ITR-4 Filing: Who should use this tax-filing form and who should not

The Income Tax Department offers different ITR forms, each designed for specific types of taxpayers.

Filing income tax returns (ITR) can be a complex process, especially when it comes to selecting the correct form. Choosing the right form is crucial as it determines the information you need to provide and the applicable tax regulations.

Let's first explore the different ITR forms and how to identify the one that is most relevant to your income situation.

How to choose the appropriate ITR form for your income?

When it comes to choosing the right ITR form, it's essential to assess your income sources and the category you fall under. The Income Tax Department offers different ITR forms, each designed for specific types of taxpayers. Here are some key factors to consider when selecting the appropriate ITR form:

Identify your taxpayer category: Individuals, Hindu Undivided Families (HUFs), companies, partnerships, and other entities have different ITR forms. Determine the category that best suits your income profile.

Also read: ITR-1 - who should use it and who shouldn't 

Assess your income sources: Different ITR forms cater to various types of income, such as salary, business or professional income, capital gains, house property income, and more. Identify the income sources applicable to you.

Also read: ITR-2 - who should us it and who shouldn't

Consider exemptions and deductions: Some ITR forms provide specific sections to claim deductions or exemptions. If you are eligible for any deductions or exemptions, ensure that the chosen form allows you to declare and avail of those benefits.

Analyse complexity and compliance: Different ITR forms have varying levels of complexity and reporting requirements. Evaluate the form's complexity based on your income sources and reporting capabilities.

Also read: How to use National Pension Scheme to save tax

By carefully considering these factors, you can narrow down the options and choose the ITR form that aligns with your income and tax situation.

Who should file ITR-4 form?

Among the various ITR forms, ITR-4 is specifically designed for individuals and Hindu Undivided Families (HUFs) who have opted for the presumptive taxation scheme. The presumptive taxation scheme is applicable to certain professionals, small businesses, and freelancers with turnover or gross receipts below a specified limit.

The scheme is applicable for small businesses with turnover or gross receipts below Rs 2 crore and for professionals such as doctors, lawyers, and chartered accountants.

Key criteria to determine if you should file ITR-4

Eligibility for presumptive taxation: If you are eligible and have opted for the presumptive taxation scheme under Section 44AD, Section 44ADA, or Section 44AE of the Income Tax Act, ITR-4 is the suitable form for you.

Business income sources: ITR-4 is applicable if you have income from a business or profession, including freelancing, consultancy, or small-scale trading or manufacturing activities.

Total income threshold: If you file taxes under the Presumptive Tax Scheme (PTS), you need to use the ITR-4 form. Under the PTS, the ITR can be filed by taxpayers engaged in any business if the total turnover or gross receipts from the business do not exceed Rs 2 crore and by the resident taxpayers engaged in a specified profession, where total gross receipts from the profession do not exceed Rs 50 lakh.

Reporting requirements: ITR-4 requires reporting of specific details related to income and expenses, such as turnover, gross receipts, deductions, and other relevant information.

By filing ITR-4 accurately and on time, taxpayers can fulfill their tax obligations and benefit from the convenience of the presumptive taxation scheme.

By ensuring compliance with the appropriate ITR form, taxpayers can streamline their tax filings and stay on the right side of the law.