ITR-4: Who Can File ITR 4

If you've jumped on this article, it means you want to file your income tax return quickly and hassle-free without getting into too many complications. 

"Why are you tensed, Namrata?"

"Raj, I wanted to get a personal loan. But the bank asks me to submit the income tax return documents."

"So? You must have filed it last year, didn't you?"

"Oh come on. I would rather give up the thought of taking a personal loan. Income tax return filing is a tough nut to crack."

"C'mon, nowadays, it has become more like a walk in the park. You don't even have to keep the accounting records handy."

Yes, income tax laws in India are becoming easier day-by-day. To promote ease of doing business, the Government is simplifying the process so the businesses and professionals can focus on revenue and growth instead of scratching their heads around compliances. 

Are you a freelancer or an agency owner? You can file your income tax return in less than an hour. I can see some eyes rolling. 

ITR-4 is the answer to all your tax concerns. It's a simple tax return form for the business owners and professionals who don't want to get into the complexities of the income tax law. 

I will focus mainly on agency owners, solopreneurs (engaged in professional services) and freelancers for this article. You'll learn:

• What is ITR-4?
• Who is eligible to file ITR-4?
• How to calculate profits from your income? 
• Can you get rid of all the accounting records if you're eligible for ITR-4?
• Can you mention salary details in ITR-4 along with the freelancing income?

Budget 2023 Update

The presumptive taxation limits under Sections 44AD and 44ADA for the FY 2023-24 (AY 2024-25) has been revised:

Section 44AD (Small Businesses)

Previous Limit: ₹2 crore
Revised Limit: ₹3 crore*

Section 44ADA (Professionals)

Previous Limit: ₹50 lakh
Revised Limit: ₹75 lakh*

What is ITR-4?

ITR-4 (also called SUGAM) is an income tax return form which can be filed by the businesses and professionals under ‘presumptive taxation scheme'. 

Only those taxpayers can file ITR-4 whose total gross receipts (total receipts from all clients including the foreign clients) are less than Rs 50 lakhs in a financial year. 

How to calculate profits from the professional income? 

Under Section 44AD, the presumptive income scheme simplifies tax calculation for small businesses with gross receipts or turnover less than Rs 2 crore. It estimates net income at 8% of gross receipts, or 6% if receipts are digital. This scheme exempts businesses from maintaining books of accounts and quarterly advance tax payments, requiring only a single advance tax payment by 15th March. 

Who is eligible to file ITR-4?

Professionals who're engaged into the following professions can file ITR-4:

• Legal
• Medical
• Engineering
• Architecture
• Accounting
• Technical consultancy
• Interior decoration

This list covers nearly every field in which a freelancer or an agency owner works. For our easy understanding, writers, marketers, graphic designers, website developers, video editors, content marketing agencies, digital marketing agencies, etc. can avail the benefit of ITR-4. However, if in doubt, consult with a tax expert to determine your eligibility.

Who is not eligible to file ITR-4 for AY 2024-25?

• If income is above Rs 50 lakh from salary, house property, or other sources.
• Directors in a company or those with investments in unlisted equity shares.
• Resident but not ordinarily residents (RNOR) and Non-residents.
• Income from:

1. More than one house property.
2. Lottery, racehorses, legal gambling, etc.
3. Taxable capital gains.

• Income from agricultural exceeding Rs 5,000.
• Residents with assets or signing authority in foreign accounts.
• Claiming relief for foreign tax paid or double taxation under sections 90/90A/91.
• Gains from Virtual Digital Assets (Cryptocurrency).
• TDS deducted under Section 194N.

Can you get rid of all the accounting records if you're eligible for ITR-4?

Yes, if you're filing ITR-4 return, you're not required to maintain accounting books. However, ITR-4 requires following details related to cash and bank summaries.

• Opening balance
• Receipts during the year
• Payments/ withdrawals during the year
• Closing balance

A normal excel sheet can be maintained for tracking your cash and bank transactions for tax purposes. 

Can you mention salary details in ITR-4 along with your freelancing income?

Yes. Apart from reporting profits from business & profession, you can report the following incomes as well in ITR-4:

• Income from Salary (including allowances, perquisites etc.)
• Income from House Property
• Income from Other Sources. 

Changes in ITR-4 form for the AY 24-25

Changes have been made to the ITR-4 form for the AY 24-25. The updates are:

• Taxpayers who prefer the old regime must opt out by submitting Form 10-IEA as the default tax regime has been changed to the new tax regime as per Section 115BAC.
• Section 80CCH allows individuals to claim a tax deduction for the total amount deposited in the Agnipath Scheme, who subscribe to the Agniveer Corpus Fund on or after 01-11-2022, 
• The turnover for the presumptive taxation scheme under Section 44AD has been increased from Rs. 2 crores to Rs. 3 crores  and gross receipts under Section 44ADA has been raised from Rs. 50 lakhs to Rs. 75 lakhs

What's the due date for filing ITR-4 for FY 2023-24?

The due date for filing ITR-4 is 30th November 2024. 

The Author is the founder of Content Flavour, a comprehensive content marketing agency that creates conversational content to convert businesses, c-suite executives and professionals into online brands. He has 44,000+ followers on LinkedIn and ranks in top 1% in the "Writing and Editing" industry as per LinkedIn Social Selling Index.