Explore the key differences between ITR-3 and ITR-4, eligibility criteria, and filing requirements for the financial year 2025-26. Ensure accurate and compliant tax filing with our detailed guide.
ITR-3 and ITR-4 Differences
ITR-3 Details
ITR-4 (Sugam) Details
Examples
FAQs on ITR-3 and ITR-4
Eligibility Criteria
Understand who can file ITR-3 and ITR-4 based on income sources and tax schemes.
ITR-3 is for individuals and HUFs with income from business or profession.
ITR-4 is for resident individuals, HUFs, and firms under presumptive taxation (Sections 44AD, 44ADA, 44AE).
ITR-4 is applicable if total income is up to ₹50 lakhs.
ITR-3 includes income from all sources, including capital gains and casual income.
Nature of Income
Different income types determine the appropriate ITR form.
ITR-3 covers all income types, including salary, business, capital gains, and more.
ITR-4 includes income from salary, two house properties, and capital gains under Section 112A up to ₹1.25 lakh.
ITR-4 excludes casual income and income from more than two house properties.
ITR-3 requires detailed income reporting, while ITR-4 is simplified for presumptive income.
Books of Accounts and Audit
Requirements for maintaining books and audit differ between ITR-3 and ITR-4.
ITR-3 requires maintaining books if income exceeds limits under Section 44AA.
ITR-4 does not require maintaining books of accounts.
Audit is mandatory for ITR-3 if turnover exceeds limits under Section 44AB.
No audit is required for ITR-4 under presumptive taxation.
Filing Deadlines
Ensure timely filing by knowing the due dates for each form.
ITR-3 non-audit cases: Due by 31st August 2026.
ITR-3 audit cases: Due by 31st October 2026.
ITR-4: Due by 31st August 2026, as audit is not applicable.
Late filing attracts penalties under Section 234F.
Eligibility Criteria For Filing ITR-3
Determine if you qualify to file ITR-3 based on your income sources.
Individuals and HUFs with income from business or profession.
Includes income from salary, house property, capital gains, and other sources.
Applicable for partners in firms with income from interest and remuneration.
Not applicable for those opting for presumptive taxation.
Who Is Not Eligible To File ITR-3?
Identify who cannot file ITR-3 to avoid incorrect filing.
Individuals and HUFs without business or professional income.
Companies, LLPs, and trusts are not eligible.
Non-residents or RNORs cannot file ITR-3.
Those with income solely from salary or house property should file ITR-1 or ITR-2.
Due Date for Filing ITR-3
Know the deadlines to avoid penalties and ensure compliance.
Non-audit cases: File by 31st August 2026.
Audit cases: File by 31st October 2026.
Partners in audited firms: File by 31st October 2026.
Late filing incurs penalties under Section 234F.
Worked Example: Tax Calculation
Illustrate tax calculation for an individual filing ITR-3.
Consider an individual with ₹10 lakh salary, ₹2 lakh business income.
Deductions: ₹1.5 lakh under Section 80C, ₹50,000 under Section 80D.
Taxable income: ₹10 lakh + ₹2 lakh - ₹2 lakh = ₹10 lakh.
Tax: ₹1.12 lakh (old regime) or ₹75,000 (new regime).
Who Can File ITR-4?
Eligibility criteria for filing ITR-4 under presumptive taxation.
Resident individuals, HUFs, and firms with presumptive income.
Total income should not exceed ₹50 lakhs.
Income from salary, two house properties, and presumptive business.
Agricultural income up to ₹5,000 is allowed.
Who Cannot File ITR-4?
Identify taxpayers who are ineligible to file ITR-4.
Non-residents and RNORs are not eligible.
Total income exceeding ₹50 lakhs disqualifies filing.
Income from more than two house properties is not allowed.
Capital gains exceeding ₹1.25 lakh under Section 112A disqualify filing.
Presumptive Taxation
Understand the presumptive taxation scheme under different sections.
Section 44AD: For businesses with turnover up to ₹2 crore, 8% deemed profit.
Section 44ADA: For professionals with gross receipts up to ₹50 lakh, 50% deemed profit.
Section 44AE: For transporters, ₹7,500 per month per vehicle deemed profit.
No need to maintain books of accounts under presumptive taxation.
Worked Example: Presumptive Tax Calculation
Illustrate tax calculation under presumptive taxation.
Business turnover: ₹1.5 crore, deemed profit: ₹12 lakh (8%).
Deductions: ₹1.5 lakh under Section 80C.
Taxable income: ₹12 lakh - ₹1.5 lakh = ₹10.5 lakh.
Tax: ₹1.17 lakh (old regime) or ₹90,000 (new regime).
Example 1: ITR-3 Filing
Scenario for an individual with multiple income sources filing ITR-3.
Income: ₹15 lakh salary, ₹3 lakh business income, ₹2 lakh capital gains.
Deductions: ₹1.5 lakh under Section 80C, ₹50,000 under Section 80D.
Taxable income: ₹15 lakh + ₹3 lakh + ₹2 lakh - ₹2 lakh = ₹18 lakh.
Tax: ₹3.37 lakh (old regime) or ₹2.85 lakh (new regime).
Example 2: ITR-4 Filing
Scenario for a small business owner filing ITR-4.
Business turnover: ₹60 lakh, presumptive income: ₹4.8 lakh (8%).
Income from salary: ₹5 lakh, total income: ₹9.8 lakh.
Deductions: ₹1.5 lakh under Section 80C.
Taxable income: ₹9.8 lakh - ₹1.5 lakh = ₹8.3 lakh.
Example 3: Presumptive Taxation
Illustrate presumptive taxation for a professional.
Gross receipts: ₹40 lakh, deemed profit: ₹20 lakh (50%).
Deductions: ₹1.5 lakh under Section 80C, ₹25,000 under Section 80D.
Taxable income: ₹20 lakh - ₹1.75 lakh = ₹18.25 lakh.
Tax: ₹3.57 lakh (old regime) or ₹3.15 lakh (new regime).
What is the due date for filing ITR-3 for FY 2025-26?
For non-audit cases, the due date is 31st August 2026. For audit cases, it is 31st October 2026.
Can a non-resident file ITR-4?
No, ITR-4 is only for resident individuals, HUFs, and firms opting for presumptive taxation. Non-residents cannot file ITR-4.
What is the presumptive income rate under Section 44AD?
Under Section 44AD, the presumptive income rate is 8% of the total turnover or gross receipts for eligible businesses.
Is audit mandatory for ITR-4 filers?
No, audit is not required for ITR-4 filers as it is applicable under the presumptive taxation scheme, which exempts maintaining books of accounts.
What are the penalties for late filing of ITR-3?
Late filing of ITR-3 attracts a penalty under Section 234F, which can be up to ₹10,000 if filed after the due date.
Can ITR-3 be filed by a partner in a firm?
Yes, partners in a firm with income from interest and remuneration can file ITR-3, provided they meet the eligibility criteria.
What is the maximum income limit for filing ITR-4?
The total income should not exceed ₹50 lakhs for filing ITR-4 under the presumptive taxation scheme.
Are capital gains allowed in ITR-4?
Yes, capital gains under Section 112A up to ₹1.25 lakh are allowed in ITR-4, but no carry forward of capital losses is permitted.
How is presumptive income calculated for professionals under Section 44ADA?
For professionals under Section 44ADA, 50% of the gross receipts are deemed as presumptive income, simplifying tax calculations.
What happens if I file the wrong ITR form?
Filing the wrong ITR form can lead to rejection of the return and may require refiling with the correct form, potentially incurring penalties.