If you are a small business owner, freelancer, or professional who has opted for the presumptive taxation scheme under Sections 44AD, 44ADA, and 44AE of the Income Tax Act, 1961, you need to file ITR-4 to submit your income tax returns (ITR). For the financial year 2024-25 (assessment year 2025-26), the Income Tax Department has updated ITR-4 to make it easier for eligible taxpayers to report their income under the presumptive taxation scheme. This blog explains everything you need to know about ITR-4 for filing your income tax return for FY 2024-25 (AY 2025-26).
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What is ITR-4 (Sugam)?
ITR-4 is an income tax return form for small taxpayers who choose to report their income under presumptive taxation scheme. Unlike the other ITR forms such as ITR-3, which is for professionals or businesses that keep detailed accounts, and ITR-1, which is for salaried individuals, ITR-4 makes it easier for eligible taxpayers to file their returns. With ITR-4, you can report your income as a fixed percentage of your turnover or gross receipts without needing to maintain extensive records.
Who should file ITR-4 for FY 2024-25 (AY 2025-26)?
ITR-4 is designed for individuals, Hindu Undivided Families (HUFs), and firms (excluding LLPs) who are residents and have a total income of up to ₹50 lakh. It applies to those earning income from business or profession under the presumptive taxation scheme, as well as those with long-term capital gains of up to ₹1.25 lakh under Section 112A.
Professionals like doctors, lawyers, and consultants, as well as freelancers such as online content writers, bloggers, and vloggers, need to file the ITR-4 form for the financial year 2024-25.
This includes:
- Businesses under Section 44AD,
- Professionals under Section 44ADA,
- Transporters owning goods vehicles under Section 44AE.
Freelancers, such as online content writers, bloggers, and vloggers, need to file the ITR-4 form for the financial year 2024-25.
Who cannot file ITR-4?
You cannot use ITR-4 if your total income is over ₹50 lakh or if your capital gains exceed ₹1.25 lakh.
Additionally, it is not applicable if you are a company director, have investments in unlisted shares, are a non-resident, or have foreign income/assets. You cannot use ITR-4 if there are brought forward losses or losses need to be carried forward under any income head, or tax payment on Employee Stock Option Plan (ESOP) has been deferred.
Presumptive taxation under ITR-4
Under Section 44AD, small businesses can declare 6% (for digital transactions) or 8% (for cash transactions) of their turnover as income. Section 44ADA allows professionals like doctors, lawyers, and consultants to declare 50% of their gross receipts as income. Section 44AE is for taxpayers owning up to 10 goods vehicles, where income is calculated based on fixed amounts per vehicle per month or part of a month. This approach saves time and effort, as there is no need to maintain books or get accounts audited.
Key changes in ITR-4: What’s new in ITR-4 for FY 2024-25 (AY 2025–26)?
Filing your taxes using ITR-4 has undergone a few important updates, particularly for small business owners, professionals, and those utilizing the simplified tax filing method for FY 2024-25. Whether you are a first-time filer or a regular, here’s what has changed and what you should keep in mind.
1) Prefilled Country Code: To reduce errors, the form now comes with “91-INDIA” as the default country code.
2) Previously, having capital gains would push you out of ITR-4. But not anymore. If you have earned up to ₹1.25 lakh in long-term capital gains (LTCG) under Section 112A, you can still use ITR-4
3) A new schedule, Schedule EA 10(13A) for House Rent Allowance (HRA) is added which asks for details such as:
- Place of work
- Actual HRA received
- Actual Rent paid
- Details of Salary
4) For interest on home loans, Schedule 24(b) has been added for you to mention:
- Whether the loan is taken from bank or other than bank
- Name of the bank/institution/person from which the loan is taken
- Loan account number of the bank/institution
- Date of sanction of loan
- Total amount of loan
- Loan outstanding amount as on the last date of the financial year
- Interest on borrowed capital
5) If you are claiming deductions for life insurance, provident fund, etc under Section 80C, you will now have to provide the eligible amount for deduction and the policy number or Document Identification number.
6) If you are claiming deductions for pension contributions, Permanent Retirement Account Number (PRAN) must be provided.
7) For health insurance deductions under Section 80D, you need to disclose the details of insurance such as the name of the insurance company, policy number and health insurance amount.
8) Claiming deductions under Section 80U or 80DD now requires you to specify the type of disability.
9) For deductions under Section 80DDB, you must mention the specific illness being treated.
10) The loan-based deductions such as interest on loan for higher education (80E), for residential house property (80EE), certain house property (80EEA), purchase of electric vehicle (80EEB) are more structured and include:
- From where the loan is taken from, that is a bank or an institution
- Name and Loan Account Number of the bank/institution from which the loan is taken
- Date of sanction of loan
- Total amount of loan
- Loan outstanding as on the last date of financial year
- Interest on such loan
- Vehicle Registration number in case of deduction of interest paid on purchase of vehicle
11) To claim rent paid under Section 80GG, you now have to enter the acknowledgment number of Form 10BA.
12) Now, you will have to mention under which section tax was deducted at source (TDS).
How to choose between the old and new tax regimes in ITR-4 for FY 2024-25
If you are filing your tax return using ITR-4 and want to continue with the old tax regime—where you can claim deductions like Section 80C, 80D then Form 10-IEA is a must.
This form is introduced specifically to let taxpayers officially opt out of the default tax regime (i.e. new regime) which offers lower tax rates but no deductions.
So, if you want to stay in the old regime and make the most of your eligible deductions, make sure you submit Form 10-IEA.
Can ITR-4 be revised or rectified for FY 2024-25?
If you filed your return but later found a mistake, you can file a revised return under Section 139(5). However, if your ITR was processed incorrectly or shows errors not caused by you, you can file a rectification request under Section 154 of the Act.
Key difference between ITR-3 and ITR-4
While ITR-3 is for those who maintain books and may have complex income from business or profession, ITR-4 is much simpler. It considers income based on a set percentage and is ideal for small taxpayers. ITR-3 requires full disclosure of profit and loss, balance sheet, and more, making it suitable for larger or diversified businesses.
Who cannot opt for the presumptive taxation scheme?
The presumptive taxation scheme is designed to simplify tax filing for small businesses and professionals by allowing them to declare income at a fixed percentage. However, not everyone is eligible to use this benefit. The following are excluded:
- Businesses involved in commission or brokerage
- Agency businesses
- Taxpayers owning more than 10 goods carriages at any time during the year
Filing ITR-4 doesn’t have to be complicated. With this simple guide, you can better understand the changes made for AY 2025-26. Always file your return on time to avoid penalties and stay compliant with tax laws.
FAQs
What is the due date for filing ITR-4 for FY 2024-25 (AY 2025-26)?
The last date to file your income tax return is usually July 31. However, for the financial year 2024-25, the Income Tax Department has extended the ITR filing due date to September 15, 2025.
Can salaried individuals file ITR-4 for FY 2024-25?
Yes, only if they also have eligible presumptive business or professional income.
Is an audit required under ITR-4 for FY 2024-25?
No audit is required if you file under the presumptive scheme. However, if you declare lower income than specified and your total income exceeds the basic exemption limit, tax audit applies.
What is the presumptive income scheme?
It allows small taxpayers to declare income at a fixed percentage of turnover/gross receipts, without maintaining books of accounts:
- For small businesses (6% or 8% of turnover)
- For professionals (50% of gross receipts)
- For transporters (based on number of vehicles)
Can I switch between presumptive and regular schemes?
Yes, but frequent switching is not allowed. For example, once opted out of the presumptive scheme, you cannot opt it again for the next 5 years.
Can I report more than one business or profession in ITR-4?
Yes, you can report multiple eligible businesses or professional activities, provided all fall under the presumptive income scheme.
