ITR-4 (Sugam): A Complete Guide for AY 2025-26
If you’re a small business owner, freelancer, or professional who has opted for presumptive taxation, then ITR-4 (Sugam) is the right income tax return form for you. It is specially designed to simplify tax compliance for taxpayers with relatively simple financial affairs under Sections 44AD, 44ADA, or 44AE of the Income Tax Act. In this article, we explain everything you need to know about ITR-4 for Assessment Year 2025-26, including eligibility, structure, major changes, and how to file the form online.
What is ITR-4?
ITR-4, also known as Sugam, is the return form meant for Individuals, Hindu Undivided Families (HUFs), and Partnership Firms (other than LLPs) who:
- Have opted for presumptive income scheme under Section 44AD, 44ADA, or 44AE
- Have income from business or profession
- Have total income up to ₹50 lakhs
ITR-4 is designed to ease the compliance burden by removing the need to maintain books of accounts and instead allowing income to be declared on a presumptive basis.
What is Presumptive Taxation?
Presumptive taxation is a simplified method under the Income Tax Act where eligible taxpayers can declare income as a fixed percentage of gross receipts/turnover without maintaining detailed books of accounts.
Applicable Sections:
Note: Since income is calculated as a percentage of turnover, no further business expense deductions are allowed.
Who Can File ITR-4?
You can file ITR-4 if you meet all the following conditions:
- You are an Individual, HUF, or Partnership Firm (not LLP)
- You are a Resident of India
- Your total income is up to ₹50 lakh
- Your income includes:
- Business income under Section 44AD or 44AE
- Professional income under Section 44ADA
- Salary/pension
- One house property
- Long-term capital gain (LTCG) under Section 112A up to ₹1.25 lakh without any capital loss carry-forward
- Income from other sources (excluding lottery, betting, etc.)
Who Cannot File ITR-4?
You cannot use ITR-4 if:
- Your total income exceeds ₹50 lakh
- You are a Director in a company
- You own unlisted equity shares
- You have more than one house property
- You have foreign assets or foreign income
- You have agricultural income exceeding ₹5,000
- You are RNOR (Resident but Not Ordinarily Resident) or a Non-Resident
- You have taxable capital gains other than those permitted
- You’ve claimed foreign tax relief under Sections 90/90A/91
- You’ve earned income from lottery, racehorses, or digital assets like cryptocurrency
- You are subject to TDS under Section 194N
- You are required to maintain books of accounts under the Income Tax Act
Major Changes in ITR-4 for AY 2025-26:
Long-Term Capital Gains (LTCG) Inclusion:
- Taxpayers can now report LTCG under Section 112A (from listed equity shares and equity mutual funds) up to ₹1.25 lakh in ITR-4, if there’s no carry-forward of losses.
Tax Regime Selection (Section 115BAC):
- New Tax Regime is the default option.
- Taxpayers can opt for the Old Regime by filing Form 10-IEA before the due date.
- If you opted out in the previous year, confirm or change your choice in AY 2025-26.
Enhanced Deduction and Disclosure Requirements:
- Section-wise disclosure now mandatory under Sections 80C to 80U via drop-down menus.
- Income from foreign retirement accounts (Section 89A) requires additional reporting.
Aadhaar Update:
- The system no longer accepts the 28-digit Aadhaar Enrollment ID.
- Only the valid 12-digit Aadhaar number will be accepted.
TDS Reporting Enhancement:
- A new column introduced in Schedule TDS to mention the section under which TDS has been deducted.
Structure of ITR-4 Form:
The ITR-4 form is structured into the following sections:
- Part A: General Information
- Part B: Gross total income from all heads
- Part C: Deductions and computation of taxable income
- Part D: Tax computation and status
- Schedule BP: Income from business/profession under Sections 44AD/44ADA/44AE
- Schedule IT: Advance Tax and Self-Assessment Tax
- Schedule TDS1 & TDS2: Tax Deducted at Source from salary and other sources
- Schedule TCS: Tax Collected at Source
- Schedule GST: GSTIN and gross receipts reported under GST
- Financial Particulars of Business: Assets and liabilities owned
- Verification: Declaration by the taxpayer
How to File ITR-4 Online?
Step-by-Step Guide on the Income Tax Portal:
- Visit the Income Tax e-Filing portal
- Log in with your PAN, password, and captcha.
- Click on e-File > Income Tax Return
- Choose AY 2025-26 and select ITR Form: ITR-4
- Select filing type – Original/Revised
- Fill out all sections of the form (auto-fill is available for many details)
- Choose the tax regime (old/new)
- Select verification option (E-verify now or later)
- Preview and submit your return
- If E-verifying now, use Aadhaar OTP, net banking, or other available methods
Important: ITR-4 is an annexure-less form. No supporting documents need to be attached at the time of filing.
Key Changes Introduced in AY 2024-25:
- New tax regime made default (Section 115BAC)
- Form 10-IEA introduced for opting out of the new regime
- Introduction of Section 80CCH: Deduction for Agniveer Corpus Fund
- Increased turnover thresholds:
- 44AD: ₹2 crore → ₹3 crore (if cash receipts <5%)
- 44ADA: ₹50 lakh → ₹75 lakh (if cash receipts <5%)
- New field in Schedule BP to disclose cash receipts, including non-account-payee cheques
Final Thoughts:
ITR-4 simplifies income tax return filing for small businesses and professionals under the presumptive taxation scheme. With recent changes in thresholds and tax regime rules, it’s important to stay updated and file accurately.
Disclaimer: This article is for informational and educational purposes only. It does not constitute professional tax advice. Please consult a tax expert or chartered accountant for guidance specific to your financial situation.
