Itr-4 (sugam) Decoded: Who Can File, What’s New For Ay 2025–26 -- Check Details

If you’re a mini business owner, professional, aliases self-employed individual earning up to Rs 50 lakh annually, nan ITR-4 (Sugam) shape mightiness beryllium your easiest way to record taxes for AY 2025–26. The Central Board of Direct Taxes (CBDT) rolled retired ITR-4 (SUGAM) for AY 2025-26 via Notification No. 40/2025 dated 29.04.2025, effective from 1st April 2025.  

With immoderate cardinal updates this year, here’s what you request to cognize earlier choosing this simplified return form.

What is ITR 4?

ITR-1 and ITR-4 cater to mini and mean taxpayers seeking a streamlined income reporting process, while ITR-2 and ITR-3 are designed for taxpayers pinch much intricate income streams specified arsenic superior gains and overseas income. ITR-4 is suitable for individuals, HUFs, and Firms (excluding LLPs) who are residents pinch a full income of up to Rs 50 lakh. This class must besides person income from business aliases occupation calculated nether sections 44AD, 44ADA, aliases 44AE, arsenic good arsenic semipermanent superior gains nether conception 112A up to Rs 1.25 lakh.

Individuals who autumn nether immoderate of nan pursuing criteria are not eligible to usage this form: institution Directors, owners of unlisted equity shares, recipients of deferred income taxation connected ESOP, individuals pinch cultivation income exceeding Rs 5,000, aliases individuals pinch assets (including financial liking successful immoderate entity) located extracurricular India.

Who tin record ITR-4?

ITR-4 is meant for resident individuals, Hindu Undivided Families (HUFs), and business firms (other than LLPs) who’ve opted for presumptive taxation nether Sections 44AD (for mini businesses), 44ADA (for professionals for illustration doctors, lawyers, architects), aliases 44AE (for equipment transporters). Your full income, including business aliases master receipts, location property, interest, aliases family pension, must not transcend Rs 50 lakh.

What’s caller this year?

A awesome update for AY 2025–26 is that taxpayers pinch semipermanent superior gains of up to Rs 1.25 lakh tin now besides usage ITR-4. This brings immoderate elasticity if you had humble equity aliases spot gains during nan twelvemonth and different autumn nether presumptive taxation.

Another summation is astir nan taxation authorities selection. If you’re readying to opt retired of nan caller authorities nether Section 115BAC and proceed pinch nan aged taxation slab system, nan shape will inquire if you had revenge Form 10-IEA successful AY 2024–25. If you didn’t (say, because you revenge ITR-1 aliases ITR-2 past year), you must now taxable Form 10-IEA this twelvemonth to move regimes—and that excessively earlier your return filing owed day nether Section 139(1).

"The revised Form ITR-4 (Sugam) now includes a abstracted statement point titled 'Income connected which nary taxation is payable: Long-Term Capital Gains nether Section 112A not chargeable to Income-tax,' besides allowing taxpayers to study specified exempt LTCG," said CA Dr Suresh Surana. 

> This update enables taxpayers who are different eligible to usage ITR-1 aliases ITR-4 and who besides person exempt LTCG income nether Section 112A (such arsenic gains from nan waste of listed equity shares aliases units of equity-oriented communal funds) to study specified income straight wrong these simplified forms. However, transportation guardant and/or set-off of superior losses specifications cannot beryllium provided successful these forms.

What should taxpayers do now?

If you’re eligible for presumptive taxation and person nary analyzable income sources, ITR-4 keeps your filing simple. But cheque your superior gains and make judge you enactment connected nan Form 10-IEA request successful clip if you're switching taxation regimes. Missing that deadline could fastener you into nan caller authorities for nan year.

Which taxpayers cannot usage ITR-4

The revised ITR-4 shape now caters to mini taxpayers by excluding individuals pinch income complete Rs 50 lakh, overseas assets, unlisted equity shares, aliases directorship successful a company. It besides disqualifies non-residents, group pinch aggregate location properties, aliases individuals nether nan presumptive taxation strategy who do not meet circumstantial conditions, for illustration professionals pinch gross receipts exceeding nan period for Section 44ADA.

The caller Ministry of Finance notification (G.S.R. 271(E)) amended nan Income-Tax Rules, 1962 to simplify compliance for mini taxpayers. The updated ITR-4 shape now includes sections for individual information, income sources, and deductions, including those nether Section 80CCH to meet nan requirements of nan caller taxation regime.