Online Income Tax Return (ITR) Form-4

Individuals enrolled under the presumptive taxation scheme need to use Form itr_4 to file their annual ITR.


As per the Section 44 AD, Section 44 ADA, and Section 44 AE of the Income Tax Act, a tax- payers are eligible to opt for presumptive income scheme as per their business requirement or the form of business. The scheme allows a tax payer to compute annual taxable amount on a presumed income basis instead of an actual earnings. Individuals, Professionals, and Hindu Undivided Families (HUF’s) who have opted for presumptive income scheme are obliged to use Form ITR- 4 SUGAM for filing their annual Income Tax Returns (ITR).

Any individual or HUF can opt for presumptive income scheme based on their respective annual income. In case of a business entity the annual income shall not exceed INR 2 Crores, while professionals can go for presumptive income scheme when their yearly receipts exceed INR 50 Lacs.

Following sources of income are taken into consideration while computing the annual taxable amount:

As per the Income Tax Department’s (ITD) guidelines, all individuals who need to file Form ITR- 4 SUGAM must complete the mandated statutory formalities of filing annual ITR by July 31st and in case of business September 30th is the due date for filing annual ITR.

Important Notes:

Individuals and HUFs exceeding their respective annual turnover limits (as specified by the ITD) are not eligible to use Form ITR- 4 SUGAM Also, Companies are restrained to use the Form ITR- 4 SUGAM and are advised to file their annual ITRs using Form ITR- 6 or Form ITR- 7 (as per the applicability).

Presumptive Taxation Scheme

Presumptive Income Scheme for Small and Medium Size Enterprises (SMEs) The ITD has introduced the presumptive taxation scheme in financial year 2016- 2017. Business entities with an annual turnover of NOT exceeding over INR 2 Crores can get enrolled and claim benefits of the scheme.

Presumptive taxation for businesses is covered under section 44AD of the income tax act. Any business which has a turnover of less than Rs 2 crore can opt to be taxed presumptively. They must declare profits of 8% for non-digital transactions or 6% for digital transactions.

For Instance, business entity with total annual turnover of INR 1 Crores need to file annual ITR equalling to INR 8 Lacs, which is computed as per the prescribed 8% tax rate. The rate is, however, applied on a presumed income that is based on the annual turnover.

Moreover, the presumptive taxation scheme has a determined minimum annual tax rate (i.e. 8%) chargeable on the presumed income, but there is no defined maximum tax rate. Any tax payer (professional or business) can willingly declare their respective profit margin, if its exceeding the taxable amount as per the minimum prescribed 8% tax rate.

Presumptive Taxation Scheme for Professionals

The ITD invites professionals (like engineers, doctors, chartered accountants) with gross receipts NOT exceeding INR 50 Lacs in a financial year to get enrolled under the Presumptive Taxation Scheme. ITD has set the tax rate at 50% on the annual gross receipts to compute the presumed income. Further, the taxable amount (i.e. 50% of total gross receipts) will be calculated under income tax head, “Profits and Gains of Business or Profession”.

For Instance, a professional with INR 40 Lacs of annual gross receipts will be charged tax at 50% rate making it INR 20 Lacs, which will be the taxable income. Likewise SMEs, a professional can also willingly declare more income, if exceeding 50% of the total annual receipts. A professional can claim for deductions under the presumptive taxation scheme such as salary paid to employees and interest paid to partners. As per the Sections 30 to 38, a professional is, however, not eligible to claim deductions for depreciation on assets.

Presumptive Taxation Scheme for Transporters

The ITD has extended presumptive taxation scheme for Transporters involved in activities, including plying, leasing, and / or hiring of goods carriages. A transporter can get enrolled under presumptive taxation scheme for owning NOT more than 10 goods carriages. Under this scheme, the presumed income is computed to be INR 7,500 each month that will be valid on all types of goods carriage vehicles, irrespective of heavy or light.

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