Purpose of ITR-4

The purpose of ITR-4 is to:

• Simplify tax compliance for small taxpayers.
• Facilitate presumptive taxation for individuals and entities.
• Reduce the burden of maintaining exhaustive financial records.

Applicability of ITR-4

ITR-4 applies to the following taxpayers who meet specific conditions:

Eligible Taxpayers:

• Individuals, HUFs, and Firms (excluding LLPs) opting for presumptive taxation under:
  • Section 44AD for businesses.
  • Section 44ADA for professions.
  • Section 44AE for transporters.
• Total income during the financial year does not exceed ₹50 lakhs.
• Income sources limited to:
  • Salary or pension.
  • Income from one house property (excluding losses brought forward).
  • Income from other sources, such as interest and family pension.
  • Income from eligible presumptive business or profession.

Presumptive Taxation: Simplified Taxation Scheme

Presumptive taxation is a scheme under the Income Tax Act, 1961, designed to simplify the tax compliance process for small businesses, professionals, and transport operators. Instead of maintaining detailed accounting records and undergoing audits, taxpayers under this scheme can declare income at a prescribed percentage of their gross receipts or turnover.

Section 44AD (Business Income):

• For eligible businesses with gross turnover/receipts up to ₹2 crores.
• Presumptive income: 8% of turnover (6% for digital transactions).

Section 44ADA (Professional Income):

• For specified professions with gross receipts up to ₹50 lakhs.
• Presumptive income: 50% of gross receipts.

Section 44AE (Income from Goods Carriages):

• For taxpayers owning up to 10 goods carriages.
• Presumptive income: ₹7,500 per month per vehicle.

The ITR-4 form is divided into four parts for easy reporting of income and tax details:

Part A: General Information

• Basic details:
  • Name, PAN, Aadhaar number, and contact details.
  • Filing status (original or revised return).
  • Nature of business/profession.
  • Opt-in/opt-out status under presumptive taxation.

Part B: Gross Total Income

• Reporting of income from:
  • Salary/Pension.
  • House Property: Limited to one property.
  • Other Sources: Interest, family pension, etc.
  • Business/Profession: Presumptive income under Sections 44AD, 44ADA, or 44AE.

Part C: Deductions and Total Taxable Income

• Deduction claims under various sections of Chapter VI-A:
  • 80C: Investments in PPF, LIC, NSC, etc.
  • 80D: Health insurance premiums.
  • 80G: Donations to eligible institutions.
  • 80E: Interest on education loans.
• Total taxable income is calculated after applying deductions.

Part D: Tax Computation and Status

• Tax computation includes:
  • Total tax liability.
  • Advance tax payments.
  • TDS/TCS deductions.
  • Refunds or additional tax payable.

Supplementary Schedules

• Schedule BP: Presumptive income details under Sections 44AD, 44ADA, or 44AE.
• Schedule IT: Details of advance tax and self-assessment tax payments.
• Schedule TCS: Taxes collected at source.
• Schedule TDS: Taxes deducted at source (salary and other income).