ITR-4 Sugam Explained: Presumptive Income Under 44AD, 44ADA and 44AE, Eligibility and Filing (AY 2026-27)
ITR-4, called Sugam, is the presumptive taxation return for resident individuals, HUFs and partnership firms (not LLPs) with total income up to ₹50 lakh who declare business profit at 8% or 6% of turnover under section 44AD, professional income at 50% of receipts under 44ADA, or goods-carriage income under 44AE. It also takes salary, one house property, other sources and small 112A gains. No balance sheet or profit and loss account is required, and the due date for AY 2026-27 is 31 July 2026.
Key facts, FY 2025-26
- Who
- Resident individuals, HUFs and partnership firms other than LLPs, with total income up to ₹50 lakh
- Section 44AD (business)
- Turnover up to ₹2 crore, or ₹3 crore if cash receipts are 5% or less; profit at 8% (6% for digital receipts)
- Section 44ADA (profession)
- Gross receipts up to ₹50 lakh, or ₹75 lakh if cash receipts are 5% or less; profit at 50%
- Section 44AE (goods carriages)
- Up to 10 vehicles; ₹7,500 per vehicle per month, or ₹1,000 per ton for heavy goods vehicles
- Not for
- NRIs, directors, unlisted shares, foreign assets, more than one house, income above ₹50 lakh, commission or agency income, losses to carry forward
- Due date
- 31 July 2026; advance tax in one instalment by 15 March 2026 for presumptive income
What it is
ITR-4 exists so that small businesses and professionals can file without keeping books. Instead of reporting actual profit, you declare a fixed percentage of turnover or receipts as income and the department accepts it. In return, no audit, no balance sheet and no expense-by-expense scrutiny.
Three presumptive sections feed the form. Section 44AD covers most businesses: traders, shopkeepers, contractors, small manufacturers. Section 44ADA covers notified professions: legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, and film and IT professionals as notified. Section 44AE covers owners of goods carriages with up to ten vehicles.
Like ITR-1, the form accepts salary, one house property, other sources income and, from AY 2025-26, long-term equity gains under 112A up to ₹1.25 lakh. The same exclusions as ITR-1 apply: directors, unlisted shareholders, NRIs and anyone with foreign assets or a second house move to ITR-3.
Presumptive schemes in ITR-4
| Scheme | Who | Limit for FY 2025-26 | Presumptive income |
|---|---|---|---|
| 44AD | Resident individuals, HUFs, partnership firms running a business (not commission, agency, brokerage or 44AE business) | Turnover up to ₹2 crore; ₹3 crore if cash receipts are 5% or less | 8% of turnover; 6% for receipts through bank, UPI or cheque cleared by the due date |
| 44ADA | Resident individuals and partnership firms in notified professions | Gross receipts up to ₹50 lakh; ₹75 lakh if cash receipts are 5% or less | 50% of gross receipts |
| 44AE | Any owner of up to 10 goods carriages | Vehicle count, not turnover | ₹7,500 per vehicle per month (part month counts as full); ₹1,000 per ton of gross vehicle weight for heavy vehicles above 12 tonnes |
How to file ITR-4
- Total your gross receipts or turnover for FY 2025-26 from bank statements, invoices and GST returns, and split them into cash and digital. Confirm you are within the 44AD or 44ADA limit.
- Log in to the e-filing portal, start a return for AY 2026-27, choose Individual (or HUF or Firm) and ITR-4.
- In Schedule BP, enter the nature of business code, gross turnover split between digital and other modes, and the presumptive income at 6%, 8% or 50%. For 44AE, enter each vehicle with tonnage and months held.
- Fill the financial particulars: sundry debtors, creditors, stock and cash balance as on 31 March 2026. These four figures are mandatory even without books.
- Add salary from Form 16, one house property, interest and dividend, and 112A gains if any. Choose the regime; if you want the old regime, file Form 10-IEA before the due date and enter its acknowledgement number.
- Match Schedule TDS with Form 26AS, pay self-assessment tax, submit and e-verify within 30 days.
Worked example: Freelance designer under 44ADA, new regime, FY 2025-26
- Gross professional receipts, all through bank
- ₹36,00,000
- Presumptive income at 50%
- ₹18,00,000
- Tax on ₹18,00,000 under the new regime slabs
- ₹1,60,000
- Health and education cess at 4%
- ₹6,400
- Total tax, payable as advance tax by 15 March 2026
- ₹1,66,400
- Actual expenses were ₹6,00,000; real profit was ₹30,00,000
- Still taxed on ₹18,00,000
Common mistake: opting out of 44AD in a bad year
If you declare income under 44AD and then in any of the next five years declare a lower profit than 8% or 6%, you lose the scheme for five years from that year, and you need audited books if income exceeds the basic exemption limit. A trader who used 44AD in FY 2024-25 and reports an actual loss in FY 2025-26 through ITR-3 has opted out; the rule does not apply in the same way to 44ADA, but the lower profit still forces books and audit.
What to do next
Check that every exclusion is clear: no directorship, no unlisted shares, no foreign account, one house, income under ₹50 lakh. If you clear the list, ITR-4 is the quickest business return there is. If your real margin is far below the presumptive rate and the numbers are large, it may be worth keeping books and filing ITR-3 instead; a qualified professional (CMA/CA) can run both computations before 31 July 2026.
ITR-4 (Sugam): questions
Who can file ITR-4 for AY 2026-27?
Resident individuals, HUFs and partnership firms (not LLPs) with total income up to ₹50 lakh who declare income under section 44AD, 44ADA or 44AE, and whose other income is limited to salary, one house property, other sources and 112A gains up to ₹1.25 lakh. Directors, unlisted shareholders, NRIs and those with foreign assets cannot use it.
What is the 44AD turnover limit for FY 2025-26?
₹2 crore, extended to ₹3 crore if cash receipts during the year are 5% or less of total receipts. Profit is deemed at 8% of turnover, or 6% for the part received digitally or by account payee cheque by the return due date.
What is the 44ADA limit for professionals?
Gross receipts of ₹50 lakh, extended to ₹75 lakh if cash receipts are 5% or less of the total. Income is deemed at 50% of gross receipts. It applies to notified professions such as legal, medical, engineering, architecture, accountancy, technical consultancy and interior decoration.
Can a freelancer file ITR-4?
Yes, if the work falls within a notified profession under 44ADA and receipts are within the limit, or if it is treated as a business under 44AD. Freelancers earning from foreign clients can still use ITR-4 as long as they are resident and hold no foreign assets.
What is the difference between ITR-4 and ITR-3?
ITR-4 is presumptive only: no books, no balance sheet, income up to ₹50 lakh. ITR-3 is the full return with accounts, used when you exceed the limits, declare lower than the presumptive rate, have losses, or are excluded from ITR-4 by directorship, NRI status, foreign assets or a second house.
Can I claim expenses in ITR-4?
No. The presumptive rate is deemed to be net of all business expenses and depreciation. Under the old regime you can still claim chapter VI-A deductions such as 80C and 80D against the presumptive income, and a partnership firm under 44AD cannot separately deduct partner salary or interest.
Do presumptive filers pay advance tax?
Yes, but in a single instalment: 100% of the estimated tax by 15 March 2026 for FY 2025-26. Missing it attracts 1% monthly interest under sections 234B and 234C.
Related forms and sections
- Section 44ADSection 44AD allows a resident individual, HUF or partnership firm with business turnover up to ₹2 crore, or ₹3 crore if at least 95% of receipts are digital, to declare profit at 8% of turnover (6% for amounts received digitally) without maintaining books of account or getting a tax audit. Once you opt out after using it, you cannot return for 5 years. Advance tax is paid in one instalment by 15 March.
- Section 44ADASection 44ADA allows a resident individual or partnership firm in a specified profession with gross receipts up to ₹50 lakh, or ₹75 lakh if at least 95% of receipts are digital, to declare 50% of receipts as taxable income without maintaining books or getting a tax audit. It covers legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, film artists, company secretaries and IT professionals. F&O trading is a business, not a profession, and is not eligible.
- ITR-3ITR-3 is the return for individuals and HUFs who have income from a business or profession, including F&O and intraday trading, freelancing with books of account, proprietorships and partners receiving remuneration or interest from a firm. It contains every schedule in ITR-2 plus a profit and loss account, balance sheet and the tax audit fields. For AY 2026-27 it is due on 31 July 2026, or 31 October 2026 where a section 44AB audit applies.
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General information for FY 2025-26, not professional advice. Limits and dates change with each Budget; the updated date above is when this page was last checked. Disclaimer