Income Tax

A Complete guide on filling ITR‐4 SUGAM

Recently the Central Board of Direct Taxes notified the instructions intending to help taxpayers to file particulars in the ITR Form 4 for the AY 2021-22 relating to the FY 2020-21. In this article, we shall discuss ITR 4 SUGAM.

What is ITR-4 SUGAM?

This form is for the taxpayers who file returns under the presumptive income scheme in Section 44AD, Section 44ADA and Section 44AE of the Income Tax Act. In case where the turnover of the business mentioned above becomes more than 2 crore rupees, then the taxpayer can’t file ITR-4.

The ITR-4 form is also called SUGAM, and it is a simplified return form used by taxpayer if he’s eligible to declare profits & gains from business and profession on presumptive basis under sections mentioned above of the Income Tax Act.

Eligibility criteria to file ITR-4 SUGAM

Form  ITR-4 SUGAM should be used by an individual who is a resident other than not an ordinarily resident or a Firm (other than LLP) which is a resident, having a total income for the assessment year (2019-2020) not exceeding 50 lakh rupees and who has income under the following heads:

• Income from Salary or Income from Pension or;
• Income from One House Property or;
• Interest income &/or income from family pension taxable under other Sources or;
• Income from business where such income is calculated on a presumptive basis under Section 44AD (Gross Turnover up to 2 crore rupees)
• Income from a business where the income is computed on a presumptive basis under Section 44AE (income from goods carriage up to ten vehicles);
• Income from Profession where the income is computed on a presumptive basis under Section 44ADA (Gross receipt Up to 50 lakh rupees).

It may be noted that the income calculated on presumptive basis under section 44AD or 44AE or 44ADA would be presumed to have been computed after considering every loss, allowance, deduction or depreciation under Income-tax Act. However, a person having loss after giving effect to proviso to sub-section 3 of Section 44AE has to file ITR 5.

In case the income of another person, such as spouse, minor child, etc., is to be clubbed with the taxpayers’ income, the ITR-4 SUGAM can be used only if the income being clubbed falls into the aforementioned income categories.

Non-applicability of ITR-4 SUGAM

This form is not applicable for the following:

• Director in a company;
• A person who has held any unlisted equity shares at any time during the previous year;
• A person who has any asset (including financial interest in any entity) situated outside India;
• An individual who has the authority of signing in any account located outside India;
• If a person has deferred tax on ESOP obtained from employer being eligible start-up.

Further, this ITR-4 form also cannot be used by a person who has any income of the nature during the previous year-

Profits and gains from business and professions not required to be computed under section 44AD, 44ADA or 44AE, like income from speculative business, agency business, commission or brokerage income etc.;

• Capital gains;
• Income from more than one house property;
• Income under the head from other sources;
• Income to be apportioned as per provisions of section 5A; Or
• Agricultural income more than 5,000 rupees.

When is this form not mandatory?

This Form (ITR‐4 SUGAM) is a simplified return form that is used by an assessee, at his option, in case where he is eligible to declare profits and gains from business and profession on presumptive basis under sections- 44AD, 44ADA or 44AE.

However, if the assessee maintains all books of accounts and other documents specified in section 44AA of the income tax act and gets his accounts audited and receives an audit report according to section 44AB, then filling up the Form ITR‐4 is not mandatory. In such a scenario, other regular return forms like ITR‐3 or ITR‐5, as applicable, can be used and not this Form.

How to file ITR-4 SUGAM?

An applicant can file this form electronically on the e-filing web portal of the Income-tax Department and verify by:

• Digitally signing the verification part; or
• Authenticating through electronic verification code (EVC); or
• By sending duly signed paper Form ITR-V^[1] (Acknowledgment) through post to Centralized Processing Centre at- Income Tax Department, Bangalore— 560500, Karnataka.

The applicant should furnish the following details in the ITR form-4:

• Taxpayer’s General Information;
• Gross Total Income;
• Deductions and Taxable Total Income;
• Tax Computation and Tax Status;
• Income details from Business/Profession;
• Donation detail entitled for deduction under section 80G;
• Deduction with respect to health insurance premium under section 80D.

Conclusion

As stated earlier, if the assessee maintains books of accounts and other documents specified in section 44AA of the income tax act and also gets his accounts audited and receives an audit report according to section 44AB, then it’s not mandatory to file this form (ITR-4 SUGAM). In such a scenario, other regular return forms like ITR‐3 or ITR‐5, as applicable, can be used.

Read our article:Essentials points to note if you are filing ITR this Year