What is ITR-4 (Sugam)?#
ITR-4, also called Sugam (meaning "simple/easy"), is the income tax return form for individuals, HUFs, and firms (excluding LLPs) who have opted for presumptive taxation under specific sections of the Income Tax Act.
It's essentially a simplified version of ITR-3 for small businesses and professionals who don't want to maintain detailed books of accounts.
Who Can File ITR-4?#
You can file ITR-4 if:
✅ You are an individual, HUF, or firm (not LLP) ✅ You opt for presumptive taxation under:
- Section 44AD — Small businesses (turnover ≤ ₹3 crore)
- Section 44ADA — Specified professionals (gross receipts ≤ ₹75 lakh)
- Section 44AE — Transporters (up to 10 goods carriages) ✅ You have income from salary, one house property, and other sources (in addition to presumptive income) ✅ Total income is ≤ ₹50 lakh (from non-presumptive sources)
Who Cannot File ITR-4?#
❌ Income > ₹50 lakh from non-presumptive sources ❌ Capital gains of any kind ❌ Directors in companies ❌ Investments in unlisted shares ❌ NRIs or HUF partners ❌ If you maintain regular books and don't opt for presumptive scheme
Presumptive Tax Rates Under Each Section#
| Section | For Whom | Deemed Profit Rate |
|---|---|---|
| 44AD | Eligible businesses | 8% of turnover (cash); 6% (digital receipts) |
| 44ADA | Doctors, CAs, lawyers, architects, etc. | 50% of gross receipts |
| 44AE | Goods transporters | ₹7,500/month per vehicle |
You don't need to maintain books of accounts when opting for presumptive taxation — the profit is deemed to be the specified percentage.
Benefit of Filing ITR-4#
- No books of accounts required (simplifies compliance)
- No tax audit required (saves CA fees)
- Simpler form than ITR-3
- Advance tax: Pay 100% by March 15 (single installment)
Key Condition: Opt-Out Consequences#
If you opt out of presumptive taxation in any year, you cannot opt back in for the next 5 years. This is a critical consideration before choosing the scheme.
Practical Example#
A freelance graphic designer earning ₹30 lakh/year:
- Under 44ADA: Deemed income = 50% × ₹30L = ₹15 lakh
- No need to prove actual expenses
- File ITR-4, pay tax on ₹15 lakh
- If actual expenses are > 50% of income → 44ADA may not be beneficial; consider ITR-3 with regular books