ITR-4
What is ITR 4 Form?
This return is applicable for an Individual or Hindu Undivided Family (HUF), who is Resident other than Not Ordinarily Resident or a Firm (other than LLP) which is a Resident having Total Income up to ₹ 50 lakh and having income from Business or Profession which is computed on a presumptive basis (u/s 44AD / 44ADA / 44AE) and income from Salary / Pension / One House Property / Other sources (Interest, Family Pension, Dividend etc.) / Agricultural Income up to ₹ 5,000.
What is a Presumptive Taxation Scheme?
The presumptive taxation scheme is designed to simplify tax compliance for certain individuals and businesses.
Under Section 44AA of the Income Tax Act, individuals and businesses engaged in specific activities are typically required to maintain detailed accounting records. However, Sections 44AD, 44ADA, and 44AE offer relief to small taxpayers by allowing them to estimate their Income at prescribed rates, reducing the burden of maintaining extensive financial records.
Limit for Senior Citizens is INR 3 lakhs and for Super Senior Citizens INR 5 lakhs.
There is no basic exemption limit for any other persons other than Individuals.
Who cannot use ITR 4 Form?
ITR-4 cannot be used by a person who;
- is a director in a company
- has held any unlisted equity shares at any time during the previous year
- has any asset (including financial interest in any entity) located outside India
- has signing authority in any account located outside India
- has income from any source outside India
- is a person in whose case payment or deduction of tax has been deferred on ESOP
- who has any brought forward loss or loss to be carried forward under any head of income
- Please note that ITR-4 (Sugam) is not mandatory. It is a simplified return form to be used by an Assessee, at his option, if he is eligible to declare Profits and Gains from Business or Profession on presumptive basis u/s 44AD, 44ADA or 44AE.
Late Fee and Penalty for late Filing of ITR-4
Late filing of income tax returns can result in various penalties, depending on your total income.
- Late fee of Rs. 5000 will be levied on any persons other than Individuals with a total income exceeding Rs. 5 lakhs, while those with income below this threshold will incur a reduced late fee of Rs. 1,000.
- Late fee of Rs. 5000 will be levied on Individuals with a total income exceeding Rs. 5 lakhs, while those with income below this threshold will incur a reduced late fee of Rs. 1,000. However, Individuals having total income up to Rs. 2.5 lakhs are not required to pay any late fee for late filing of the return. For Senior Citizens, this limit is Rs. 3 lakhs and for Super Senior Citizens Rs. 5 lakhs.
- Additionally, if you owe taxes and fail to file the return by the due date, you will be liable for additional interest at a rate of 1% per month until you submit the return.
- In more severe cases, penalties can be imposed for underreporting or misreporting of income. Underreporting may lead to penalties of up to 50% of the tax underreported, while misreporting can result in penalties of up to 200% of the misreported tax amount.
- Furthermore, repeated failure to file tax returns despite reminders from tax authorities may lead to prosecution procedures. This could result in imprisonment ranging from three months to seven years, depending on the outstanding tax liabilities.
It is crucial to file your tax returns promptly and accurately to avoid these legal and financial consequences.
How we can assist you?
We provide valuable assistance in filing your ITR-4 return. We start by helping you select the appropriate form based on your income sources, ensuring accuracy in filing.
We meticulously calculate your tax liability, perform error checks, and prioritize timely filing to reduce the risk of penalties or tax notices. If eligible, we assist in processing your income tax refund efficiently.
Our team of tax experts is available to address your queries and provide guidance throughout the process. We also keep you updated on tax law changes and deadlines, ensuring your compliance with the latest regulations. With our secure platform, you can trust us to safeguard your financial data while simplifying your ITR-4 filing experience.
FAQs
What is ITR-4 Form?
ITR-4 is an Income Tax Return form in India designed for individuals and Hindu Undivided Families (HUFs) with income from a business or profession under the presumptive taxation scheme.
Who should file ITR-4?
Individuals and HUFs with income from a small business or profession, and opting for presumptive taxation under Sections 44AD, 44ADA, or 44AE, should file ITR-4.
What documents are needed to file ITR-4?
Documents like PAN card, Aadhaar card, financial statements, profit and loss account, balance sheet, and other business-related documents are needed.
How is income calculated under presumptive taxation in ITR-4?
Under presumptive taxation, a percentage of the total turnover or gross receipts is considered as income (8% for business, 50% for professionals, and specified rates for others).
Can I revise ITR-4 after filing?
Yes, taxpayers can revise their ITR-4 within the prescribed time limit if they discover any errors or omissions.
Are there any specific schedules for reporting partnership income in ITR-4?
Yes, Schedule BP (Business and Profession) is used to report details of business income, including income from partnership firms.
Can I claim a deduction for interest paid on business loans in ITR-4?
Yes, interest on business loans can be claimed as a deduction in the relevant schedule. Provide details of the interest paid during the financial year.
What is the penalty for late filing of ITR-4?
Late filing may attract a penalty under Section 234F. The penalty amount varies based on the delay in filing the return.
What is the reporting requirement for income received in kind in ITR-4?
If you receive income in kind (perquisites), such as accommodation or a car, from your business or profession, report the details in the relevant schedules of ITR-4, including their valuation.
How are losses from a proprietary business set off against salary income in ITR-4?
Business losses can be set off against salary income in the same assessment year. Report the details of losses and their set-off in the relevant schedules.
How is income from partnership firms or LLPs treated in ITR-4?
Income from partnership firms or LLPs is reported in ITR-3, not ITR-4. Partners should file ITR-3 if they have income from such entities, providing details of their share of profits, capital, and other relevant information.
What is the treatment of presumptive income under Section 44ADA in ITR-4?
If you opt for presumptive taxation under Section 44ADA, report 50% of the gross receipts as presumptive income in Schedule BP. No further deductions are allowed.
How to e-verify the ITR-4 form?
ITR-4 can be e-verified using methods like Aadhaar OTP, EVC (Electronic Verification Code), or by sending a signed ITR-V to the Centralized Processing Centre (CPC).
Can I revise ITR-4 after filing?
Yes, taxpayers can revise their ITR-4 within the prescribed time limit if errors or omissions are discovered.
Can a salaried individual file ITR-4 if they have income from freelance work on the side?
If the freelance income is from a profession, ITR-4 can be used. However, if it is from business, ITR-4 is not applicable, and ITR-3 may be more suitable.
