The Income Tax Return (ITR) Form-4, also known as Sugam, is a simplified tax return form designed for small businesses and professionals with presumptive income under Sections 44AD, 44ADA, and 44AE of the Income Tax Act. If you are a freelancer, small trader, or eligible professional, this guide will help you understand ITR-4 for FY 2024-25 (AY 2025-26).
Who Should File ITR-4?
ITR-4 is applicable to:
- Small businesses with a turnover of up to ₹2 crores (under Section 44AD)
- Professionals(like doctors, lawyers, consultants) with gross receipts up to ₹50 lakhs (under Section 44ADA)
- Freelancers & self-employed individualsopting for the presumptive taxation scheme
- Transport operators(owning up to 10 goods vehicles) under Section 44AE
Note: Salaried individuals, large businesses, and those with capital gains must file ITR-1, ITR-2, or ITR-3 instead.
Key Features of ITR-4 (FY 2024-25)
1. Presumptive Income Scheme Benefits
- Businesses can declare 8% (6% for digital transactions) of turnover as profit.
- Professionals can declare 50% of gross receipts as income.
- No need to maintain detailed books of accounts.
2. Due Date for Filing ITR-4
- 31st July 2025 (for non-audit cases)
- 30th September 2025 (if audit is required)
3. Documents Required
- Bank statements (for turnover verification)
- GST returns (if applicable)
- Form 16A/26AS (for TDS details)
- Business expense summary (if not under presumptive scheme)
Who Should File ITR-3 vs ITR-4?
Applicability
- ITR-3 → For businesses/professionals maintaining detailed books of accounts (no turnover limit).
- ITR-4 (Sugam) → Only for small businesses/professionals opting for presumptive taxation (Sections 44AD, 44ADA, 44AE).
Eligibility Criteria
- ITR-3→ For businesses/professionals maintaining detailed books of accounts (no turnover limit).
- ITR-4 (Sugam)→ Only for small businesses/professionals opting for presumptive taxation (Sections 44AD, 44ADA, 44AE).
Audit Requirement
- ITR-3 → Mandatory if turnover exceeds ₹1 crore (₹10 crore for 44AB).
- ITR-4 → No audit required if filing under presumptive scheme.
Presumptive Taxation
- ITR-3 → Not allowed (must report actual profits).
- ITR-4 →
- Businesses: 8% profit (6% for digital transactions).
- Professionals: 50% of gross receipts as income.
Benefits of Filing ITR-4
✔ Simplified tax calculation (no need for detailed expense proofs).
✔ Lower compliance burden (no mandatory audit for small businesses).
✔ Faster processing compared to ITR-3.
✔ Avoids penalties for late filing.
Penalties for Late Filing
- ₹5,000 (if filed after July 31 but before December 31, 2025).
- ₹10,000 (if filed after December 31, 2025).
- Interest under Section 234A (1% per month on pending tax).
Conclusion
Filing ITR-4 (Sugam) is the easiest way for small businesses and professionals to comply with tax laws under the presumptive income scheme. Ensure timely filing before July 31, 2025, to avoid penalties.