Navigate the intricacies of ITR-4 filing for FY 2025-26 with our detailed guide. Learn about eligibility, deductions, and step-by-step filing instructions.
Understanding ITR-4 Applicability
Filing Process for ITR-4
Deductions and Exemptions
Worked Example: Tax Calculation
FAQs on ITR-4 Filing
Who Should File ITR-4?
ITR-4 is designed for taxpayers opting for the presumptive income scheme under Sections 44AD, 44ADA, and 44AE.
Individuals, HUFs, and Firms (other than LLPs) with business income.
Income under the presumptive taxation scheme up to ₹2 crore.
Professionals with income under Section 44ADA up to ₹50 lakh.
Exclusions from ITR-4
Certain taxpayers are not eligible to file ITR-4.
Individuals with income exceeding ₹50 lakh.
Income from more than one house property.
Income from capital gains or foreign assets.
Presumptive Taxation Scheme
Understand the benefits of the presumptive taxation scheme.
Section 44AD: 8% of turnover or gross receipts.
Section 44ADA: 50% of gross receipts for professionals.
Section 44AE: Income from goods carriage at ₹7,500 per month per vehicle.
Eligibility Criteria
Ensure you meet the eligibility criteria for filing ITR-4.
Resident individuals, HUFs, and firms.
No income from foreign sources.
No agricultural income exceeding ₹5,000.
Documents Required
Gather all necessary documents before filing.
PAN card and Aadhaar card.
Bank statements and Form 26AS.
Details of business turnover and receipts.
Steps to File ITR-4
Follow these steps to file your ITR-4 accurately.
Log in to the Income Tax e-filing portal.
Select 'ITR-4' and the assessment year 2026-27.
Fill in personal, income, and tax details.
Verification Process
Complete the filing by verifying your return.
E-verify using Aadhaar OTP or net banking.
Send a signed ITR-V to CPC, Bengaluru if not e-verified.
Ensure verification within 120 days of filing.
Common Mistakes to Avoid
Avoid these errors to ensure smooth processing.
Incorrect personal details.
Mismatch in income and Form 26AS.
Omitting bank account details.
Section 80C Deductions
Maximize your deductions under Section 80C.
Investments in PPF, NSC, and ELSS.
Life insurance premium payments.
Principal repayment on home loans.
Health Insurance Deductions
Claim deductions for health insurance premiums.
Up to ₹25,000 for self and family under Section 80D.
Additional ₹25,000 for parents below 60 years.
₹50,000 for senior citizen parents.
Interest on Home Loan
Deduct interest paid on home loans.
Up to ₹2 lakh under Section 24(b).
Additional ₹1.5 lakh under Section 80EEA for first-time buyers.
Conditions apply for loan sanction date and property value.
Other Deductions
Explore additional deductions available.
Section 80G for donations to charitable institutions.
Section 80E for interest on education loans.
Section 80TTA for savings account interest up to ₹10,000.
Example Scenario
Calculate tax for a professional using presumptive taxation.
Gross receipts: ₹40 lakh under Section 44ADA.
Presumptive income: 50% of ₹40 lakh = ₹20 lakh.
Deductions claimed: ₹1.5 lakh under Section 80C.
Tax Calculation
Determine the tax liability based on the example.
Taxable income: ₹20 lakh - ₹1.5 lakh = ₹18.5 lakh.
Tax under old regime: ₹2.5 lakh (up to ₹5 lakh), 20% (₹5 lakh to ₹10 lakh), 30% (above ₹10 lakh).
Total tax: ₹2.5 lakh + ₹1 lakh + ₹2.55 lakh = ₹6.05 lakh.
Tax Savings
Evaluate tax savings through deductions.
Deductions reduced taxable income by ₹1.5 lakh.
Tax savings at 30% slab: ₹1.5 lakh x 30% = ₹45,000.
Effective tax liability: ₹6.05 lakh - ₹45,000 = ₹5.6 lakh.
Who can file ITR-4?
ITR-4 is suitable for individuals, HUFs, and firms (excluding LLPs) with income from business or profession under the presumptive taxation scheme, provided their turnover does not exceed ₹2 crore for businesses or ₹50 lakh for professions.
What is the deadline for filing ITR-4 for FY 2025-26?
The deadline for filing ITR-4 for FY 2025-26 (AY 2026-27) is July 31, 2026. It is crucial to file before this date to avoid penalties and interest on late filing.
Can I file ITR-4 if I have income from capital gains?
No, ITR-4 cannot be used if you have income from capital gains. In such cases, you should opt for ITR-2 or ITR-3, depending on other sources of income.
How is presumptive income calculated under Section 44AD?
Under Section 44AD, presumptive income is calculated as 8% of the total turnover or gross receipts of the business. This rate is reduced to 6% for digital transactions.
What are the benefits of the presumptive taxation scheme?
The presumptive taxation scheme simplifies tax calculations by allowing taxpayers to declare income at a prescribed rate, reducing the burden of maintaining detailed books of accounts and audits.
Can I claim deductions under Section 80C while filing ITR-4?
Yes, deductions under Section 80C can be claimed while filing ITR-4. These include investments in PPF, NSC, life insurance premiums, and more, up to a maximum of ₹1.5 lakh.
Is it mandatory to maintain books of accounts under presumptive taxation?
No, under the presumptive taxation scheme, taxpayers are not required to maintain detailed books of accounts. However, they must maintain records of turnover and receipts.
What happens if I miss the ITR-4 filing deadline?
Missing the ITR-4 filing deadline can result in a late filing fee under Section 234F, ranging from ₹1,000 to ₹5,000, depending on the delay and total income.
Can I switch from the presumptive scheme to regular taxation?
Yes, taxpayers can switch from the presumptive scheme to regular taxation. However, once opted out, they cannot return to the presumptive scheme for the next five years.
Are there any penalties for incorrect filing of ITR-4?
Yes, incorrect filing can attract penalties under various sections, including underreporting of income or furnishing inaccurate details, leading to penalties up to 200% of the tax due.