ITR-4 Return Filing

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ITR-4 SUGAM Form Filing - Income Tax Return

For filing returns, the Income Tax Department has set out different forms. These forms are filed by the taxpayers as per the category that they fall under and the source of their income. There are multiple criteria that decide eligibility of a taxpayer to file a particular ITR form. Form ITR-4 is used for filing Income Tax Return by those taxpayers who have opted for the presumptive income scheme under Sections 44AD, 44ADA and 44AE of the Income Tax Act, 1961. This is, however, subject to the business turnover limit of INR 2 crores, exceeding which the taxpayer would be required to file ITR-3. Presumptive Taxation scheme is a scheme that exempts the small taxpayers from maintenance of books of accounts.

Who all are eligible to file Form ITR 4?

Form ITR-4 is required to be filed by those individuals whose income comes from the following sources:

Business Income under Section 44AD/Section 44AE
Income from profession as per Section 44ADA
Income up to INR 50 lakhs from Salary/Pension
Income up to INR 50 lakhs from One House Property (does not include brought forward loss or loss to be brought forward under this head)
Income from other sources up to INR 50 lakhs (does not include winning from lottery or horse races)
Form ITR-4 can also be filed by freelancers in case their income does not exceed INR 50 lakhs.

Who all are not required to file Form ITR-4?

Form ITR-4 cannot be filed by any individual who:

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 an 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 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 lottery, horse races, income taxable at special rates u/s 115BBDA or 115BBE
Has income which is to be apportioned in accordance with 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)

Features of Presumptive Taxation Scheme

There is no requirement of maintenance of 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 15th of March. There is no need to comply with quarterly installments of due dates of Advance tax (i.e. in June, Sep, Dec)

What is the process of filing Form ITR-5?

Form ITR-5 may be filed by the taxpayer either offline or online.

Offline filing of the form may be done by:

Furnishing bar-coded return
Furnishing the return in physical paper form – at the time of physical submission of the return, an acknowledgement shall be issued by the Income Tax Department

Online filing of Form ITR-5 can be done by:

Online furnishing of the return under digital signature
Online furnishing of the return under digital signature

Presumptive Income and its Taxation

Small businesses usually do not have enough resources for maintaining proper accounts and calculating exact profit or loss. For this reason, the Income Tax Department has laid down simple provisions for computation of income tax of small business owners based on gross receipts of the business.

What are the components of Form ITR-4?

Form ITR-4 has the following parts:

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 pertaining to 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 column

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Income tax return filing for a taxpayer with taxable income of less than Rs.10 lakhs.

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Income tax return filing for a taxpayer with taxable income of less than Rs.25 lakhs.

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Filing Income Tax Return ITR-4 SUGAM Form

ITR-4 SUGAM form can be filed under any of the following four methods:

Filing in a paper form - Only applicable for individuals over 80 years old and/or individuals/HUFs whose income does not exceed Rs.5 lakhs and no refund is claimed.
Filing online using digital signature certificate.
Transmitting the data in ITR-4 SUGAM form electronically under electronic verification code.
By transmitting the data in ITR-4 SUGAM form electronically and then mailing (By post) the return in Return Form ITR-V to the Income Tax Office.

Assessee filing ITR-4 SUGAM form under the fourth method must complete the acknowledgement in ITR-V. After preparing ITR-V, the assessee should print out two copies of Form ITR-V. One copy of ITR-V, duly signed by the assessee, has to be sent by ordinary post to

Post Bag No. 1,
Electronic City Office,
Bengaluru— 560 100,
Karnataka.

The other copy may be retained by the assessee for his record.

Presumptive Taxation Scheme for SMEs

From the financial year 2016-17, businesses having a turnover of upto Rs.2 crores can be registered under the presumptive taxation scheme. The rates of presumed income chargeable to tax under the cheme is set at 8% for the financial year 2016-17. Hence, if a business has a total turnover of Rs.1.0 crores in 2016-17, then the income chargeable to tax would be Rs.8 lakhs. Further, though the minimum amount chargeable to tax is determined under the presumptive taxation scheme, there is no higher limit. Hence, a taxpayer can also willingly declare a higher income than the mandatory 8% of gross receipts or total turnover, while filing income tax returns. So, it is up to the discretion of the business owner to declare if the profit margin in the business is more than the mandatory 8%.

Presumptive Taxation Scheme for Professionals

The presumptive taxation scheme has also been extended to professionals. However, professionals who wish to enroll under the presumptive taxation scheme should have gross receipts from professional services not exceeding Rs.50 lakhs in a financial year. For professionals enrolled under the presumptive taxation scheme, 50% of the total receipts of the professional during the financial year would be considered as profit and get taxed under the income tax head, “Profits and gains of business or profession”. For example, if a professional has total receipts from profession amounting to Rs.30 lakhs, then the taxable income would be a minimum of Rs.15 lakh under the presumptive taxation scheme.

Similar to the presumptive taxation scheme for SMEs, professionals can also declare income more than the mandatory 50% of the total receipts. Further, while calculating income under presumptive taxation scheme, professionals can claim deduction with respect to salary and interest paid to partners. However, professionals will not be eligible to claim deduction under Sections 30 to 38, including depreciation on assets.

Presumptive Taxation Scheme for Professionals

Presumptive Taxation Scheme for Transporters

The presumptive taxation scheme for transporters can be availed by persons involved in plying, hiring or leasing of goods carriages. Individuals who own less than 10 goods carriage can enrol under the presumptive taxation scheme for transporters. Taxpayers enrolled under the presumptive taxation scheme for transporters can calculate income to be 7,500 for every month (or part of a month) for all types of goods carriage vehicles, heavy or light.