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ITR-4

The presumptive scheme of taxation under the Income-tax Act has been beneficial to a lot of taxpayers who have limited income from business or profession. Under the presumptive taxation scheme, taxpayers declare their income as a percentage of turnover when the books of accounts are not maintained. The income tax return filing process is also simplified for these taxpayers through the new ITR-4. Hence ITR-4 has been given the byname ‘Sugam’.

Let us have a glance at the return filing requirements in the context of ITR-4.

Who Can File ITR-4?

An individual, HUF and a partnership firm (not being an LLP) can file their income tax return using ITR-4 provided that, they meet the following criteria:

  • They are residents of
  • Their total income does not exceed INR 50 lakhs.
  • They do not have any income under the head ‘Capital Gains’.
  • They have not invested in any unlisted equity shares.
  • The assessee is not an individual who is a Director in any
  • The agricultural income of the assessee does not exceed INR 5,000.

Taxpayers earning the following incomes can file ITR 4:

  • Presumptive income declared under the sections 44AD, 44ADA or 44AE.
  • Salary/Pension
  • Income from one House Property (excluding cases where there is brought forward/carried forward of loss)
  • Income from Other Sources (excluding winnings from lottery and income from race horses)

Note: ITR-4 is meant for assessees having a total income up to INR 50 lakhs. As long as the turnover does not exceed the limits prescribed u/s 44AD (turnover up to INR 2 crores) and 44ADA (turnover up to INR 50 lakhs), this form can be used for filing the returns. One should not misinterpret the term ‘turnover’ as ‘total income’.

Contents of ITR-4

The ITR-4 applicable for the A.Y. 2020-21 has 9 worksheets, a summary of which has been provided below. These worksheets are visible in the excel utility available on the e-filing website.

1) Income Details:

This schedule requires the taxpayer to enter general information and income details. The new additions here are:

  • The requirement of Unique Document Identification Number (DIN) of the notice/order, if the return is being filed in response to a notice u/s 139(9)/142(1)/148/153C or an order u/s 119(2)(b).
  • Disclosures applicable only to those persons who are filing returns due to the seventh proviso to section 139(1) (Persons whose total income exceeds the maximum amount chargeable to tax but are not required to file returns) such as:
    • Aggregate deposits greater than INR 1 crore into current account(s),
    • Foreign travel expenditure greater than INR 2 lakhs and
    • Electricity expenditure greater than INR 1 lakh during the financial year.

The computation of income is done in this sheet by taking inputs from other schedules/worksheets wherever required. This sheet also contains fields for most of the Chapter VI-A deductions.

2) Schedule BP:

This schedule calculates the presumptive income under the respective sections. A segment is provided for the input of the amount of outward supplies reported in the GST returns. A summary of the position of assets and liabilities as on 31.03.2020 can be entered in this sheet.

3) Schedule TDS:

The relevant details for claiming TDS credit will have to be entered in this schedule. A separate table is available for claiming TDS credit in relation to salary and rental income.

4) Schedule IT:

The details relating to the advance tax instalments and self-assessment tax paid will be entered here.

5) Schedule TCS:

The credit of taxes collected at source, if any, can be claimed by filling up the relevant fields in this schedule.

6) Taxes paid and verification:

The tax payable amount calculated in the ‘Income Details’ sheet will be brought forward to this sheet to determine whether there is any tax payable by the assessee or refund due. Exempt income will also have to be reported. At the end of the sheet, the verification details are to be provided.

7) Schedule DI:

Where certain investments, deposits or payments are made to claim deduction under Chapter VI-A, a grace period had been allotted up to 31.07.2020 for the AY 2020-21. A bifurcation is provided to report the amounts invested up to 31.03.2020 and those invested between 01.04.2020 to 31.07.2020. This schedule is unique to AY 2020-21.

8) Schedule 80D:

The reporting for deductions u/s 80D has become more detailed with this separate sheet. In the preceding assessment years, the reporting under this section was done along with the other Chapter-VIA deductions.

9) Schedule 80G:

The various details relating to eligible donations made by the assessee are to be entered in this sheet.