Filing of ITR 4 and Presumptive Tax Scheme

  • Blog|Income Tax|
  • 4 Min Read
  • By Taxmann
  • |
  • Last Updated on 10 May, 2021
ITR 4 is the Income-tax return form for those taxpayers, who have opted for the presumptive income scheme as per section 44AD, 44ADA, and 44AE of the Income-tax Act. However, if the total income of the assessee exceeds Rs. 50 lakhs, then he can’t file ITR 4 and will have to file his return in ITR 3 or ITR 5 as the case may be.

1. What is a Presumptive Taxation Scheme? 

Presumptive taxation schemes are the scheme wherein the assessee can compute their tax on a presumption basis as per the prescribed percentage of T.O./gross receipts or on the basis of no. vehicles owned by him as the case may be.

1.1 Section 44AD: 

This scheme is applicable to an Individual, HUF, Partnership Firm engaged in any business. Under this scheme, the eligible taxpayers can compute the taxable income on a presumptive basis if the turnover of the business does not exceed Rs. 2 crores during the year. The presumptive income shall be 6% to 8% of the total turnover of the year from such business. 

1.2 Section 44ADA: 

This scheme is applicable to an Individual, HUF, Partnership Firm engaged in a specified profession. Under this scheme, the eligible taxpayers can compute the taxable income on a presumptive basis if gross receipts of the profession do not exceed Rs. 50 lakhs during the year. The presumptive income shall be 50% of total receipts of the year from such a profession.

1.3 Section 44AE: 

This scheme is applicable to every assessee who is engaged in the business of plying, hiring, and leasing of goods carriage. Under this scheme, the eligible taxpayers can compute the taxable income on a presumptive basis if eligible does not own more than 10 goods carriage vehicle during the year.

2. Mode of Filing the Return of Income: 

    1. By furnishing in paper format (only when the assessee is a super senior citizen being an individual whose age is 80 years or more)
    2. By furnishing the return electronically with or without DSC or with EVC

3. Who can file ITR 4? 

Return in Form ITR 4 can be filed by an ordinarily resident individual or HUF or a resident firm (other than LLP) if his total income comprises of the following components:-

    1. Presumptive Income computed as per provisions of Sections 44AD, 44ADA and 44AE
    2. Salary or pension 
    3. Income from 1 house property (provided there is no brought forward loss or loss to be carried forward)
    4. Income from other sources (other than income chargeable at special rates including winnings from lottery and racehorses or loss under this head but including family pension)  If the income of another person (spouse, minor child, etc.) is to be clubbed with the income of the taxpayer, return in ITR-4 can be filed only when such income falls in any of the above categories.

4. Who can’t file ITR4? 

Return in form ITR 4 can’t be filed by an individual or HUF or firm if any of the following conditions are met: – 

4.1 Restrictions based on residential status: 


1. Assessee is a non-ordinarily resident or non-resident.

4.2 Restrictions based on the individual status of the assessee: 


2. Assessee is a director of a company

3. Assessee holds shares in the unlisted company at any time during the previous year

4. He owns assets including any financial interest located outside India.

5. He has signing authority in any account outside India

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4.3 Restrictions based on Income:  

  1. His total income exceeds Rs. 50 lakhs
  2. He has any income from a source outside India.
  3. He has any income to be apportioned in accordance with provisions of section 5A
  4. He has any brought forward losses or losses to be carried forward under any head of income
  5. He owns more than one house property, the income of which is chargeable under the head “Income from house property”
  6. His income includes Income from business or profession except for the income from presumptive taxation scheme
  7. He has capital gains/ losses in the sale of investment/ property
  8. He is assessable for the whole or any part of the income on which TDS has been deducted in the hands of the person other than the assessee
  9. He has any dividend income exceeds Rs. 10 lakhs taxable under Section 115BBDA
  10. The assessee has any unexplained income (i.e., cash credit, unexplained investment, etc.) taxable at 60% under Section 115BBE
  11. Income under the head “income from other sources” with respect of which the assessee has claimed exemption u/s 57,
  12. Assessee is claiming deduction under Section 80QQB or 80RRB in respect of royalty from patents or books.
  13. Assessee is claiming deduction under section 10AA or Part-C of Chapter VI-A
  14. If an individual is taxable in respect of an income but TDS in respect of such income has been deducted in hands of any other person (i.e., clubbing of income, Portuguese Civil Code, etc.)
  15. Assessee is Claiming relief of tax under sections 90, 90A or 91
  16. Assessee has:
    • Income from foreign sources
    • Foreign Assets including financial interest in any foreign entity
    • Signing authority in any account outside India
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