Last updated: December 17th, 2024 10:45 AM

Form ITR 4 (Sugam) for AY 2020-21

Income Tax Return 4 (ITR 4) is a form for ITR filing which should be used by assessees having a business income. Only assessees who have opted for a presumptive taxation scheme should use Form ITR 4. A presumptive taxation scheme is a facility offered by the Central Board of Direct Taxes (CBDT) to assessees who meet the eligibility criteria as per Sections 44AD, 44ADA or 44AE. Assessees who opt for the scheme can declare a taxable income as a percentage of the turnover. Thus, the assessees opting for the scheme need not carry out the detailed procedure for calculation of business income, as mentioned in the Income Tax Act. ITR 4 is a simplified return intended for usage by assessees who have opted for a presumptive scheme. Assessees filing ITR 4 should undergo an audit in case the declared taxable income is lesser than the presumptive income. It is mandatory to file ITR 4 using the electronic mode. However, for assessees who are aged above eighty years, the return can be filed using a physical copy of ITR 4. All assessees who have opted for the presumptive scheme should file ITR 4 irrespective of the utilisation of the Basic Exemption Limit (BEL). On 3rd January 2020, the CBDT issued Notification G.S.R.9(E). The notification has introduced an additional restriction regarding the filing of ITR 4. The notification specifies that assessees who are jointly owning house property with more than one person should not opt for ITR 4. The impact of the notification is that assessees who are jointly owning house property with more than one person are not allowed to use ITR 4. The notification covers Assessment Years commencing from 2020-21.

Applicability

Form ITR 4 (Sugam) should be filed only when the following conditions are satisfied:

• The assessee falls under either one of the following categories:
  • Individual,
  • Hindu Undivided Family(HUF), or
  • Partnership firm which is not a Limited Liability Partnership (LLP)
• The assessee is considered to be an ordinary resident as per Section 6(6) of the Income Tax Act
• The assessee is obtaining income which falls under the heading Profits and Gains of Business or Profession as mentioned in Section 28 of the Income Tax Act
• The assessee has opted for a presumptive taxation scheme under Sections 44AD, 44ADA or 44AE
• The taxable income of the assessee is calculated in the manner provided in Sections 44AD, 44ADA or 44AE
• The assessee is covered by the requirement to file Form 3CA or 3CB and also Form 3CD as per Rule 6G

Incomes Reportable Under ITR 4

ITR 4 is used to report exclusively income which falls under the heading Profits and Gains of Business or Profession as per Section 28 of the Income Tax Act. Only assessees who have opted for a presumptive taxation scheme under Sections 44AD, 44ADA or 44AE should use ITR 4.

Restriction of ITR 4

ITR 4 should not be used in the following circumstances:

• When the assessee owns a house property in joint-ownership with two or more persons
• When the assessee is the owner of assets located abroad
• When the assessee is the beneficial owner of any business enterprise or charitable organisation located abroad
• When the assessee has appointed a signing authority abroad
• When the assessee is obtaining income from outside India
• When the assessee is from Goa, Dadra and Nagar Haveli or Daman and Diu, and is having income which should be allocated between family members as per Section 5A
• When the assessee is employed as a director in a company
• When the assessee was holding unlisted shares during the financial year
• When the taxable income of the assessee is more than fifty lakh rupees
• When the assessee is the owner or beneficial owner of more than one taxable house property (A taxable house property is an immovable property whose net annual value is taxable as per Section 22 of the Income Tax Act.)
• When the assessee has a loss which is brought forward into the current assessment year under any head of income
• When the assessee has a loss to be carried forward to future assessment years under any head of income
• When TDS should be deducted on the income of the assessee, but the deduction was made for another person
• When the assessee has made a claim for relief under Sections 90, 90A or 91 for avoiding double taxation
• When the agricultural income is more than five thousand rupees
• When the taxable income of the assessee includes any income exceeding ten lakh rupees by way of dividends from a domestic company
• When the assessee has taxable income which is covered by Section 115BBE

Out of the above, the first restriction was additionally introduced by the notification with effect from 3rd January 2020. The notification is given below for reference, together with the format for ITR 4:  

Changes in ITR 4

Compared to the ITR-4 form of previous Assessment Year (AY), the Government of India (GoI) has introduced the following additional fields:

• Details of the employer in case the assessee is showing salary income
• Details of unrealised rent in case there is house property income accruing to the assessee
• Details of deduction claimed under Section 57(iv) if any
• Details of Passport along with the date of expiry

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