ITR-4 Form (Sugam) - What is ITR-4, Who Should File, Applicability and How to File ITR-4 For AY 2025-26

ITR-4 should be filed by taxpayers who are running a business and have opted for presumptive taxation scheme under section 44AD, 44ADA and 44AE of the act. Irrespective of whether they have salary income or not, they can file their returns using form ITR-4.

If the businesses do not opt form presumptive taxation, they can file their returns using Form ITR-3.

Then freelancers such as online content writers, bloggers, vloggers, etc. need to file the ITR-4 form. Also, professionals like chartered accountants, doctors, lawyers and engineers, etc. whose income is computed on a presumptive basis u/s 44AD, 44ADA or 44AE need to file this form. 

The Income Tax Department has officially released excel based utility for ITR-1 and ITR-4, marking the start of ITR filing for financial year 2024-25 (AY 2025-26). Now, the taxpayers can proceed filing their returns using the excel utility available on the ‘downloads’ section of the Income Tax portal.

Link to download ITR-1 and ITR-4 excel based utility

What is the ITR-4?

• Different ITR Forms such as ITR-1, ITR-2, ITR-3, and ITR-4 have been notified by the Income Tax Department for taxpayers to file tax returns based on the nature of their income.
• ITR-4 is the Income Tax Return form for taxpayers with business income who opt for a presumptive income scheme under Section 44AD, Section 44ADA and Section 44AE of the Income-tax Act,1961. 

What is Presumptive Taxation?

• Businesses usually have to maintain elaborate books of accounts, and calculate profit according to the relevant provisions of the act.
• But, a relaxation has been provided for small business whose turnover has not crossed certain prescribed limits. In such cases profits can be calculated as a fixed percentage of turnover and can be shown as income in ITR-4. 
• This scheme has been introduced to ease the compliance burden on small businesses by exempting them from maintaining detailed accounting records.
• The presumptive taxation scheme is covered under the following sections:

• Since the profit is calculated directly as a percentage of turnover, the expenses incurred in course of business cannot be again claimed as a deduction. 

Who is Eligible to File ITR-4?

ITR-4 is to be filed by the individuals/HUF/Partnership firm who fulfill the following conditions:

• Is a Resident of India as per Income Tax Act
• Having Business or Professional Income
• Income from business income calculated under Section 44AD or 44AE
• Income from profession calculated under Section 44ADA
• Long-term capital gains income up to Rs. 1.25 lakhs (having no brought-forward or carry-forward capital loss)
• Should not have income from more than one house property

Who is Not Eligible to File ITR-4?

• An individual whose total income exceeds rupees 50 lakhs.
• An individual who is either a director in a company 
• An individual who has invested in unlisted equity shares cannot use this form.
• An individual, HUF or partnership firm who is required to maintain the books of accounts under the Income-tax Act, 1961.
• Resident but not ordinarily residents (RNOR) and Non-residents
• Individuals  who have earned income through the following means: Lottery, racehorses, legal gambling, etc.
• Individual who has more than one house property
• Taxable capital gains (short-term and long-term)
• Agricultural income exceeding Rs 5,000
• A resident that has assets (including financial interest in any entity) outside India or is a signing authority in any account located outside India
• Individuals claiming relief of foreign tax paid or double taxation relief under section 90/90A/91
• Gains from Virtual Digital Assets (Crypto currency)
• Individuals for whom the TDS has been deducted under Section 194N

Major Changes in ITR-4 Form from AY 2025-26

Inclusion of Long-Term Capital Gains (LTCG) Reporting

Taxpayers can now report long-term capital gains (LTCG) under section 112A (from listed equity shares and equity-oriented mutual funds) in ITR-1, provided:

• The total LTCG does not exceed Rs. 1.25 lakh, and
• There are no brought-forward losses or losses to be carried forward under the capital gains head.

Previously, any capital gains required filing ITR-2; this change allows more taxpayers with a very less LTCG to use the simpler ITR-1 form.

Additional Disclosure for Tax Regime Selection (Section 115BAC)

• The new tax regime is now the default for individuals, but eligible taxpayers can opt out and choose the old regime each year directly in the ITR.
• If a taxpayer opted out of the new regime in AY 2024-25, they must declare and confirm their choice or change it for AY 2025-26.
• First-time opt-outs in AY 2025-26 must provide Form 10-IEA acknowledgment details.
• Form 10-IEA must be filed before the due date of return filing.

Enhanced Deductions and Disclosures

• Deductions under Sections 80C to 80U must now be selected from a drop-down menu in the e-filing portal, and the exact clause/sub-section must be specified. This aims to improve accuracy and transparency.
• Income from retirement accounts maintained abroad (Section 89A) has new fields for better relief tracking.

Aadhaar Enrollment ID Removed

• The 28-digit Aadhaar Enrolment ID is no longer accepted. 
• The field now only accepts valid 12-digit Aadhaar Numbers.

Additional Column under Schedule TDS

• An additional column has been added under the Schedule - TDS Details to specify the section under which TDS is deducted. 

What is the Structure of ITR-4?

ITR-4 is divided into parts as mentioned below: 

PART A: General Information 
PART B: Gross total income from the five heads of income 
PART C: Deduction and total taxable income 
PART D: Tax computation and tax status 
Schedule BP: Details of income from Business-Section 44AD, 44ADA and 44EA 
Information regarding turnover/Gross receipts reported for GST: Furnish the GSTIN 
Financial Particulars of Business: Mention the asset and liabilities that you own 
Schedule IT, TCS and TDS 1: Statement of payment of advance tax and tax on self-assessment, tax collected at source and TDS from salary 
Schedule TDS2: Statement of tax deducted at source on income other than salary. 
Verification column: Declare that all your information furnished are true to your knowledge and add your signature.

How To File ITR-4 Form?

You can submit your ITR-4 Form on ClearTax.

Step 1: Log in or sign up on the ClearTax portal. We’ve added the link to the portal for you in the description below. Login to your account, and let’s get started.

Step 2: If you are filing with us for the first time, you must link your PAN by entering your PAN, Date of Birth, and the OTP received on your registered mobile number. Linking your PAN will allow us to submit your return to the income tax department. 

Step 3: But if you filed with us last year and your PAN is already linked, you will directly see this screen.

Step 4: Here, you will have to complete another OTP verification if you want us to pre-fill the details for you. So there are two options here: if you have your Aadhaar registered mobile number with you, you can opt for Aadhaar registered mobile number option and enter the single OTP received as an SMS. And if you don’t have it, then select the IT Department registered mobile number option and enter two OTPs- one received on your mobile and the other one on e-mail.

Step 5: Voila! Most of your information has been auto-filled.

Step 6: Click on 'Continue to e-File’.

Step 7: Here you will see 4 tabs: Personal Info, Income Sources, Tax Saving, and Tax Summary. Let us first look at the personal info tab. All your personal details like name, address and other details will appear here. You can expand each section and review these details. In case you wish to change some information here, you have the option to edit these details. 

Step 8: Now let us move to the Income Sources section. 

1. First up is salary. It may not be applicable in your case if you have business or profession income. 
2. Then there is ‘Rental or house property Income’ 
3. ‘Other Income’ section is where you can add all your dividend income, interest income from savings banks, FDs, income from online gaming and also agricultural income. We fetch interest, FD Income and dividend income directly from the Prefill, You just need to review if something is missing and add them.
4. Then next is the ‘Capital Gains’ section which is where all your income from stocks, mutual funds, US stocks, ESOPs, sale of land or building or jewellery will go. 
5. ‘Business Income’ here you can fill up details regarding your business income, i.e, income under presumptive taxation.

Step 9: Now comes the important section which is the ‘Professional, Freelancing and Business Income’ section. So broadly there are 5 sub-sections here. The first section is 44ADA- this is for professionals. The income tax law has specified a few professions and made it clear that only these professionals can opt for 44ADA: 

Professions like 

1. Legal
2. Medical
3. Engineering
4. Architecture
5. Accountancy
6. Technical Consultancy
7. Interior Decoration
8. Film Artists like cameraman, producer, editor, actor, director, singer, etc are specified.

Step 10: Under ‘Nature of Business’ you will have nearly 40 codes. Select the appropriate code - You can just search for your profession if you do not know your code, that's absolutely fine. And mention the trade name and description.  If you have multiple professions, you can add them all here. 

Note: Your revenue should be less than or equal to Rs 50 lakh and expenses cannot be more than 50% i.e. by default it is assumed that your expenses or cost will not be over 50% of your income.

Step 11: Now let’s look at the 44AD section. 44AD is mainly for small businesses. Just like there were some conditions under 44ADA, there are some conditions for 44AD too. The first condition is that your turnover, i.e. nothing but your sales, must be less than 2 crores and the second condition is that your profit must be more than or equal to 8% of your turnover.

Step 12: Now, it’s time to save some taxes. Go to the tax-savings section and claim all the ‘Deductions’. If you have made donations, tax saving investments like PPF, insurance, ELSS mutual funds, then don't forget to add all those details here. This will help you save some taxes. 

Step 13: If you scroll down, you will find the ‘tax-paid’ section. You can upload your Form 26AS to auto-populate the details. All the details of TDS deducted by your clients and also the advance tax you’ve paid, will appear here. If you’ve bought a car or if you’ve gone on a foreign vacation, TCS, i.e. tax may have been collected at source. That also gets filled from 26AS.

Step 14: Now scroll down, and you’ll see the other disclosures tab. If any of these conditions apply to you, then enter those details.

Step 15: Click on ‘Go to next’ and you will see a tax summary. Based on all the details you’ve added, we have auto-selected the ITR Form for you. Note that you can switch between old and new tax regimes only once in a lifetime. So be careful when selecting the tax regime.   
Once you are done reviewing all the details in the summary report, click on ‘File Tax’. If you have any tax dues, you can refer to the guide here on ‘how to make the tax payment online’ and complete your tax payment in minutes.

Step 16: Once done, don’t forget to e-verify your return and collect exclusive rewards from over 50+ brands!

   
How to File ITR on the Government Portal?

Step 1: Go to the Income Tax e-Filing portal.

Step 2: Log in to the e-filing portal by entering your user ID (PAN), Password, and Captcha code and click 'Login'.

Step 3: Click on the 'e-File' menu and click the 'Income Tax Return' link.

Step 4: Click on ‘Continue’.

Step 5: Read the instructions carefully and fill in all the applicable and mandatory fields of the online ITR form.

Step 6: Choose the appropriate Verification option in the 'Taxes Paid and Verification' tab.

Step 7: Choose any one of the following options to verify the income tax return:

• I would like to e-verify
• I would like to e-verify later within 30 days from the date of filing.

Step 8: Click on the 'Preview and Submit' button, Verify all the data entered in the ITR.

Step 9: 'Submit' the ITR.

Step 10: On Choosing the 'I would like to e-Verify' option, e-Verification should be done through any of the available methods by entering the EVC/OTP. 

Major Changes in ITR-4 Form from AY 2024-25

Below changes are incorporated in the ITR-4 form from AY 2024-25 onwards:

• The default tax regime has been changed to the new tax regime following amendments introduced by the Finance Act 2023 to Section 115BAC. For individuals, HUFs, AOPs, BOIs, and AJPs, the new tax regime now applies by default. Taxpayers who prefer the old tax regime must explicitly choose to opt out. An individual filing ITR 4 must submit Form 10-IEA to opt out of the new tax regime. 
• ITR-4 form has been updated to include a column for disclosing the amount eligible for deduction under Section 80CCH. Section 80CCH, was introduced by the Finance Act 2023, allowing individuals enrolled in the Agnipath Scheme and subscribing to the Agniveer Corpus Fund on or after 01-11-2022 to claim a tax deduction for the total amount deposited in the Agniveer Corpus Fund. 
• The Finance Act 2023 has increased the turnover threshold limit for opting for the presumptive taxation scheme under Section 44AD from Rs. 2 crores to Rs. 3 crores, provided that receipts in cash do not exceed 5% of the total turnover or gross receipts for the previous year. Additionally, Section 44ADA was amended to raise the threshold limit of gross receipts from Rs. 50 lakhs to Rs. 75 lakhs, given that receipts in cash do not exceed 5% of the total gross receipts for the previous year. To reflect these changes, ITR-4 has been updated to include a new column for disclosing "receipts in cash" under Schedule BP. The definition of cash includes cheques or bank drafts that are not account payee.

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