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ITR-3 vs ITR-4: Difference And Who Can File?

Updated on: May 23rd, 2023


16 min read

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Filing an income tax return creates a sense of anxiety amongst the taxpayers since there is a lot of hustle and bustle in choosing the right ITR form, disclosing the income under correct head, claiming exemptions to save tax, etc. There are currently 7 ITR forms available for various taxpayer categories. This article provides a comprehensive understanding of the eligibility for ITR-3 and ITR-4 (Sugam).


Eligibility Criteria For Filing ITR-3

Individuals and Hindu Undivided Family (HUFs) are eligible to file ITR-3 if they have income from business or profession. Applicability for ITR-3 filing

  • Income from business or profession (both tax audit and non tax audit cases)
  • Salary income
  • Rental income from house property 
  • Short or long term capital gains
  • Interest, dividends, winning from lottery and any income from other sources
  • Income (interest and remuneration) as a partner in a firm 

Due Date For Filing ITR-3  (For Assessment Year 2023-24)

Category of taxpayerDue date of ITR
If tax audit is not applicable31 July, 2023
  • If tax audit is applicable
  • Partner of a firm, where firm is required to get its books of accounts audited
31 October, 2023

ITR-4 or Sugam

Who Can File ITR-4?

Resident Individuals, HUFs and partnership firms are eligible to use ITR-4 if they satisfy a few conditions. Below are the conditions for applicability for ITR-4 filing:

  • Total income is up to Rs. 50 lakhs
  • Business or profession income is computed on presumptive basis under Section 44AD, 44ADA or 44AE.
  • Income from salary/pension
  • Rental income from one house property, 
  • Agricultural income (up to Rs. 5,000)
  • Income from other sources such as interest, dividend, family pension, etc.

Who Cannot File ITR-4?

  • Non-Residents or Resident but not ordinarily resident (RNOR)
  • Should not have income from lottery or owning and maintaining race horses
  • Person is a director in any company
  • has held unlisted equity shares at any time during the year
  • Income is exceeding Rs. 50 lakhs 
  • Who has agricultural income in more than ₹5,000
  • has income from more than one House Property;
  • Income taxable under Section 115BBDA (Dividend from domestic company in excess of Rs. 10 lakhs) or Section 115BBE (tax on undisclosed income and investments)
  • Taxpayers whose income tax is deferred on ESOPs

Freelancers such as bloggers, content writers, digital marketers, etc. can also file ITR-4. Due date for filing ITR-4 for Assessment Year 2023-24 is 31 July 2023.

Section 44AD

Small business owners whose turnover does not exceed Rs. 2 crore can opt for paying tax under presumptive scheme. Under Section 44AD, taxpayers can declare 8% or 6% (in case of online transactions) of the turnover as income and are not required to maintain books of accounts. 

Section 44ADA

Professionals whose receipts in a year are up to Rs. 50 lakhs can declare 50% of such receipts as income. Tax will be calculated on such declared income. Professions who can avail presumptive scheme under section 44ADA are:

  • Architecture
  • Accounting
  • Engineering
  • Legal
  • Architect
  • Medical
  • Interior decoration
  • Technical consultancy
  • Film artists including actors, director, producer, cameraman, singer, lyricist, costume designer, story writer, dialogue writer, editor, etc.
  • Authorised Representative - It does not include a person who is carrying on an accountancy or legal profession or is an employee of the person represented. 
  • Company Secretary
  • Information Technology

Section 44AE

A taxpayer engaged in the business of plying, hiring or leasing of goods carriages can opt for 44AE if he does not own more than 10 goods carriages at any time during the year. 

ITR-3 and ITR-4 Difference

EligibilityIndividuals and HUFs whose total income includes income from business or professionResident individuals, HUFs or partnership firms who have opted for presumptive taxation scheme under Section 44AD, 44ADA or 44AE and income is up to Rs. 50 lakhs
Number of house propertiesIncome can be from any number of house propertiesIncome should be from one house property only
Due date of filingDue date of filing ITR-3 for non audit taxpayers is 31st July. Whereas for audit cases, the due date is 31st October.Due date of filing ITR-4 is 31st July. Since audit is not applicable on presumptive taxation scheme


Let’s take some examples

Case 1: Atul runs a cloth retail shop and has opted for the presumptive income scheme.

Atul can choose to file ITR-3 or ITR -4 (provided is gross turnover is less than Rs 2 crore).

Case 2: Neha is an interior decorator and wants to know which ITR form should she file.

As a professional, as long as her gross receipts from profession does not exceed Rs.50 lakh, she can opt for presumptive scheme of tax and file her return with ITR-4 Form.

Case 3 : Deepika had opted for presumptive income for FY 2016-17. She runs a wholesale business and her turnover for FY 2017-18 was Rs 2.20 crores.

Since Deepika’s turnover exceeds Rs 2 crore, for financial year 2017-18 she will have to file ITR-3 as ITR-4 is not applicable in cases where turnover exceeds Rs 2 crore.

Case 4: Rahul is an insurance agent and his income was Rs 18 lakhs in the financial year 2017-18, he wants to file ITR-4.

Those running insurance commission business cannot file ITR-4. Therefore Rahul has to file ITR -3 for financial year 2017-18.

Case 5 : Shashank is a practicing heart specialist and his turnover for the financial year 2017-18 is Rs 55 lakhs. Shashank wants to file ITR-4.

As Shashank has his own practice, he carries on the profession. Hence he can file ITR 4 only if his annual receipts are less than Rs.50 lakhs. As Shashank’s income is more than Rs.50 lakhs, he has to file ITR-3. 

Case 6 : Prashant carries on 2 businesses . He has a manufacturing business with a turnover of Rs 2.4 crores and another business of truck hiring and leasing, which is eligible for presumptive income as per section 44 AD. Prashant wants to know which ITR to file.

Even though Prashant runs a business which is eligible under section 44AD, he shall have to file ITR-3. Return of income must include income from all sources and given Prashant’s first business, ITR-3 shall be applicable for filing his consolidated income details.

Case 7 : Ashish is in the business of plying, hiring , or leasing goods carriage. In the financial year 2017-18  he owned 13 lorries.

Presumptive method of taxation under section 44AE is applicable only in cases where not more than 10 trucks are owned. Therefore, Since Ashish owns more than 10 trucks he has to file ITR-3.

Case 8 : Vijay is in the business of plying, hiring, leasing goods carriage and owns 5 goods carriage during the year but Vijay chooses not to opt for 44 AE scheme and want to declare income lower than the income estimated under section 44AE.

Vijay can declare income lower than what is calculated under section 44AE, however he shall have to maintain books of accounts as prescribed and will have to file ITR-3 for his income.

* all names are fictitious and used only for the purpose of illustration.


Can I file IFTR-4 instead of ITR-3?

Taxpayers who have opted for presumptive taxation under Section 44AD, 44ADA or 44AE are mandatorily required to file ITR-4. Since, ITR-3 is for persons having income from business or profession, you have to file ITR-4

Is ITR-3 for salaried employees?

Salaried employees can file ITR-3 if they have income from business or profession in addition to the salary income. However, in case an employee only earns salary he can file ITR-1 (Sahaj).

Who cannot use ITR-3?

ITR-3 cannot be used by 

  • Companies, charitable and religious trusts, limited liability partnerships (LLP), firm, local authority, body of individuals and association of persons 
  • Person opting for presumptive taxation
  • Person having income more than Rs. 50 lakhs

Can I file ITR-3 myself?

Yes, ITR-3 can be filed by the taxpayer himself as it does not require any authentication from the Chartered Accountant or any official. It just needs to be verified and authenticated by the taxpayer while filing.

Does ITR-4 have capital gain?

No, ITR-4 does not have the option for capital gains. If any person has capital gains, ITR-2 or ITR-3 can be filed in case of individuals and HUF.

Also read about:
1. Which ITR Should I File
2. How to file ITR Online
3. What is ITR 2 Form & How to File ITR-2
4. How to File ITR-2 for Income from Capital Gains FY 2022-23
5. ITR 1 vs ITR 4
6. What is ITR 3 Form & How to File ITR-3
7. How to File and Download ITR-7 Form
8. What is ITR-5 Form, Structure & How to File ITR 5
9. ITR 6
10. Due date for ITR Filing 


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