Certain company directorship situations
• Brought-forward or carry-forward losses
• Certain special-rate income
• LLP status
• Other prescribed exclusions

The Income Tax Department’s AY 2026-27 guidance lists these exclusions. (Income Tax Department)

What about F&O and Intraday Trading?

If your income falls outside the presumptive provisions applicable to ITR-4, ITR-3 may be required.

The source material specifically notes that F&O and intraday traders cannot use ITR-4 where the income must be reported as regular business income.

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ITR-3 vs ITR-4

Feature	ITR-4	ITR-3
Presumptive taxation	Yes	Yes/No depending on circumstances
Regular business accounts	Generally not required for the presumptive computation	Applicable where required
Total income limit	₹50 lakh, subject to applicable conditions	No such ITR-4 limit
Business income	Eligible presumptive income	Wider range of business income
LLP	❌	Applicable return depends on entity
F&O/business situations outside ITR-4	❌	✅
Carry-forward losses	❌ where prohibited	✅ where applicable

The key distinction is that ITR-4 is the simplified presumptive-tax return, whereas ITR-3 covers a broader range of business/professional situations.

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Important Changes for AY 2026-27

The current AY 2026-27 material highlights several important points.

1. ITR-4 Due Date

For AY 2026-27, the Income Tax Department states that the due date for ITR-4 is:

31 August 2026 for applicable non-audit cases. (Income Tax Department)

2. Eligible LTCG Can Be Reported

Eligible Section 112A long-term capital gains up to ₹1.25 lakh can be included in ITR-4, subject to the prescribed conditions. (Income Tax Department)

3. Bank Balance Information

The AY 2026-27 filing requirements include financial information such as the year-end bank balance.

4. Investments Field

The business financial particulars include a separate investments field.

5. Old Tax Regime

Where applicable, taxpayers with business/professional income who want to exercise the old-regime option need to comply with the prescribed Form 10-IEA requirement.

The source material identifies these AY 2026-27 changes.

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Documents Required for ITR-4

Before filing, keep the following information ready:

Basic Information

• PAN
• Aadhaar
• Mobile number
• Email address
• Bank account details
• IFSC
• Year-end bank balance

Business Information

• Gross turnover/receipts
• Cash receipts
• Digital receipts
• Business details
• Presumptive income calculation

Tax Documents

• Form 16, where applicable
• Form 16A, where applicable
• Form 26AS
• AIS
• TIS
• TDS details
• Advance tax details
• Self-assessment tax details

GST-Registered Businesses

If you are GST registered, keep your:

• GSTIN
• GST returns
• Turnover details

available for reconciliation.

The source material recommends reconciling turnover with GST information where applicable.

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How to File ITR-4 Online

The filing process can be completed through the Income Tax e-filing portal.

Step 1 – Login

Go to the Income Tax e-filing portal and log in using your credentials.

Step 2 – Select ITR Filing

Navigate to:

e-File → Income Tax Returns → File Income Tax Return

Step 3 – Select Assessment Year

For FY 2025-26:

AY 2026-27

Step 4 – Select ITR-4

Choose:

ITR-4 (Sugam)

and select the appropriate taxpayer status.

Step 5 – Verify Turnover

Separate:

• Digital receipts
• Cash receipts

and verify that you satisfy the applicable presumptive taxation conditions.

Step 6 – Calculate Presumptive Income

Enter the applicable income under:

• 44AD
• 44ADA
• 44AE

Step 7 – Add Other Income

Enter eligible:

• Salary/pension
• House property income
• Interest income
• Other permitted income
• Eligible Section 112A LTCG

Step 8 – Check Taxes

Verify:

• TDS
• TCS
• Advance tax
• Self-assessment tax

against Form 26AS and AIS/TIS.

Step 9 – Pay Tax

If additional tax is payable, complete the required tax payment.

Step 10 – Submit and Verify

Submit the return and complete e-verification.

The source material describes the same basic online filing workflow, including turnover reconciliation, Schedule BP, tax payment and e-verification.

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What Happens If You File Late?

If you miss the prescribed due date, you may still be able to file a belated return subject to the applicable rules.

For AY 2026-27, the Income Tax Department states that a late return may attract a late-filing fee of up to ₹5,000, along with applicable interest on unpaid tax. (Income Tax Department)

The source material states that a belated return can be filed up to 31 December 2026, subject to applicable provisions.

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Advance Tax for Presumptive Taxpayers

Presumptive taxpayers have a simplified advance-tax payment mechanism.

The source material explains that eligible presumptive taxpayers generally pay their advance tax in a single instalment by 15 March, rather than four regular instalments.

If tax remains unpaid, applicable interest provisions may apply.

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Is ITR-4 Mandatory?

No.

ITR-4 is a simplified option available to taxpayers who satisfy the eligibility conditions.

The Income Tax Department specifically states that ITR-4 is not mandatory and can be used at the taxpayer’s option when eligible for presumptive taxation under Sections 44AD, 44ADA or 44AE. (Income Tax Department)

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ITR-4 for a Proprietorship Business

A common question among small business owners is:

“I have a proprietorship. Can I file ITR-4?”

A proprietorship itself does not file a separate ITR as a company would. The proprietor files the appropriate individual return.

If the proprietor is eligible for presumptive taxation and satisfies the ITR-4 conditions, ITR-4 can be used.

For example:

Proprietor: Jay Kumar Pathak
Business: Swastic Solutions

If the business qualifies under Section 44AD and the proprietor satisfies all ITR-4 conditions, the proprietor may be able to use ITR-4.

The Income Tax Department confirms ITR-4 eligibility for resident individuals and resident firms other than LLPs, subject to the prescribed conditions. (Income Tax Department)

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ITR-4 and GST

GST registration is not itself a universal requirement for filing ITR-4.

However, if your business is GST registered, your turnover reported in income-tax records should be properly reconciled with your GST records.

For a GST-registered business, it is good practice to reconcile:

Sales Register ↔ GST Returns ↔ Bank Receipts ↔ ITR Turnover ↔ AIS/26AS

This helps identify discrepancies before filing.

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ITR-4 and Business Expenses

One of the biggest differences between normal business taxation and presumptive taxation is that under the presumptive method, you generally do not calculate taxable profit by separately deducting every actual business expense.

Instead, the applicable presumptive percentage is used to determine the income.

For example, under the Section 44AD illustration:

Turnover = ₹50 lakh

If presumptive income is calculated at 6%:

₹50 lakh × 6% = ₹3 lakh

You cannot simply reduce that ₹3 lakh by separately claiming every expense such as:

• Rent
• Salary
• Electricity
• Travel
• Advertising
• Office expenses
• Telephone
• Routine business purchases

as if you were calculating profit under regular books.

Therefore, a business should compare presumptive taxation vs regular taxation before selecting the most suitable method.

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Five-Year Rule Under Section 44AD

Taxpayers should also understand the consequences of leaving the presumptive scheme.

The source material highlights the Section 44AD five-year rule: where a taxpayer opts for presumptive taxation and subsequently declares income below the prescribed presumptive level in circumstances covered by Section 44AD(4), the presumptive scheme can become unavailable for the following five assessment years, with regular books/audit implications where applicable.

Therefore, don’t choose 44AD simply because it appears easier for one year. Consider your expected business growth and future accounting requirements.

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Common Mistakes While Filing ITR-4

Mistake 1: Choosing ITR-4 without checking eligibility

Not every small business can use ITR-4.

Mistake 2: Incorrect turnover

Your ITR turnover should be properly reconciled with your business records and GST returns where applicable.

Mistake 3: Mixing cash and digital receipts

The applicable presumptive calculation can depend on the nature of receipts, so maintain proper records.

Mistake 4: Ignoring AIS/26AS

Always check your:

• AIS
• TIS
• Form 26AS

before filing.

Mistake 5: Ignoring disqualifying income

Foreign assets, certain capital gains, losses, special-rate income and other prescribed circumstances can make ITR-4 unavailable.

Mistake 6: Assuming ITR-4 means “no records”

Even though detailed books may not be required for the presumptive computation, maintaining basic business records is still a sensible practice.

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ITR-4 FAQs

1. Can a salaried person also file ITR-4?

Yes, an eligible resident individual can have salary/pension income along with eligible presumptive business/professional income, provided all ITR-4 conditions are satisfied. (Income Tax Department)

2. Can a proprietor file ITR-4?

Yes, an eligible proprietor can file ITR-4 as an individual if the business income qualifies for presumptive taxation and all other conditions are met.

3. Can an LLP file ITR-4?

No. ITR-4 is not applicable to LLPs. (Income Tax Department)

4. What is the income limit for ITR-4?

The general total-income limit is ₹50 lakh, subject to the specific AY 2026-27 provisions. (Income Tax Department)

5. Can ITR-4 include capital gains?

For AY 2026-27, eligible Section 112A LTCG up to ₹1.25 lakh can be reported, subject to the prescribed conditions. Certain other capital gains make ITR-4 unavailable. (Income Tax Department)

6. Can I claim actual business expenses separately under 44AD?

The presumptive method is designed to determine business income using the prescribed percentage rather than separately calculating actual operating expenses.

7. What is the difference between ITR-3 and ITR-4?

ITR-4 is the simplified presumptive-tax return for eligible taxpayers.

ITR-3 is the broader return for individuals/HUFs with business or professional income who are not eligible for ITR-4 or choose/need regular computation.

8. What is the due date for ITR-4 for AY 2026-27?

For applicable non-audit cases, the Income Tax Department currently states 31 August 2026. (Income Tax Department)

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Final Checklist Before Filing ITR-4

• Confirm ITR-4 eligibility
• Confirm residential status
• Confirm total income is within the applicable limit
• Confirm business/profession qualifies for 44AD/44ADA/44AE
• Calculate turnover correctly
• Separate cash and digital receipts
• Reconcile GST turnover, if registered
• Check Form 26AS
• Check AIS/TIS
• Check TDS/TCS
• Check bank details and year-end balance
• Add salary/pension, house-property and other permitted income
• Check eligible Section 112A LTCG
• Check tax regime requirements
• Pay any tax due
• Submit ITR
• Complete e-verification
• Save the acknowledgement

Conclusion

ITR-4 (Sugam) is designed to make tax filing easier for eligible small businesses, professionals and other taxpayers using presumptive taxation.

For an eligible small proprietor, it can significantly simplify compliance because business income is determined under the presumptive provisions rather than through the detailed profit-and-loss calculation normally required under regular taxation.

However, ITR-4 should not be selected solely because your turnover is small. Eligibility depends on the type of income, business/profession, residential status, capital gains, losses, foreign assets/income and other prescribed conditions.

For AY 2026-27, the Income Tax Department’s current guidance should be treated as the final reference before filing. (Income Tax Department)

Disclaimer: This article is for general educational and informational purposes. Tax treatment depends on individual circumstances and the applicable law. Verify the latest provisions on the Income Tax Department portal or consult a qualified tax professional before filing.

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