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ITR-4 Return Filing
Form ITR 4 is the appropriate income tax return form for taxpayers who have chosen the Presumptive Taxation Scheme under Sections 44D, 44DA, or 44AE of the Income Tax Act, 1961. It's important to note that this eligibility is subject to a business turnover limit. If the taxpayer's turnover exceeds Rs. 2 crore, they are required to file ITR 3 Form instead.
What is Presumptive Taxation in Scheme?
The Presumptive Taxation Scheme is designed to relieve small taxpayers from the obligation of maintaining detailed books of accounts.
Who is Eligible to file Form ITR 4?
Individuals whose income comes from the following sources have to file ITR 4 Form:
- Business Income under Section 44AD/Section 44AE.
- Income from a profession as per Section 44ADA.
- Income up to Rs. 50 lakh from Salary or Pension.
- Income up to Rs. 50 lakh from One house property (that does not include the brought forward loss o loss that is to be brought forward under this head)
- Income from other sources up to Rs.50 lakh (does not include winning from lottery or horse races)
- Form ITR 4 can also be filed by the freelancers if the income is not exceeding Rs.50 lakh.
Who is not eligible for ITR 4 Form?
The following individuals need to file ITR-4:
- Holds Directorship in a company
- Holds any unlisted equity shares at any time during the previous year
- Has assets/financial interest in an entity outside India
- Has signing authority in any account outside India
- Has income from a source located outside India
- Has profits from a business or profession which is not required to be computed under sections 44AD, 44ADA, or 44AE, like income from a speculative business, commission, brokerage, etc.
- Makes Capital Gains
- Has income from more than one house property
- Has income under the head "other sources" from winning the lottery, horse races, income taxable at special rates u/s 115BBDA or 115BBE
- Has income which is to be apportioned under the provisions of Section 5A
- Has agricultural income exceeding INR 5,000
- Has any brought forward loss or loss which is to be carried forward under any income head
- Has loss under “income from other sources”
- Has a claim of relief under Sections 90, 90A or 91
- Has any deduction claim under Section 57 (except deduction relating to family pension)
- Has claim of tax credit which has been deducted at source in the hands of another person
- Has joint ownership in house property (inserted in AY 20-21).
Components of ITR 4 Form
The structure of Form ITR-4 is as follows:
Who Cannot File the ITR-5 Form?
The ITR-5 Form is not meant for the following categories of taxpayers:
- Part A: General Information
- Part B: Gross total income under the five heads of income
- Part C: Deductions and Total Taxable Income
- Schedule BP: Details of Income from Business
- Schedule 80G: Details of Donations entitled for deduction under Section 80G
- Schedule IT: Statement of payment of advance tax and tax on self-assessment
- Schedule- TCS: Statement about Tax Collected at source
- Schedule TDS1: Statement of Tax Deducted at Source on Salary
- Schedule TDS2: Statement of tax deducted at source on income apart from salary
- Verification Scheme
Presumptive Taxation Scheme
What are the features of the Presumptive Taxation Scheme?
- Under presumptive taxation scheme, there is no requirement to maintain the books of accounts
- The net income is estimated to be 8% of gross cash receipts. However, for payments received via digital mode, the net income is assumed to be 6% of such gross receipts.
- Deduction of any business expense against this income is not allowed.
- The business owner has to pay 100% Advance Tax by the 15th of March. There is no need to comply with quarterly installments of due dates of Advance tax (i.e. in June, Sep, Dec)
Presumptive Taxation Scheme
| Small businessmen | Professionals | Transporters | |
|---|---|---|---|
| Applicable Income Tax Section | Section 44AD | Section44ADA | Section44AE |
| Eligible business | The taxpayer may be in any wholesaling, retailing, trading, civil construction, or any other business |
| Entities of business involved in hiring, plying, or leasing of 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 10 goods vehicles during the year. |
| Computation | 8% of total receipts and electronic receipts shall be charged at 6% of gross turnover during the year. | 50% of gross receipts. A higher income of more than 50% can be declared | ? 7,500 per vehicle per month or part thereof based on the duration for which the vehicle was owned by the person during the year |
| Deductions allowed | No further deductions and exemptions are allowed | No further deductions and exemptions are allowed | No further deductions and exemptions are allowed (A partnership can claim deduction and interest to the paRtners from the computed income at RS. 7500 vehicle per month) |
How to file ITR 4 Form?
ITR-4 can be submitted both online and offline as well.
Offline
- Individuals at the age of 80 years or more
- The individual’s income is less than Rs.5 Lakh and he does not have to claim a refund in the income tax return
ITR 4 can be filed offline :
- By furnishing a return in a physical paper form
- By furnishing a bar-coded return (An acknowledgment will be issued at the time of submission of the physical paper return)
Online/Electronically
- By furnishing the return digitally using the digital signature.
- By transmitting the data electronically and then submitting the verification of the return made in Form ITR-V.
If the ITR-4 Form is under digital signature then an acknowledgment will be sent to the registered email id.
Major Amendments made to the ITR 4 Form in AY 2021 - 2022
The ITR 4 Form for the AY 2021-2022 comes with notable changes:
Declaration for opting between the old and new tax regimes under section 115 BAC has been added. Taxpayers need to choose ‘Yes or No’ in Part A general information. If opting for the new tax regime, the Form 101E furnishing date and acknowledgment number must be provided.
Part B includes a drop-down menu for specifying the nature of income under ‘Income from other sources,’ including interest from savings account, deposits, etc. For dividend income, a quarterly breakup is required for claiming relief from interest charges for default in advance tax payment under section 234C.
Schedule DI, introduced in AY 2020-2021, has been removed.
These changes aim to streamline the filing process and provide clarity in choosing tax regimes.
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