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ITR-4S Sugam: Eligibility, Benefits, Filing Process, and Difference between ITR-4
ITR-4S form, also known as Sugam, has been introduced by the Income Tax Department to make tax filing easier for small taxpayers under the presumptive taxation scheme. The purpose was to make tax compliance easier for businesses and professionals by reducing the need for detailed bookkeeping. Initially designed for small businesses with a turnover of up to a certain amount, it has expanded to include professionals and certain other types of income.
Read this article to understand all aspects of ITR-4S, including eligibility, benefits, contents, and the filing process.
ITR-4S Sugam
ITR-4S is designed for individuals and Hindu Undivided Families (HUFs) who use the presumptive taxation scheme under Section 44AD, 44ADA, 44AE of the Income Tax Act. The small taxpayers involved in the business or professions are allowed to declare income at a pre-specified rate, thereby simplifying the tax compliance process.
Features of ITR-4S Sugam
Following are the features of ITR-4S:
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Presumptive Income Scheme: ITR-4S is in sync with the Section 44AD and Section 44AE of the Income Tax Act, that is, the presumptive income scheme intended for the small taxpayers.
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Simplified Documentation: ITR-4S requires minimal documentation, thus the tax filing process is fast and easy.
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No need to maintain Books of Accounts: The taxpayers following the presumptive taxation scheme are not required to maintain the books of accounts, which again reduces the burden of tax compliance.
Benefits of Filing ITR-4S
The benefits of filing ITR-4S are manifold and are listed below:
Reduced Compliance Load: ITR-4S seeks only a few details while filing the ITR, thereby simplifying the filing process. Thus, the compliance load is reduced.
Lower Tax Liability: Choosing the presumptive taxation scheme often results in the lower tax liability since the tax is to be paid at a fixed rate on the gross total income.
Time and Cost-Efficient: Since the ITR filing process is simplified, it reduces time required for filing the ITR and is also cost-efficient.
Who can File ITR-4S?
ITR-4S can be filed by the following assesses:
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According to Section 44AD, businesses with turnover of less than INR 2 Crore can choose the presumptive taxation scheme and file ITR-4S form.
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According to Section 44ADA, the professionals having a gross receipt of up to INR 50 Lakhs in the financial year can opt for the presumptive taxation scheme and file ITR-4S form.
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Individuals earning income from the partnership firm but do not carry any profession under Section 44AD or Section 44AE, can opt for the presumptive taxation scheme and file ITR-4S.
Who cannot File ITR-4S?
Following types of assessees are specifically excluded from filing Form ITR-4S:
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Taxpayers having income from more than one house property.
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Individuals with income from winnings from lottery, gambling, or horse races.
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Non-residents or individuals having income from foreign sources or are having foreign assets.
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Taxpayers having agricultural income more than INR 5,000.
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Taxpayers availing relief under Section 90, 90A, or 91.
Content of ITR-4S Sugam
ITR-4S Sugam contains the following information which is to be filled by the taxpayers while filing the return:
Personal Information: This section includes the information on the taxpayer’s name, PAN, address, and contact information.
Gross Receipts or Turnover: The total receipts of the business for the financial year is included in this section.
Presumptive Income Calculation: The estimated income based on gross receipts as described in Section 44AD and Section 44AE are presented under this head.
Deductions and Taxable Income: The eligible deductions used to determine the tax liability and calculate the net taxable income are presented in this section.
Details on Tax Payments: The details of taxes paid, that is, advance tax, self-assessment tax, and the TDS/TCS information should be provided in this section.
Steps for Filing ITR-4S Sugam
Following are the steps for Filing ITR-4S Sugam form:
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Compile all the Necessary Documents: Collect and compile all the relevant information, bank statements, and tax payment receipts beforehand for filing the ITR-4S form.
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Access the Income Tax e-Filing Portal: Login to the income tax portal using the credentials.
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Choose the Appropriate Assessment Year: Select the appropriate assessment year for which the ITR-4S is being filed.
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Fill the Required Information: The requisite information as asked in the form should be provided accurately and correctly.
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Verify and Submit the ITR: Once the information provided is thoroughly checked for accuracy, the form can be submitted and it can be verified with Aadhaar OTP, EVC, or through sending the signed ITR-V to CPC.
Mistakes to Avoid while Filing ITR-4S
Assessees should avoid the following mistake while filing ITR-4S:
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Under-reporting Income: All incomes should be reported accurately to avoid imposition of any penalty.
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Ignoring Deductions: If assessee ignores any deductions while filing the ITR, the resulting tax liability may be higher. Thus, the assessee should carefully claim all the applicable deductions while filing the ITR-4S.
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Entering Incorrect Personal Information: The personal information such as PAN, Aadhaar Number, Bank Account Information, and Contact Information should be entered correctly.
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Ignoring the Last Date: Late filing of ITR can lead to penal consequences and late fees.
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Failing to Verify the ITR: Failure to verify the ITR within the specified timeframe will result in the ITR to be considered as invalid.
Difference between ITR-4 and ITR-4S Sugam
The difference between ITR-4 and ITR-4S Sugam is explained as below:
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Frequently Asked Questions
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What is ITR-4S (Sugam)?
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ITR-4S or Sugam is a simplified ITR Form for the taxpayers who have opted for the presumptive taxation scheme under Section 44AD, 44ADA, or 44AE. It is designed for small businesses and professionals for simplifying the tax filing process.
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Who can file ITR-4S?
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Individuals, Hindu Undivided Families (HUFs), and Partnership Firms other than LLPs having income from business and profession on presumptive basis and whose turnover or gross receipts do not exceed INR 2 Crore in the financial year.
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Which types of income can be reported in ITR-4S?
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Following types of income can be reported in ITR-4S: income from small businesses opting for the presumptive taxation scheme, salary/pension, income from one house property, agricultural income up to INR 5,000, and other sources of income excluding winning from lottery or income from horse races.
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Can an individual file ITR-4S if he has foreign assets or income from foreign sources?
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No. Individuals with foreign assets and having income from foreign sources are not allowed to file ITR-4S. They can use ITR-2 or ITR-3, as applicable.
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Is an audit necessary for taxpayers filing ITR-4S?
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No. Taxpayers opting for the presumptive taxation scheme under Section 44AD, 44ADA, or 44AE and are using ITR-4S are not required to get their accounts audited if their income is within the eligible limits. Moreover, they should comply with the provisions of the presumptive taxation scheme.
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How is the income calculated under the presumptive taxation scheme of ITR-4S?
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For businesses, 8% or 6% for digital transactions of the gross turnover or gross receipts is taken as the presumptive income. For professionals, 50% of total gross receipts or turnover is considered as the presumptive income.
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Can deductions under Section 80C to 80U be claimed while filing ITR-4S?
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Yes. Taxpayers can claim deductions under Section 80C to 80U on investments made and specified expenditures while filing ITR-4S.
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What happens if an assessee switches from the presumptive taxation scheme after filing ITR-4S?
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If an assessee opts out of the presumptive taxation scheme, he cannot choose it again for the next 5 financial years. This decision should be considered carefully.
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Does ITR-4S allow you to carry forward loss from business or profession?
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No. Business loss cannot be carried forward if you choose for the presumptive income scheme and will be filing ITR-4S.
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Can ITR-4S be revised after submission?
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Yes. If any mistake has been made in ITR-4S or any omission has occurred in the original return, it can be revised within the prescribed time period as per the Income Tax Act.
Prachi Jain
Chartered Accountant
Prachi Jain is a Chartered Accountant with a passion for simplifying finance and tax-related matters through her insightful and informative blogs. With a background in finance and a deep understanding of tax regulations, Prachi has established herself as a trusted source of financial wisdom. Prachi is committed to empowering her readers with the knowledge they need to make informed financial decisions. Her expertise and dedication shine through in every blog post, helping her audience navigate the intricacies of finance and taxes with confidence. Follow Prachi Jain's blog for practical insights and guidance on managing your finances effectively.
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