ITR-4

Presumptive Taxation Scheme

Small businessmen might not have sufficient resources to keep accurate accounting records and determine the profit or loss. Due to this, managing the income and taxes from such a business is challenging. Therefore, the Income Tax Department has established some simple regulations under which your income depends on your company's gross receipts. This is known as the presumptive method, in which tax payments are made on an estimated basis.

The features of the presumptive taxation scheme are listed below:

• The maintaining of books of accounts is not required under the presumptive taxation scheme.
• Any business expenses cannot be deducted from this income.
• By 15 March, the business owner must pay 100% of the advance tax. There is no requirement to adhere to the quarterly Advance Tax instalment due dates (i.e., in June, September, and December).
• The estimated net income is 8% of the total cash receipts. However, the net income is estimated to be 6% of such gross receipts for payments made online.

Form ITR – 4 (SUGAM) can be u​sed by an Individual/HUF/Firm (Other than LLP)​ whose total income for the year includes:

• Business income computed as per the provisions of section 44AD or​44AE; or​
• Income from Profession as computed as per the provisions of​44ADA; or
• Income from salary/pension; or
• Income from one house property (excluding cases where loss is brought forward from previous years); or
• Income from other sources (excluding winnings from lottery and income from race horses dividend income in excess of Rs. 10 lakhs or unexplained Income, etc. as referred to in section 115BBE)
• Further, in a case where the income of another person like spouse, minor child, etc., is to be clubbed with the income of the taxpayer, this return form can be used where income to be clubbed falls in any of the above categories.