How to File ITR-4 Sugam for AY 2026-27
Key Takeaways
- ITR-4 (Sugam) is for resident individuals, HUFs, and firms (not LLPs) with presumptive business or professional income under Sections 44AD, 44ADA, or 44AE, and total income up to Rs 50 lakh.
- Presumptive tax means you declare a fixed percentage of turnover as profit and keep no detailed books: 6%/8% under 44AD, 50% under 44ADA.
- Turnover limits: 44AD up to Rs 2 crore (Rs 3 crore if cash receipts are up to 5%); 44ADA up to Rs 50 lakh (Rs 75 lakh if cash receipts are up to 5%).
- The due date is August 31, 2026 for non-audit cases. Presumptive filers pay advance tax in one instalment by 15 March 2026.
- For AY 2026-27, ITR-4 now also allows Section 112A LTCG up to Rs 1.25 lakh.
Who should read this: Small shop owners, traders, freelancers, consultants, doctors and other professionals within the receipts limit, and small transporters.
Reading time: ~15 minutes · Last updated: 30 June 2026 · Applicable FY: 2025-26 · Applicable AY: 2026-27
Written by the Tax Garden Compliance Team (Kondapur, Hyderabad). Reviewed by a Chartered Accountant on our practice team. Figures verified against the CBDT AY 2026-27 ITR notification and the Income-tax Act, 1961. See Sources.
ITR-4 Sugam is the simplest return for small businesses and professionals. It uses the presumptive taxation scheme, so you declare a fixed percentage of turnover as profit, skip detailed books, and file a short form. If you run a small business or freelance within the limits, ITR-4 saves you the work of ITR-3.
Looking for expert help with how to file ITR-4 Sugam presumptive tax for small business AY 2026-27? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant end-to-end: filings, notices, and advisory, all in one place.
What is ITR-4 (Sugam)?
ITR-4, named Sugam (Hindi for "easy"), is the income tax return for taxpayers who opt for presumptive taxation under Sections 44AD, 44ADA, or 44AE. Instead of computing actual profit from books, you declare a prescribed percentage of turnover or gross receipts as income. It is meant for small businesses and professionals with total income up to Rs 50 lakh.
Why Choose Presumptive Tax / ITR-4?
- Less compliance: No requirement to maintain detailed books of account or get a tax audit (within limits).
- Simple computation: Income is a fixed percentage of turnover, so tax planning is straightforward.
- Lower cost: Filing is quick and inexpensive compared to a full books-based ITR-3.
- Legal basis: The presumptive scheme is built into the Income-tax Act to ease compliance for small taxpayers.
Who Can File ITR-4 for AY 2026-27?
You can file ITR-4 if you are a resident individual, HUF, or firm (not an LLP) with total income up to Rs 50 lakh from any of these.
| Presumptive section | Who | Limit | Deemed profit |
|---|---|---|---|
| 44AD | Resident business (not commission/agency) | Turnover up to Rs 2 cr (Rs 3 cr if cash up to 5%) | 6% (digital) / 8% (cash) of turnover |
| 44ADA | Resident professional (specified professions) | Gross receipts up to Rs 50 lakh (Rs 75 lakh if cash up to 5%) | 50% of gross receipts |
| 44AE | Goods carriage owners (up to 10 vehicles) | n/a | Per-vehicle, per-month basis |
Plus salary/pension, one house property, other-sources income, and (new for AY 2026-27) Section 112A LTCG up to Rs 1.25 lakh.
Who Cannot File ITR-4?
- Total income above Rs 50 lakh, or turnover/receipts above the presumptive limits.
- Capital gains other than 112A LTCG up to Rs 1.25 lakh (any STCG, property, gold, or crypto gain). → ITR-3.
- More than one house property.
- Director in a company, or holding unlisted shares.
- Foreign assets, foreign income, or signing authority abroad.
- NRI or RNOR (presumptive ITR-4 is for residents).
- LLPs (an LLP files ITR-5).
- Income from commission or agency, or a professional who wants to declare profit below the presumptive rate (must use ITR-3 with audit).
- Agricultural income above Rs 5,000.
Declaring profit below the presumptive percentage requires regular books and a tax audit, which means ITR-3, not ITR-4. Opting out of 44AD after using it locks you out of the scheme for five years.
ITR-4 vs ITR-3: The Core Choice
Comparison
ITR-4 (Sugam) vs ITR-3 : Which Business Return?
Presumptive simplicity vs actual-profit reporting
| Parameter | ITR-4 (Sugam) | ITR-3 |
|---|---|---|
| Income basis | Presumptive % of turnover | Actual profit from books |
| Books of account | Not required | Required |
| Total income limit | Up to Rs 50 lakh | No limit |
| Capital gains | Only 112A LTCG up to Rs 1.25L | All capital gains |
| Tax audit | Not needed (within scheme) | If 44AB triggers |
| Due date (non-audit) | 31 Aug 2026 | 31 Aug 2026 |
Takeaway: Choose ITR-4 for simple presumptive filing within limits. Move to ITR-3 for capital gains, above-limit turnover, or to declare lower actual profit.
Source: CBDT ITR Instructions AY 2026-27 : incometax.gov.in/iec/foportal/
How Presumptive Income Works
Section 44AD (business): Declare 6% of digital/bank turnover and 8% of cash turnover as profit. Example: Rs 40 lakh digital turnover → Rs 2.4 lakh deemed profit.
Section 44ADA (profession): Declare 50% of gross receipts as profit. Example: a freelancer with Rs 30 lakh receipts → Rs 15 lakh deemed income.
Section 44AE (transport): Income is computed per goods vehicle, per month (a fixed amount based on vehicle capacity), for owners of up to 10 vehicles.
See the Section 44AE transport guide for the per-vehicle calculation.
Advance Tax: One Instalment, Not Four
Presumptive filers under 44AD and 44ADA pay the entire advance tax in a single instalment by 15 March 2026, instead of the usual four instalments. Missing it attracts Section 234C interest. See advance tax due dates.
What Changed in ITR-4 for AY 2026-27
- August 31 non-audit deadline for ITR-3/ITR-4.
- Section 112A LTCG up to Rs 1.25 lakh now allowed within ITR-4.
- Investment and bank-balance disclosure is now required for ITR-4 filers under AY 2026-27.
- Cash-receipt thresholds (5% test) raising 44AD to Rs 3 crore and 44ADA to Rs 75 lakh continue.
- Dual contact and representative-assessee fields captured.
- For AY 2026-27, the Income-tax Act, 1961 provisions apply.
Required Documents
| Document | Mandatory? | Purpose |
|---|---|---|
| PAN, Aadhaar (linked) | Yes | Login, e-verification |
| Turnover / gross receipts summary | Yes | Presumptive computation |
| Bank statements | Yes | Verify digital vs cash receipts (5% test) |
| GST returns (if registered) | If applicable | Turnover reconciliation |
| Form 16 (if also salaried) | If applicable | Salary income |
| Form 26AS, AIS, TIS | Yes | TDS and income reconciliation |
| Vehicle details (44AE) | If transport | Per-vehicle income |
| Pre-validated bank account | Yes | Refund |
Step-by-Step: How to File ITR-4
Step-by-Step Guide
How to File ITR-4 Sugam for AY 2026-27
On the income tax e-filing portal : incometax.gov.in/iec/foportal/
Compute turnover and the 5% test
Total your turnover/gross receipts and split digital vs cash to confirm you are within 44AD/44ADA limits and which deemed-profit rate applies.
Pre-workLog in and select ITR-4
Log in with PAN. e-File > Income Tax Returns > File Income Tax Return. Select AY 2026-27 and ITR-4 (Sugam).
StartChoose regime / file Form 10-IEA
New regime is default. To use the old regime, file Form 10-IEA before the return.
RegimeDeclare presumptive income
Enter turnover and the deemed profit under 44AD/44ADA/44AE. The form computes income at the prescribed percentage.
BusinessAdd salary, house property, other income
Schedule S (salary), one house property, other sources, and 112A LTCG up to Rs 1.25 lakh if any.
Other incomeApply deductions and check tax
Chapter VI-A deductions (old regime). The portal computes tax; the 87A rebate makes income up to Rs 12 lakh tax-free under the new regime.
DeductionsPay tax and reconcile
Pay any balance via e-challan and reconcile TDS with Form 26AS and AIS.
Tax paidValidate, submit, e-verify
Validate, submit, and e-verify within 30 days. An unverified return is treated as not filed.
FinalSource: CBDT ITR-4 Instructions AY 2026-27 : incometax.gov.in/iec/foportal/
Worked Examples
1. Small trader (44AD). Imran has Rs 45 lakh turnover, mostly via UPI/bank. He declares 6% (Rs 2.7 lakh) as profit under 44AD, files ITR-4, and pays nil tax after the 87A rebate.
2. Freelancer (44ADA). Pooja, a freelance designer, has Rs 28 lakh receipts. She declares 50% (Rs 14 lakh) as income under 44ADA and files ITR-4. Total income under Rs 50 lakh, so she is eligible.
3. Consultant who must use ITR-3. Karthik's receipts are Rs 80 lakh, above the Rs 75 lakh 44ADA cap, so he cannot use ITR-4. He files ITR-3 with books.
4. Transporter (44AE). Lakshmi owns 4 trucks and declares income per vehicle per month under 44AE, filing ITR-4.
Common Mistakes
- Using ITR-4 above the turnover/receipts limit or with total income above Rs 50 lakh.
- Reporting capital gains (other than 112A up to Rs 1.25 lakh) in ITR-4 instead of ITR-3.
- Declaring profit below the presumptive rate without books and audit, which is not allowed in ITR-4.
- Wrong digital vs cash split, applying 6% where 8% is due.
- Missing the single 15 March advance-tax instalment, triggering 234C interest.
- Forgetting the five-year lock-in after opting out of 44AD.
Common Notices and How to Respond
| Notice | Cause | Response |
|---|---|---|
| Section 143(1) intimation | Income/TDS mismatch | Reconcile, rectify u/s 154 or pay |
| Section 139(9) defective | Wrong form (e.g., capital gains present) | Revise with ITR-3 |
| Section 143(2) scrutiny | Turnover vs GST/AIS mismatch | Respond via the scrutiny notice process |
Penalties
- Section 234F: Rs 5,000 late fee (Rs 1,000 if income up to Rs 5 lakh) for filing after the due date.
- Section 234B/234C: Interest for advance-tax shortfall, including the single 15 March instalment.
- Belated return: Until 31 December 2026, with loss of carry-forward benefits and default new regime.
Latest Changes
- August 31 non-audit deadline for ITR-4.
- Section 112A LTCG up to Rs 1.25 lakh allowed.
- New-regime Rs 12 lakh rebate applies to presumptive income too.
- For AY 2026-27, the Income-tax Act, 1961 governs.
Meaning of Key ITR-4 Terms
| Term | Meaning | Why it matters |
|---|---|---|
| Presumptive taxation | Declaring a fixed % of turnover as profit | Core of ITR-4; no books needed |
| Section 44AD | Presumptive scheme for business | 6%/8% of turnover |
| Section 44ADA | Presumptive scheme for professionals | 50% of receipts |
| Section 44AE | Presumptive scheme for goods transport | Per-vehicle, per-month |
| Turnover / gross receipts | Total sales or professional fees | Determines limit and profit |
| 5% cash test | Cash receipts not above 5% of turnover | Raises limits and lowers rate |
| Form 10-IEA | Old-regime opt-in form | File before the return |
| Five-year lock-in | Penalty for leaving 44AD | Blocks re-entry for 5 years |
Need Help Filing ITR-4?
Presumptive filing looks simple but the eligibility limits, the cash test, and the five-year lock-in catch many filers. Tax Garden (4th Floor, CWS One, Kondapur, Hyderabad, 500084, Telangana) confirms your eligibility, computes the right presumptive rate, reconciles GST turnover, and files ITR-4 for shop owners, traders, freelancers, and small transporters across India. See our tax compliance services and pricing.
Looking for expert help with ITR-4 Sugam filing services for small business and freelancers in India? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant end-to-end: filings, notices, and advisory, all in one place.
Related Guides
- ITR-1 Sahaj guide · ITR-2 guide · ITR-3 guide
- Section 44AE transport presumptive tax
- GST for freelancers and creators
- Advance tax due dates
- Business structure tax comparison
Frequently Asked Questions
Who can file ITR-4 Sugam for AY 2026-27?
Resident individuals, HUFs, and firms (not LLPs) with presumptive business or professional income under Sections 44AD, 44ADA, or 44AE and total income up to Rs 50 lakh. It also allows salary, one house property, other sources, and Section 112A LTCG up to Rs 1.25 lakh.
What is the last date to file ITR-4 for AY 2026-27?
August 31, 2026 for non-audit cases. A belated return can be filed up to December 31, 2026 with a Section 234F late fee.
What is presumptive taxation?
A scheme where you declare a fixed percentage of turnover or receipts as profit instead of maintaining detailed books: 6% (digital) or 8% (cash) under 44AD, 50% under 44ADA, and a per-vehicle amount under 44AE.
What is the turnover limit for Section 44AD?
Rs 2 crore, raised to Rs 3 crore if cash receipts do not exceed 5% of total turnover. Above this, you must file ITR-3 with books.
What is the limit for Section 44ADA?
Gross receipts up to Rs 50 lakh, raised to Rs 75 lakh if cash receipts do not exceed 5% of total receipts. Professionals declare 50% of receipts as income.
Can a freelancer file ITR-4?
Yes. A resident freelancer or consultant in a specified profession with receipts up to Rs 50 lakh (or Rs 75 lakh with the 5% cash test) can declare 50% as income under 44ADA and file ITR-4.
What is the difference between ITR-4 and ITR-3?
ITR-4 uses presumptive income and needs no books, capped at Rs 50 lakh total income. ITR-3 reports actual profit from books with no income limit and allows capital gains. F&O and above-limit businesses use ITR-3.
Can I show capital gains in ITR-4?
Only Section 112A LTCG up to Rs 1.25 lakh for AY 2026-27. Any other capital gain (STCG, property, gold, crypto) requires ITR-3.
Can an LLP file ITR-4?
No. LLPs are excluded from ITR-4 and file ITR-5. ITR-4 is for resident individuals, HUFs, and ordinary firms.
Do I need to keep books under ITR-4?
No detailed books are required under the presumptive scheme. You should still keep basic records of turnover, bank receipts, and GST returns for reconciliation.
When do I pay advance tax under ITR-4?
Presumptive filers under 44AD and 44ADA pay the entire advance tax in a single instalment by 15 March of the financial year. Missing it attracts Section 234C interest.
Can I declare profit lower than the presumptive rate?
Only by maintaining regular books and getting a tax audit, which means ITR-3, not ITR-4. Declaring lower profit in ITR-4 is not permitted.
What is the five-year lock-in under 44AD?
If you opt out of 44AD after using it, you cannot claim the scheme again for five assessment years and may be required to maintain books and get audited if income exceeds the exemption limit.
Does the Rs 12 lakh rebate apply to ITR-4 filers?
Yes. Under the new regime, the Section 87A rebate makes income up to Rs 12 lakh tax-free, which applies to presumptive income reported in ITR-4.
How do I choose the old regime in ITR-4?
File Form 10-IEA before submitting the return. Without it, the new regime applies by default.
Can a doctor file ITR-4?
Yes, a resident doctor in private practice with gross receipts within the 44ADA limit can declare 50% as income and file ITR-4. Above the limit, ITR-3 with books is required.
What documents do I need for ITR-4?
PAN, Aadhaar, turnover/gross-receipts summary, bank statements (to verify the cash/digital split), GST returns if registered, Form 16 if salaried, Form 26AS, AIS, TIS, vehicle details for 44AE, and a pre-validated bank account.
Is GST registration required to file ITR-4?
No. Income tax and GST are separate. You file ITR-4 based on income tax rules; if you are GST-registered, your turnover should reconcile with your GST returns.
What happens if I miss the August 31 deadline?
You can file a belated return until 31 December 2026 with a Section 234F fee, but you lose carry-forward benefits and are taxed under the new regime by default.
Where can I get ITR-4 filing help in Hyderabad?
Tax Garden, based in Kondapur, Hyderabad, confirms presumptive eligibility, computes the correct rate, reconciles GST turnover, and files ITR-4 for small businesses and freelancers across India. See our pricing page.
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Sources
Verified against the CBDT notification of ITR forms for AY 2026-27, the ITR-4 Sugam instructions and e-filing utility on the Income Tax Department portal (incometax.gov.in/iec/foportal/), the Income-tax Act, 1961 (Sections 44AD, 44ADA, 44AE, 87A, 112A, 139, 234C, 234F), and the Finance Acts 2024 and 2025. Confirm the current presumptive limits, the 112A allowance, and due dates against the official CBDT notification before filing.