Income Tax Return FORM IV for Business Owners

ITR Form 4

What is ITR Form 4?

The ITR-4 Form is the Income Tax Return form for those taxpayers, who have opted for the presumptive income scheme as per Section 44AD, Section 44ADA and Section 44AE of the Income Tax Act. This form needs to be filled by business enterprises only if their turnover is below Rs. 2 crores. If the taxpayer’s business turnover exceeds Rs. 2 crores then the taxpayer has to file ITR Form 3. So before you start filing your income tax return forms it is always wise to check which bracket of turnover you fall under and ensure you fill in the correct form.


Who all are required to fill in the ITR Form 4?

ITR 4 is to be filed by the individuals/HUF/ partnership firm whose total income of AY 2018-19 includes :

  1. Business income under section 44AD or 44AE
  2. Income from profession calculated under section 44ADA
  3. Salary/pension
  4. Income from One House Property (excluding the brought forward loss or loss to be carried forward cases under this head);
  5. Income from Other Sources (Excluding winning from lottery and income from horse races).

*Freelancers engaged in the above profession can also opt for this scheme if their gross receipts don’t exceed Rs 50 lakhs.

How to file the ITR Form 4?

While the main format for filing the form is online through the progress of technology, users have the option of filling the form offline also if they wish to do so. To fill the form online, taxpayers have to follow the following method

  • by furnishing the return electronically under digital signature;
  • by transmitting the data in the return electronically under electronic verification code;
  • by transmitting the data in the return electronically and thereafter submitting the verification of the return in Return Form ITR – V

That is the process to file the ITR online, taxpayers can also file their returns offline through the following modes

  • By furnishing a return in a physical paper form
  • By furnishing a bar-coded return

The Income Tax Department will issue you an acknowledgment at the time of submission of your physical paper return. Please note that only those individuals who are above the age of 80 or if their income is less than Rs. 5 lakhs and do not have a claim to the refund can fill their returns offline.

The entire ITR Form 4 is an annexure less form i.e. you do not have to attach any supporting documents while filing this form.

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Who can’t user Form ITR – 4 (SUGAM)

The Income tax department explains that the form cannot be used by an individual/HUF:

  • Whose total income for the year includes income from more than one house property.
  • Income from winnings from lottery or income from race horses.
  • Income is chargeable to tax under the head “Capital Gains”.
  • Income tax under section 115BBDA.
  • Income of nature referred to in section 115BBE.
  • Any resident having income from any source outside India.
  • Agricultural income of more than Rs 5,000.
  • Income from speculative business and other special incomes.
  • Income from agency business or income in the nature of commission or brokerage.
  • Who claims relief under section 90, 90A and/or section 91
  • Who is a resident and ordinarily resident and has any assets (including financial interest in any entity) located outside India or signing authority in any account located outside India.

What is the Eligibility Criteria for this Scheme?

  1. Your gross receipts or turnover of the business for which you want to avail this scheme should be less than Rs 2 crore.
  2. You must be a Resident in India.
  3. This scheme is allowed to an individual, a HUF or a partnership firm. It is not available to a Company.
  4. The scheme cannot be adopted by the taxpayer, if he has claimed deduction under section 10, 10A, 10B, Section 10BA, or Section 80HH to 80RRB in the relevant year.

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What are the Eligible Businesses that can avail this scheme?

The taxpayer may be in any business – retail trading or wholesale trading or civil construction or any other business to avail this scheme. But this method of income computation is NOT applicable to:

  1. Income from commission or brokerage
  2. Agency business
  3. The business of plying, hiring or leasing goods carriage (see section 44AE)
  4. Professionals – who are carrying on a profession of legal, medical, engineering, architectural, accountancy, technical consultancy, an interior decoration, an authorized representative, film artist, company secretary, and information technology.

How to Fill ITR 4?

The form should be filled up as per the sequence mentioned below:

  • Part A
  • Schedules
  • Part B
  • Verification
  • Details relating to TRP and countersignature of TRP if the return is prepared by him.

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