ITR 4 Form Filing
Form ITR 4 is filed by the taxpayers who have opted for the Presumptive Taxation Scheme under Section 44D, 44DA, 44AE of the Income Tax Act,1961. But this is subject to the business turnover limit i.e in case if the turnover is exceeding Rs.2 crore then the taxpayer is required to file ITR 3 Form.
What is Presumptive Taxation in Scheme?
Presumptive Taxation Scheme is a scheme that exempts small taxpayers from maintaining the books of accounts.
Who is Eligible to file Form ITR 4?
Individuals whose income comes from the following sources have to file ITR 4 Form:
- Business Income under Section 44AD/Section 44AE.
- Income from a profession as per Section 44ADA.
- Income up to Rs. 50 lakh from Salary or Pension.
- Income up to Rs. 50 lakh from One house property (that does not include the brought forward loss o loss that is to be brought forward under this head)
- Income from other sources up to Rs.50 lakh (does not include winning from lottery or horse races)
- Form ITR 4 can also be filed by the freelancers if the income is not exceeding Rs.50 lakh.
Who is not eligible for ITR 4 Form?
The following individuals need to file ITR-4:
- 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 any 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 a 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 the lottery, horse races, income taxable at special rates u/s 115BBDA or 115BBE
- Has income which is to be apportioned under 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).
Components of ITR 4 Form
The structure of Form ITR-4 is as follows
- 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 about 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 Scheme
Presumptive Taxation Scheme
What are the features of the Presumptive Taxation Scheme?
- Under presumptive taxation scheme, there is no requirement to maintain the 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 the 15th of March. There is no need to comply with quarterly installments of due dates of Advance tax (i.e. in June, Sep, Dec)
Presumptive Taxation Scheme
Applicable Income Tax Section
The taxpayer may be in any wholesaling, retailing, trading, civil construction, or any other business
Entities of business involved in hiring, plying, or leasing of goods carriages
Maximum turnover limit
Up to Rs 2 crore in a year
Annual receipts of not more than Rs.50 lakh.
Owning not more than 10 goods vehicles during the year.
8% of total receipts and electronic receipts shall be charged at 6% of gross turnover during the year.
50% of gross receipts. A higher income of more than 50% can be declared
? 7,500 per vehicle per month or part thereof based on the duration for which the vehicle was owned by the person during the year
No further deductions and exemptions are allowed
No further deductions and exemptions are allowed
No further deductions and exemptions are allowed (A partnership can claim deduction and interest to the partners from the computed income at RS. 7500 vehicle per month)
How to file ITR 4 Form?
ITR-4 can be submitted both online and offline as well.
The following individuals can file offline form:
- Individuals at the age of 80 years or more
- The individual’s income is less than Rs.5 Lakh and he does not have to claim a refund in the income tax return
ITR 4 can be filed offline :
- By furnishing a return in a physical paper form
- By furnishing a bar-coded return (An acknowledgment will be issued at the time of submission of the physical paper return)
- By furnishing the return digitally using the digital signature.
- By transmitting the data electronically and then submitting the verification of the return made in Form ITR-V.
If the ITR-4 Form is under digital signature then an acknowledgment will be sent to the registered email id.
Major Amendments made to the ITR 4 Form in AY 2021 – 2022
The Changes that are incorporated in the ITR 3 Form are:
There are no major changes made in the ITR 4 Form in comparison to the changes that were made last year.
ITR 4 Form for the AY 2021-2022 has been updated with a declaration to choose between the old and the new tax regimes. This declaration is under Part A general information as ” Are you opting for new tax regime under section 115 BAC where the tax taxpayer has to choose between ‘Yes or No’. If in case it is Yes, the furnishing date of the Form 101E along with the acknowledgment number has to be filed.
Part B – Under the Income from other sources a drop down like the interest from the saving account, deposit, etc is to be provided in the efiling utility along with specifying the nature of the income. In the case of the dividend income, the quarterly breakup has to be provided for allowing the applicable relief from the charge of the interest for default in the payment of advance tax under section 234C.
Schedule DI that was inserted for AY 2020 – 2021 has been removed.
ITR-4 Return Filing FAQ’s
1. Is the balance sheet mandatory for ITR 4 Filing?
In the case of ITR 4, it is not necessary to disclose the particulars of the balance sheet.
2. What is cash in hand for ITR 4?
It is not necessary to disclose the personal assets in ITR4. Only the assets that are held to conduct the business are to be shown in ITR 4. You can show Nil (Zero) value concerning sundry creditors, inventors, and Cash in Hand. There will be no error on the validation and the returns can be filed.
3. Is it possible to convert ITR 1 to ITR 4?
Yes, Form ITR 1 can be converted to ITR 4.
4. What is inventory in ITR 4?
Inventories are the assets that include the finished goods, work in progress, and the raw materials that are held by a company for sales in the future. It also includes the goods are purchased that are held for resale and maintenance supplies, and the consumables used for the production process.
5. Is it possible to shift from ITR 3 to ITR 4?
Switching from ITR 3 to ITR 4 cannot be done unless the sales are declared.
6. Can Doctors file ITR 4?
Yes, doctors can file ITR 4 after opting for the presumptive scheme and still declare the profits higher than 50% of receipts. But if the receipts are under Rs.50 lakhs and the expenses are lower than 50% of the receipts then a significant amount is saved by opting for the scheme.