ITR-4 Sugam — Presumptive Taxation for Small Business & Professionals
Last updated: 3 June 2026
What is ITR-4 Sugam? ITR-4 (Sugam) is a simplified income tax return for individuals, HUF, and partnership firms (not LLPs) who opt for presumptive taxation under Section 44AD (business), 44ADA (professionals), or 44AE (goods transport). Under presumptive taxation, you declare a fixed percentage of turnover as income — no need to maintain detailed books of accounts. Eligible if: turnover ≤ ₹2 Cr (44AD) or receipts ≤ ₹75 lakh (44ADA), total income ≤ ₹50 lakh, and you are a resident individual/HUF.
6% / 8%
Section 44AD — declare 6% of digital receipts or 8% of cash receipts as net profit. No books, no audit. Professionals under 44ADA declare 50% of gross receipts as income.
Presumptive Taxation Rates at a Glance
The key rates under each section that apply when filing ITR-4 for AY 2026-27:
| Section | Who It Covers | Turnover / Receipt Limit | Deemed Profit Rate |
|---|---|---|---|
| 44AD | Small businesses (individuals, HUF, firms) | Turnover ≤ ₹2 Crore | 6% (digital) / 8% (cash) |
| 44ADA | Specified professionals (doctors, lawyers, CAs, etc.) | Gross receipts ≤ ₹75 Lakh | 50% of gross receipts |
| 44AE | Goods carriage operators (≤10 vehicles at any time) | No turnover limit; per-vehicle cap applies | ₹1,000/ton/month (heavy); ₹7,500/vehicle/month (others) |
ITR-4 Eligibility — Who Can and Cannot File
| Eligible for ITR-4 | Must Use ITR-3 Instead |
|---|---|
| Resident individual/HUF with business income under 44AD | Total income exceeds ₹50 lakh |
| Resident professionals opting for 44ADA (receipts ≤ ₹75L) | Has capital gains (shares, property, MF) |
| Goods transport operators under 44AE | Director in any company |
| Salary + presumptive business (within limits) | Holds unlisted equity shares |
| One house property income included | Has foreign income or foreign assets |
| Income from other sources (interest, dividends) | Turnover exceeds ₹2 Cr (44AD) or ₹75 lakh (44ADA) |
| Agricultural income up to ₹5,000 | Partnership firm (not eligible for 44ADA) |
Frequently Asked Questions
What is Section 44AD presumptive taxation?
Section 44AD allows small businesses (individuals, HUF, or partnership firms — not LLPs or companies) with turnover up to ₹2 crore to declare 6% (digital receipts) or 8% (cash receipts) of turnover as net profit — without maintaining full books of accounts. If declared income is at or above this rate and below ₹50 lakh total income, file ITR-4. This simplifies compliance for small traders, shopkeepers, and contractors.
Who is eligible for Section 44ADA for professionals?
Section 44ADA is available to specified professionals — doctors, lawyers, engineers, architects, accountants, interior designers, technical consultants, and film artists — whose gross receipts do not exceed ₹75 lakh in a year (raised from ₹50 lakh in Budget 2023). Under 44ADA, 50% of gross receipts is deemed as net profit. The professional must be a resident individual or HUF; partnership firms are NOT eligible.
Can I show less than 6% profit under Section 44AD?
Yes, but with consequences. If you declare profit below 6% (digital) or 8% (cash) of turnover under Section 44AD, you must maintain books of accounts and get a tax audit done under Section 44AB — provided your total income exceeds the basic exemption limit. Once you opt out of 44AD, you cannot re-enter the scheme for the next 5 assessment years.
Is a tax audit required if profit is below the presumptive threshold in ITR-4?
If you opt for presumptive taxation and declare income at or above the prescribed rate (6%/8% for 44AD, 50% for 44ADA), no audit is required even if total income is above ₹50 lakh. However, if you declare less than the prescribed profit rate AND your gross total income exceeds the basic exemption limit (₹2.5 lakh / ₹3 lakh / ₹5 lakh depending on age), a tax audit under Section 44AB becomes mandatory.
When should I use ITR-3 instead of ITR-4?
Switch from ITR-4 to ITR-3 when: (1) you have capital gains from shares, property, or mutual funds, (2) you are a director in a company, (3) you hold unlisted equity shares, (4) your turnover exceeds ₹2 Cr (44AD) or receipts exceed ₹75 lakh (44ADA), (5) total income exceeds ₹50 lakh, (6) you want to carry forward business losses, or (7) you are opting out of presumptive taxation and maintaining full books.
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