ITR-4
What ITR-4 means, how it works, a worked example, the mistakes we see and the questions founders ask.
DefinitionITR-4 (Sugam) is the simplified income tax return for resident individuals, HUFs and partnership firms declaring business or professional income under presumptive taxation, with total income up to ₹50 lakh.
ITR-4 is the short form for small businesses and freelancers who use Section 44AD (8% or 6% of turnover) or 44ADA (50% of receipts) and do not keep audited books. It takes turnover, presumptive profit, salary, one house property and other income, plus the deductions you claim, and computes tax in a few screens. It is not available if you have capital gains beyond simple cases, more than one house property, foreign assets, or income above ₹50 lakh, in which case you move to ITR-3. The due date is 31 July. You meet it every year if you are a consultant, shop owner or small trader on presumptive tax. What it means for you: keep proof of turnover and digital receipts, because the department can ask, and remember that opting out of 44AD locks you out for five years.
How ITR-4 works
ITR-4, called Sugam, is available to a resident individual, Hindu undivided family or partnership firm (not an LLP) with total income up to ₹50 lakh whose business income is declared under Section 44AD, professional income under 44ADA, or goods transport income under 44AE. Salary, one house property and other sources can be added. Since the return for 2024-25, long-term capital gains on listed shares up to ₹1.25 lakh under Section 112A can also be included without moving to ITR-3.
The business schedule asks for gross turnover split between digital and other receipts, because the presumptive rate is 6% on amounts received through banking channels by the due date and 8% on the rest. For professionals it asks for gross receipts and applies 50%. A short financial particulars section records sundry debtors, creditors, stock and cash on 31 March, and GSTIN and GST turnover are declared so the department can match them.
The due date is 31 July and the form is filed online with Aadhaar OTP or a digital signature. ITR-4 cannot be used by a company director, anyone holding unlisted equity shares, anyone with foreign assets or income, anyone with more than one house property, or anyone with brought-forward losses; those taxpayers file ITR-3 or ITR-2.
A Kochi freelance developer receives ₹36 lakh in 2025-26, all by bank transfer. Under 44ADA she declares ₹18 lakh as profit, adds ₹30,000 of savings interest, and files ITR-4 in the second week of July. She opts for the new regime, where tax comes to about ₹1.7 lakh; her clients' TDS of ₹3.6 lakh already exceeds it, so no advance tax was due and the return produces a refund of about ₹1.9 lakh in August.
Mistakes we see with ITR-4
- Declaring exactly 50% or 8% when actual profit is far higher and the bank balance shows it, which invites a query; the presumptive rate is a floor, and a higher figure can be declared.
- Using ITR-4 after taking a directorship in a friend's company, which makes the return defective.
- Forgetting that ITR-4 still requires GST turnover to be declared and reconciled, so a gap between GSTR-3B and the return triggers a notice.
Last updated 19 October 2026. Checked against the MCA, GST, Income-tax and Trade Marks rules in force for October 2026.
Where you will meet this term
Questions founders ask about ITR-4
Can an LLP file ITR-4?
No. ITR-4 is for individuals, Hindu undivided families and partnership firms, and Section 44AD excludes LLPs anyway. An LLP files ITR-5 on actual profit, with a tax audit if turnover crosses the limit.
Is ITR-4 the same as Section 44AD?
No. 44AD and 44ADA are the computation provisions; ITR-4 is the form for reporting income computed under them. A taxpayer eligible for 44AD who has other complications, such as capital gains beyond 112A or unlisted shares, still computes under 44AD but files ITR-3.
Do I need to keep books if I file ITR-4?
Not the detailed books that Section 44AA requires, but you must be able to prove turnover and the digital share of receipts, so keep invoices, bank statements and GST returns. The portal can ask for them when the AIS or GST data do not match.