top of page
Search

Purpose and Filing Process of ITR 4

Filing income tax returns is a crucial responsibility for taxpayers, especially for those who run businesses or have income from various sources. One of the important forms used for filing income tax returns in India is the ITR 4. This form is designed specifically for individuals and Hindu Undivided Families (HUFs) who have income from a proprietary business or profession and have opted for the presumptive taxation scheme under Section 44AD, 44ADA, or 44AE of the Income Tax Act.


Understanding the purpose and the filing process of ITR 4 can help taxpayers comply with tax regulations efficiently and avoid penalties. This article will guide you through the key aspects of ITR 4, its eligibility criteria, and a step-by-step process to file it correctly.


What is the Purpose of ITR 4?


The primary purpose of ITR 4 is to simplify the tax filing process for small taxpayers who have opted for the presumptive taxation scheme. This scheme allows eligible taxpayers to declare income at a prescribed rate without maintaining detailed books of accounts. The ITR 4 form is tailored to capture income details under this scheme, making it easier for taxpayers to comply with tax laws.


Key Features of ITR 4


  • Simplified Filing: Taxpayers can declare income on a presumptive basis, reducing the need for extensive documentation.

  • Applicable to Small Businesses: Suitable for individuals, HUFs, and professionals with turnover or gross receipts up to ₹2 crore.

  • Covers Various Income Sources: Includes income from business, profession, salary, house property, and other sources.

  • Reduces Compliance Burden: No need for detailed profit and loss statements or balance sheets if opting for presumptive taxation.


This form is particularly beneficial for small business owners, freelancers, and professionals who want to avoid the complexities of regular accounting and tax filing.


Eye-level view of a person filling out tax forms on a desk
Filing tax returns with ITR 4 form

ITR 4 Filing Process Explained


Filing ITR 4 involves several steps that taxpayers must follow to ensure accurate and timely submission. The process can be completed online through the Income Tax Department’s e-filing portal or with the help of tax professionals.


Step 1: Check Eligibility


Before starting the filing process, confirm that you meet the eligibility criteria for ITR 4:


  • Your total turnover or gross receipts from business or profession should not exceed ₹2 crore.

  • You have opted for the presumptive taxation scheme under Section 44AD, 44ADA, or 44AE.

  • You do not have income from capital gains or income from more than one house property.

  • You are an individual or HUF.


Step 2: Collect Required Documents


Gather all necessary documents to fill out the form accurately:


  • PAN card and Aadhaar card

  • Bank statements and passbooks

  • Details of income from business or profession

  • Salary slips (if applicable)

  • Details of other income sources like house property or interest income

  • Tax payment challans (if advance tax or self-assessment tax has been paid)


Step 3: Download or Access the ITR 4 Form


You can access the ITR 4 form on the official Income Tax Department e-filing website or through authorized tax filing platforms. The form is available in both online and offline modes.


Step 4: Fill in the Details


Enter all required information carefully:


  • Personal details such as name, PAN, address, and contact information

  • Income details under presumptive taxation scheme

  • Details of other income sources

  • Tax deductions and exemptions claimed

  • Tax paid details


Step 5: Validate and Submit


After filling in the details, validate the form to check for errors or missing information. Once validated, submit the form electronically.


Step 6: Verify Your Return


Verification is a crucial step to complete the filing process. You can verify your return through:


  • Aadhaar OTP

  • Net banking

  • Electronic Verification Code (EVC)

  • Sending a signed physical copy of ITR-V to the Centralized Processing Center (CPC) within 120 days


Timely verification ensures that your return is processed without delays.


Close-up view of a laptop screen showing online tax filing portal
Online filing of ITR 4 on tax portal

Common Mistakes to Avoid While Filing ITR 4


Filing ITR 4 may seem straightforward, but certain mistakes can lead to processing delays or notices from the tax department. Here are some common errors to watch out for:


  • Incorrect Income Declaration: Ensure that income declared under presumptive taxation matches your business turnover.

  • Missing Verification: Not verifying the return after submission can lead to the return being treated as invalid.

  • Ignoring Advance Tax Payments: If you have paid advance tax, make sure to report it correctly.

  • Wrong Form Selection: Filing ITR 4 when not eligible can cause complications.

  • Incomplete or Incorrect Details: Double-check all personal and financial information before submission.


By avoiding these mistakes, you can ensure a smooth filing experience.


Benefits of Filing ITR 4 on Time


Filing your income tax return using ITR 4 on time offers several advantages:


  • Compliance with Tax Laws: Avoid penalties and interest for late filing.

  • Easy Loan Approvals: Filed returns serve as proof of income for loans and credit cards.

  • Carry Forward Losses: Enables you to carry forward business losses to future years.

  • Claim Refunds: If excess tax is paid, timely filing helps in claiming refunds quickly.

  • Peace of Mind: Staying compliant reduces stress and legal risks.


Timely filing also helps maintain a good financial record, which is essential for business growth and credibility.


Tips for Smooth ITR 4 Filing Experience


To make your ITR 4 filing hassle-free, consider these practical tips:


  1. Start Early: Begin gathering documents and filling the form well before the deadline.

  2. Use Reliable Software: Opt for trusted e-filing platforms or professional help.

  3. Keep Records Organized: Maintain clear records of income, expenses, and tax payments.

  4. Stay Updated: Keep track of any changes in tax laws or filing procedures.

  5. Double-Check Entries: Review all information before submission to avoid errors.


Following these tips can save time and reduce the chances of errors during filing.


For those interested in learning more or filing their returns online, you can explore the itr 4 filing process in detail on the official platform.


Understanding the Impact of Presumptive Taxation on ITR 4


Presumptive taxation under ITR 4 offers a simplified way to calculate taxable income, but it also has specific implications:


  • Fixed Income Rate: Income is calculated as a percentage of turnover or gross receipts (e.g., 8% or 6% depending on the business).

  • No Detailed Books Required: Reduces accounting burden but limits expense claims.

  • Advance Tax Payment: Taxpayers must pay 100% of advance tax by March 15.

  • Limited Deductions: Only deductions under Chapter VI-A are allowed.


Understanding these factors helps taxpayers make informed decisions about opting for presumptive taxation and filing ITR 4 accordingly.



By understanding the purpose and following the correct filing process of ITR 4, taxpayers can ensure compliance and make the most of the presumptive taxation scheme. Proper preparation, attention to detail, and timely submission are key to a successful tax filing experience.

 
 
 
bottom of page