ITR 4 Form (Sugam) Explained: Frequently Asked Questions (AY 2026-27)

ITR-4 Sugam is the income tax return form for individuals, Hindu Undivided Families (HUFs), and firms (excluding LLPs) who opt for the presumptive taxation scheme under Sections 44AD, 44ADA, or 44AE. A total of 1.88 crore taxpayers used ITR-4 for AY 2024-25, accounting for 25.77% of all returns filed — making it the most-used business income form in India.

Key Takeaways

  • 1.88 crore taxpayers (25.77% of all filers) used ITR-4 Sugam for AY 2024-25.
  • Section 44AD covers businesses with turnover up to ₹2 crore (₹3 crore if cash receipts ≤5%). Deemed profit is 8% on cash and 6% on digital receipts.
  • Section 44ADA covers specified professionals with gross receipts up to ₹50 lakh (₹75 lakh if cash receipts ≤5%). Deemed profit is 50% of receipts.
  • From AY 2026-27, ITR-4 requires new disclosures: bank balance as of 31 March 2026 (Field E21) and investments as of 31 March 2026 (Field E18a).
  • The 5-year lock-in under Section 44AD is triggered only by voluntarily declaring profit below the prescribed rates, not by exceeding the turnover cap.

What is ITR-4 Sugam and who should file it?

The form earns its name by removing the biggest compliance burden for small taxpayers: maintaining a full set of books of accounts. Under presumptive taxation, the Income Tax Act fixes your profit as a percentage of your turnover or gross receipts. ITR-4 is available to individuals, HUFs, and partnership firms (excluding LLPs). Companies, LLPs, and those with total income above ₹50 lakh cannot use this form.

What is the last date to file ITR-4 for AY 2026-27?

The due date for filing ITR-4 for AY 2026-27 is 31 July 2026 for non-audit cases. Businesses and professionals whose accounts are subject to a tax audit under Section 44AB must file by 31 October 2026. Missing the 31 July deadline triggers the Section 234F late filing penalty: ₹5,000 if your total income exceeds ₹5 lakh, or ₹1,000 if it’s ₹5 lakh or below.

What are the biggest changes to ITR-4 for AY 2026-27?

  • Up to two house properties: ITR-4 eligibility now extends to filers with up to two house properties (previously only one was permitted).
  • Bank balance disclosure (Field E21): Bank balance as of 31 March 2026 is now mandatory — keep your bank statement ready.
  • Investment disclosure (Field E18a): Investments as of 31 March 2026 must also be disclosed.

How does presumptive taxation work under Section 44AD?

Under Section 44AD, a business taxpayer with turnover up to ₹2 crore (or ₹3 crore if 95%+ is digital) can declare deemed profit without maintaining full books:

  • 8% of turnover for cash receipts
  • 6% of turnover for digital/non-cash receipts

If your actual profit margin is higher than 8%, you can declare the actual higher figure. If your actual margin is lower (e.g., only 3%), you can still declare 6%/8% to avoid books — but this triggers the 5-year lock-in if you later want to declare actual lower profit.

How does Section 44ADA work for professionals?

Section 44ADA applies to specified professionals (doctors, lawyers, engineers, architects, accountants, technical consultants, interior designers, and others notified by CBDT) with gross receipts up to ₹50 lakh (₹75 lakh if ≤5% cash receipts). Deemed profit is 50% of gross receipts. No books of accounts are required. No tax audit unless opting out.

Understanding the 5-year lock-in under Section 44AD

If you opt into Section 44AD for a year and then declare profit below the prescribed rate (8%/6%), you are locked out of the presumptive scheme for the next 5 assessment years. During these 5 years, you must maintain full books and are subject to tax audit if turnover exceeds prescribed limits.

The lock-in is NOT triggered by exceeding the ₹2 crore/₹3 crore turnover threshold. Crossing the turnover cap simply means you must file ITR-3 that year — you can re-enter ITR-4 once turnover falls back below the limit.

Common ITR-4 mistakes to avoid

  • Filing ITR-4 with total income over ₹50 lakh: Switch to ITR-3 regardless of whether you’re under the turnover cap
  • Using ITR-4 for F&O income: F&O is non-speculative business income — it requires ITR-3
  • LLPs using ITR-4: LLPs must file ITR-5; only traditional partnership firms can use ITR-4
  • Missing new disclosure fields: Bank balance (E21) and investments (E18a) are now mandatory
  • Not e-verifying within 30 days of submission

Disclaimer: This article is for informational purposes only and does not constitute professional tax advice. Consult a qualified Chartered Accountant for advice specific to your situation. All figures and dates are based on information available as of May 2026.