What is ITR Form 4?

Introduction

Presently, Income-tax Return Form-4 is to be filed by small business owners, who do not maintain books of accounts but maintain a sales ledger in approximate volume and in which includes online sellers, traders, wholesalers, manufacturers, etc. And freelancers such as online content writers, bloggers, CA, doctors, lawyers, engineers, etc. need to file the ITR Form-4. 

Individuals who are earning additional income from freelancing activities or part-time businesses also need to file the Income Tax Return Form-4. Furthermore, individuals who make profits through Futures and Options, crypto-currency, and commodities need to file this particular form. 

ITR Form-4

According to section 44AD, Section 44ADA, and section 44AE of the Income Tax Act, ITR Form-4 is the Income Tax Return for taxpayers who opt for a presumptive income scheme.

However, if the turnover of the business given above exceeds Rs 2Crores then the taxpayer will have to file ITR-3.

Who is eligible to file ITR Form-4?

ITR 4 is to be filed by the individuals, Hindu Undivided Family, Partnership firm whose total income of AY 2020-21 includes as below:

• Business Income that is mentioned under section 44AD or 44AE of the Income Tax Act.

• Income from a profession is calculated under section 44ADA.

• Salary or pension having income up to Rs.50Lakh.

• Income up to Rs.50Lakh from One House Property but it excludes brought forward loss or loss to be carried forward cases under this head.

• Having income up to Rs.50Lakh from other sources. 

Note: If their gross receipts don’t exceed Rs.50Lakhs then the Self-employed engaged in the above-mentioned profession can also opt for this scheme.

Who is not eligible to file Income Tax Return Form-4 for AY 2022-23?

• An individual having income from salary, house property, or other determinants that are above Rs.50Lakh cannot fill this form.

• An individual who is either a director in a company or an investor who has invested in unlisted equity shares cannot fill out this form.

• According to the Income Tax Act of 1961, an individual, Hindu Undivided Family, or partnership firm whose books of accounts should be audited.

• Resident but not ordinarily residents 

• Non-residents

• In case an individual is either a director or investor in a company who has invested in unlisted equity shares.

• Having an agricultural income of more than Rs.5 Thousand.

Documents required for filing ITR Form-4

You will need documents for filing the ITR Form-4 and that is given below:

• Form 16

• Form 26AS

• Form 16A

• Bank Statements

• Housing Loan Interest Certificates

• Receipts for Donations Made

• Rental Agreement

• Rent Receipts

• Investment premium payment receipts - LIC, ULIP etc.

Structure for filing the ITR Form-4 

ITR-4 is divided into many parts which are mentioned below:

• PART A: General Information

• PART B: Gross total income from the 5 heads of income

• PART C: Total taxable income and Deduction

• PART D: Tax computation and tax status

• Schedule BP: Details of income from Business given under Section 44AD, 44ADA and 44EA

• Information regarding the turnover or Gross receipts reported for GST

• Financial Particulars of Business

• Schedule IT, TCS, and TDS 1: Statement of payment of advance tax and tax on self-assessment, tax collected at source, and TDS from salary

• Schedule TDS2: Statement of deducted tax.

• Verification column

Key Changes for AY 2022-23

Some key changes are introduced in ITR Form-4 for the Assessment Year 2022-23 which are given following:

• According to section 115BAC, also if file Form No. 10-IE was filed in Financial Year 2020-21 then as a taxpayer, you need to reveal whether you had opted for the new tax regime. Further, you can choose to opt, not opt, to continue, or even opt out of the new tax regime for Financial Year 2021-22.

• In case a resident individual has income tax deferred on an employee stock ownership plan they are restricted from filing ITR Form?4.

• A quarterly breakup of dividend income is required to be given.

• Schedule DI which was inserted for Assessment Year 2020-21, has been evacuated.

Process for filing the ITR Form-4 Offline

Individuals who can file ITR Form-4 offline which is given the following:

• Individuals who are 80 years of age or more.

• The individual whose income is less than Rs.5Lakh and he does not claim a refund in the income tax return.

• A return furnishing a form in a physical paper.

• By furnishing a bar-coded return 

ITR Form –4 for filing Online or Electronically

• The return is furnished digitally using the digital signature.

• The data transmitting electronically and after that submitted the verification of the return is made in ITR Form-V.

• If the ITR Form-4 is under digital signature then an acknowledgment will be sent to the registered email id.

Conclusion 

It concluded that Income-tax Return Form-4 is to be filed by small business owners, who do not maintain books of accounts but maintain a sales ledger in approximate volume and in which includes online sellers, traders, wholesalers, manufacturers, etc. According to section 44AD, Section 44ADA, and section 44AE of the Income Tax Act, ITR Form-4 is the Income Tax Return for taxpayers who opt for a presumptive income scheme. However, if the turnover of the business given above exceeds Rs 2Crores then the taxpayer will have to file ITR-3. If their gross receipts don’t exceed Rs.50Lakhs then the Self-employed engaged in the above-mentioned profession can also opt for this scheme.

eStartIndia is one of the leading cloud-based platforms that help you to file your ITR (Income tax return) without any hassle at a very affordable cost.

Author:

Radhika Punani
Ambala
I am Radhika from Ambala city. I qualified LLM from Kurukshetra University and B.A.LLB from Maharishi Markandeshwar University