ITR-4 (Sugam): Who Can File It for AY 2026-27

ITR-4 (Sugam) is for resident individuals, HUFs and partnership firms (other than LLPs) whose total income is up to ₹50 lakh and whose business or professional income is declared on a presumptive basis under section 44AD, 44ADA or 44AE. For AY 2026-27 (income earned in FY 2025-26) it can also carry salary or pension, income from up to two house properties, interest and other sources, long-term capital gains under section 112A up to ₹1.25 lakh, and agricultural income up to ₹5,000.

If any one of those conditions breaks, ITR-4 is off the table and you will usually file ITR-3 (or ITR-5 for an LLP). Here is the full test, what changed this year, and two worked examples.

The ITR-4 eligibility checklist for AY 2026-27

You can use ITR-4 only if every line below is true for you:

• Who you are: a resident individual (not "resident but not ordinarily resident"), a resident HUF, or a resident partnership firm that is not an LLP.
• Total income: not more than ₹50 lakh.
• Business or professional income: computed on a presumptive basis under section 44AD, 44ADA or 44AE.
• House property: income from no more than two house properties. This is new for AY 2026-27. CBDT's Notification No. 45/2026 dated 30 March 2026 replaced "one house property" with "two house properties" in rule 12 for both ITR-1 and ITR-4.
• Capital gains: only long-term gains under section 112A (listed equity shares, equity mutual funds), and only up to ₹1.25 lakh.
• Agricultural income: not more than ₹5,000.

Who cannot file ITR-4

The notified form and the department's ITR-4 FAQ exclude you if you:

• are a non-resident or resident but not ordinarily resident;
• are a director in a company;
• held unlisted equity shares at any time during the year;
• have any short-term capital gain, or section 112A long-term gains above ₹1.25 lakh;
• have assets (including a financial interest in any entity) located outside India, or signing authority in a foreign account;
• have deferred tax on ESOPs from an eligible start-up;
• have income from lottery winnings, race horses, or income taxed under sections 115BBDA or 115BBE;
• have income from more than two house properties or agricultural income above ₹5,000;
• are an LLP (LLPs file ITR-5 whatever their size).

ITR-4 is optional. Being eligible for presumptive taxation does not force you onto it; it simply gives you a shorter form if you choose the scheme.

The three presumptive schemes ITR-4 is built around

Section 44AD: small businesses

For eligible resident individuals, HUFs and firms (not LLPs) carrying on business. Your profit is deemed to be 8% of turnover, or 6% of the part received by account payee cheque, draft, bank transfer or other prescribed electronic modes. You can declare more, not less. The turnover limit is ₹2 crore, rising to ₹3 crore if cash receipts are no more than 5% of total receipts. Commission and brokerage income, agency business and goods-carriage operators are outside 44AD.

Section 44ADA: professionals

For resident individuals and firms (not LLPs) in specified professions, such as doctors, lawyers, architects, engineers, chartered accountants and technical consultants. Income is deemed to be 50% of gross receipts. The receipts limit is ₹50 lakh, rising to ₹75 lakh if cash receipts are no more than 5% of the total. You do not have to maintain the books normally required under section 44AA for that profession.

Section 44AE: goods carriages

For anyone plying, hiring or leasing goods carriages who owns no more than ten of them at any time in the year. Income is deemed to be ₹7,500 per vehicle per month, or for a heavy goods vehicle (gross vehicle weight above 12,000 kg) ₹1,000 per ton of gross vehicle weight per month. A part of a month counts as a full month.

Worked example 1: a Jaipur architect under 44ADA

Ananya runs a one-person architecture practice in Jaipur. For FY 2025-26:

• Fees received by bank transfer: ₹38,40,000
• Fees received in cash: ₹1,60,000
• Gross receipts: ₹40,00,000
• Fixed-deposit interest: ₹45,000
• Rent from one let-out flat: ₹1,80,000 a year; municipal tax paid ₹6,000

1. Is 44ADA available? Cash is ₹1,60,000 of ₹40,00,000, which is 4%. Since that is within 5%, her limit is ₹75 lakh, and ₹40 lakh is well inside it. Architecture is a specified profession, so yes.
2. Presumptive income: 50% of ₹40,00,000 = ₹20,00,000.
3. House property: ₹1,80,000 less ₹6,000 municipal tax = ₹1,74,000; less the 30% standard deduction of ₹52,200 = ₹1,21,800.
4. Other sources: ₹45,000.
5. Total income: ₹20,00,000 + ₹1,21,800 + ₹45,000 = ₹21,66,800. That is under ₹50 lakh, and she also lives in a flat she owns, so she has two house properties, which ITR-4 now allows.

Ananya files ITR-4. Had she bought a third flat, or sold a few shares at a short-term gain, she would have had to move to ITR-3.

Worked example 2: a Surat textile trader under 44AD

Haresh trades in sarees in Surat. His FY 2025-26 turnover is ₹1,80,00,000: ₹1,60,00,000 received through bank and UPI, and ₹20,00,000 in cash.

1. Which limit applies? Cash is ₹20 lakh of ₹1.8 crore, about 11%. That is above 5%, so the limit is ₹2 crore, not ₹3 crore. He is still under it.
2. Deemed profit on digital receipts: 6% of ₹1,60,00,000 = ₹9,60,000.
3. Deemed profit on cash receipts: 8% of ₹20,00,000 = ₹1,60,000.
4. Presumptive income: ₹11,20,000.

If Haresh's cash share had been above 5% and his turnover ₹2.4 crore, he would have been outside 44AD altogether and would generally need regular books, a tax audit and ITR-3. Keeping the cash share at or below 5% is what lifts his ceiling to ₹3 crore.

ITR-4 or ITR-3?

Use ITR-3 instead when you have business or professional income but fail any ITR-4 condition: income above ₹50 lakh, a capital gain other than small 112A gains, foreign assets, a directorship, unlisted shares, or when you want to declare profit below the presumptive rate. ITR-3 is longer because it carries a full balance sheet and profit and loss account.

Declaring a lower profit has a cost. Under section 44AD(4), if you opt into the scheme and then, in any of the next five years, declare profit below the presumptive rate, you cannot use 44AD for the following five years. In those years your accounts will typically need a tax audit once your income crosses the basic exemption limit.

Due dates for ITR-4, AY 2026-27

• Original due date: 31 August 2026 for non-audit business and professional taxpayers. Budget 2026 moved this from 31 July, while ITR-1 and ITR-2 filers stayed on 31 July. That date has now passed.
• Belated return: by 31 December 2026, with a late fee under section 234F of up to ₹5,000 (₹1,000 if total income does not exceed ₹5 lakh), plus interest on any unpaid tax.
• Revised return: the window now runs to 31 March 2027; revising after 31 December 2026 attracts a fee.
• Verification: e-verify within 30 days of uploading, whichever return you file.

The new tax regime is the default. A taxpayer with business or professional income who wants the old regime must file Form 10-IEA on or before the section 139(1) due date, so a belated return cannot use it.

Common mistakes with ITR-4

• Counting cash wrongly. The 5% test is about cash receipts against total receipts. One large cash sale can push you from the ₹3 crore limit back to ₹2 crore.
• Assuming "no books needed" means "no records needed". You still enter financial particulars in the form (sundry debtors and creditors, stock, cash balance) and need records to back up turnover and TDS credits.
• Missing advance tax. Under 44AD and 44ADA you can pay all your advance tax in one instalment, but it must be paid by 15 March.
• Forgetting a small directorship or unlisted shareholding. Either one disqualifies you, however small.
• Using an old copy of the form. CBDT issued a corrigendum to ITR-1 and ITR-4 in April 2026. File on the current portal version.

hellobooks< / a > -helps-itr-4-filers">How HelloBooks helps ITR-4 filers

HelloBooks does not file your return. It keeps the records that make ITR-4 quick and defensible:

• Cash versus digital split. Invoices with payment links, bank feeds and bank reconciliation show how much of your turnover came in by bank, UPI or card and how much in cash, which is the number behind the 6% rate and the ₹3 crore and ₹75 lakh limits.
• A real P&L, even under presumptive tax. If your actual profit is near or below the presumptive rate, you see it during the year, while you still have time to plan with your CA.
• TDS reconciled to Form 26AS. HelloBooks records TDS deducted by your clients and reconciles it to 26AS, so the credits you claim match the department's records.
• Financial particulars. Debtor and creditor balances, stock and cash in hand come straight from the balance sheet and AR/AP aging reports.

Your CA or tax preparer reviews and files; HelloBooks keeps the numbers ready.

This is general information as of November 2026, not tax or legal advice. Check the official source or a qualified CA for your situation.