ITR-4 Form: A Simplified Tax Filing Option for Small Businesses, Professionals, and Freelancers. New Changes in AY 2025-26, including LTCG and Tax Regime Switching.
ITR-4 Filing: If you own a small business, are a freelancer, or provide professional services, the ITR-4 form might be an excellent option for you. Also known as the "Sugam Form," it's designed for small and medium taxpayers. This form simplifies and expedites income tax filing for those with less complex income streams.
What is ITR-4 (Sugam)?
ITR-4 is a tax form for individuals whose income is up to ₹50 lakh and who declare their income under the presumptive taxation scheme. This scheme eliminates the need to maintain detailed business accounts. The government estimates your income based on certain rules, and tax is levied accordingly. This form is highly beneficial for small shopkeepers, transporters, and professionals such as doctors, lawyers, and architects.
Who Can File ITR-4?
ITR-4 is not for everyone. Specific conditions must be met to use it. The following individuals can file ITR-4:
- Small Business Owners: Such as grocery stores, restaurants, or trading businesses.
- Professionals: Including doctors, lawyers, architects, and chartered accountants.
- Transport Business Owners: Such as truck or taxi drivers.
- Individuals with Income from Salary, Rent, Interest, or Family Pension: Whose total income is less than ₹50 lakh.
If your income exceeds this limit, you cannot file ITR-4.
What's New in ITR-4 for AY 2025-26?
The CBDT has introduced significant changes to ITR-4, benefiting small taxpayers.
1. Long-Term Capital Gains (LTCG): Long-term capital gains up to ₹1.25 lakh can now be reported in ITR-4. Previously, ITR-2, a more complex form, was required.
2. Switching from New Tax Regime to Old Tax Regime: If you opted for the new tax regime and wish to switch to the old tax regime, details of Form 10-IEA must be provided in ITR-4.
3. New Deductions: New deductions, such as Section 80CCH, have been incorporated into ITR-4. This benefits those seeking specific deductions under the new tax regime.
Advantages of ITR-4
Easy and Fast Filing: ITR-4 simplifies and speeds up tax filing. Maintaining complex business records is unnecessary.
LTCG Facilitation: Individuals investing in the stock market or mutual funds previously had to fill out complex forms. Now, they can report capital gains in ITR-4.
Flexibility with the New Tax Regime: Taxpayers can now switch between the new and old tax regimes, providing greater flexibility.
Points to Remember When Filing ITR-4
Check Your Income: Your total income should not exceed ₹50 lakh.
Short-Term Capital Gains: If you have short-term capital gains, you cannot file ITR-4.
Form 10-IEA: If you are opting out of the new tax regime, remember to fill out Form 10-IEA.
Where to Find the ITR-4 Form?
The ITR-4 form can be downloaded from the Income Tax Department's official website. You can also use the Income Tax e-filing website for online filing. If you encounter difficulties, consult a chartered accountant for assistance.
