ITR 4

ITR-4(Sugam): A Comprehensive Guide to Filing Your Income Tax Return

Introduction:

Filing your income tax return can be a daunting task, but it's a necessary one. The Income Tax Department of India has made it easier for taxpayers to file their returns by introducing the ITR 4 form. In this article, we'll take a detailed look at ITR 4, its features, registration process, precautions, benefits, disadvantages, required documents, and more.

The Indian Government specifies seven income tax returns categories for its citizens. Among these is the ITR-4. ITR-4 is filed by partnerships/HUF/individuals/business owners (manufacturers, wholesalers, online sellers, etc.) whose net income of 2021-22 is up to 50 lakhs subject to other conditions.

What is ITR 4?

ITR 4 is an income tax return form that is used by individuals and Hindu Undivided Families (HUFs) who have income from a presumptive business. It is also used by those who have income from other sources, such as capital gains, foreign assets, and more. ITR 4 is a simplified form that requires taxpayers to provide basic information about their income, deductions, and taxes paid.

The ITR-4 Sugam is one of the income tax returns forms. It is for those taxpayers who have opted for a presumptive income scheme. This scheme has been outlined in Section 44AD, Section 44AE, and Section 44ADA. Note, however, that if the business's turnover exceeds 2 crores in case of 44AD and 50 lakhs and in case of 44AE the assessee owned more than 10 vehicles at any time during the financial year then the taxpayer needs to file ITR-3.

Eligible/Not Eligible:

ITR-4 can be filed by a Resident Individual / HUF / Firm (other than LLP) who has:

• Income not exceeding 50 Lakh during the FY

• Income from Business and Profession which is computed on a presumptive basis u/s 44AD, 44ADA or 44AE

• Income from Salary/Pension, one House Property, Agricultural Income (up to ? 5000/-)

• Other sources which include (excluding winning from Lottery and Income from Race Horses): 

• Interest from Savings Account

• Interest from Deposit (Bank / Post Office / Cooperative Society)

• Interest from Income Tax Refund

• Family Pension

• Interest received on enhanced compensation.

• Any other Interest Income (e.g., Interest Income from unsecured loan)

ITR-4 cannot be filed by an individual / HUF / Firm (Other than LLP) who:

• is a Resident Not Ordinarily Resident (RNOR), and non-Resident Indian

• has total income exceeding 50 Lakh.

• has agricultural income in excess of 5,000/-

• is a Director in a Company

• has income from more than one House Property

• has income of the following nature: 

• winnings from lottery

• activity of owning and maintaining race horses

• income taxable at special rates u/s115BBDA or Section 115BBE

• has held any unlisted equity shares at any time during the previous year

• has deferred income tax on ESOP received from employer being an eligible start-up

• is not covered under the eligibility conditions for ITR-4

Benefits of ITR 4:

• Simplified Reporting: ITR-4 offers a simplified method of reporting income for businesses, professions, and freelancers. Taxpayers can declare their income based on presumptive rates, eliminating the need for maintaining detailed books of accounts.

• Lower Compliance Burden: Since detailed accounting records are not mandatory under the presumptive scheme, taxpayers benefit from reduced compliance burdens and paperwork.

• Ease of Filing: ITR-4 is designed to be user-friendly, making it relatively easy for individuals with business or professional income to file their tax returns.

• Aadhaar and Bank Account Linkage: The requirement to provide Aadhaar and bank account details ensures smoother processing of refunds and communication with the Income Tax Department.

• Simplified form: ITR 4 is a simplified form that requires basic information about income, deductions, and taxes paid.

  
  

Registration Process:

To file your income tax return using ITR 4, you need to register on the Income Tax Department's e-filing website. Here's how you can do it:

• Visit the Income Tax Department's e-filing website.

• Click on the 'Register Yourself' button.

• Fill in your details, including your PAN, name, date of birth, and contact details.

• Choose a password and security question.

• Click on the 'Submit' button.

• You will receive an activation link on your registered email address.

• Click on the link to activate your account.

Document's Required:

You will need to keep the below documents ready (as applicable) to file ITR-4:

• Form 16

• Form 26AS & AIS

• Form 16A

• Bank Statements

• Housing Loan Interest Certificates

• Receipts for Donation Made

• Rental Agreement

• Rent Receipts

• Investment premium payment receipts - LIC, ULIP etc.

Linking of Aadhaar and PAN is important. However, you would still be able to file your ITR if your PAN is not linked with Aadhaar, but you will have limited access on the portal. It is therefore advisable to link PAN with Aadhaar.