ITR-4 (Sugam) — presumptive taxation for small business and professionals
ITR-4 is the short form for anyone declaring income presumptively — a fixed percentage of turnover under section 44AD, half of gross receipts under 44ADA, or a per-vehicle figure under 44AE. No books, no audit, and a return that can be prepared in an afternoon. It is the form behind half of our ₹499 filings.
At a glance
- Who it is for
- Resident individuals, HUFs and firms (not LLPs)
- Total income ceiling
- ₹50,00,000
- Section 44AD turnover limit
- ₹2 crore, or ₹3 crore where cash is within 5%
- Section 44ADA receipts limit
- ₹50 lakh, or ₹75 lakh where cash is within 5%
- Books of account
- Not required
- Our fee
- ₹499 including GST
The three presumptive schemes
Section 44AD covers business: 8% of turnover as income, or 6% on receipts arriving through banking channels. Section 44ADA covers specified professions: 50% of gross receipts. Section 44AE covers goods carriage operators with up to ten vehicles, on a per-vehicle monthly basis rather than on turnover.
Note the ceiling that catches people: ITR-4 itself is capped at ₹50 lakh of TOTAL income, separately from the turnover limits. A business with ₹2 crore turnover and 8% presumed income is at ₹16 lakh and comfortably inside. A professional with ₹75 lakh of receipts at 50% is at ₹37.5 lakh and still inside. But add other income and the ₹50 lakh cap can bind.
Who cannot use it
Commission agents and brokers are excluded from 44AD outright, whatever their turnover. So are agency businesses. Limited liability partnerships cannot use ITR-4 at all, though ordinary partnership firms can. Non-residents are excluded.
You also cannot use ITR-4 if you have capital gains, more than one house property, foreign assets, or you are a company director — the same disqualifiers that push people off ITR-1.
The cash-versus-digital split decides two separate things, and nobody records it
The share of your turnover received in cash does two jobs at once under section 44AD. It decides your rate — 8% on the cash part, 6% on the rest — and it decides your eligibility, because the higher ₹3 crore turnover limit is only available where cash receipts stay within 5% of turnover. A trader with ₹2.5 crore turnover who took ₹20 lakh in cash is outside the scheme entirely and needs ITR-3, books and possibly an audit. The same trader who banked everything is inside it and files a two-page return. It is the same business either way. The difference is a number nobody thought to track.
Questions we get asked
Can I claim expenses under 44AD?
No, and that is the trade-off. The presumed percentage is deemed to be your income after all expenses. If your real expenses are heavy, declaring actual profit on ITR-3 may leave you better off.
I am a freelancer. 44AD or 44ADA?
44ADA if your work falls within the specified professions — legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration. Otherwise 44AD may apply. The distinction matters because the rates differ sharply.
What if my turnover crosses the limit mid-year?
The limit applies to the full year, so you would fall out of the scheme for that year and need ITR-3. Worth watching from around the third quarter rather than discovering it in July.
Want us to handle it?
Flat ₹499 including GST for ITR-1 and ITR-4. Everything else quoted before any work starts, with no charge for the quote.