Income Tax Return (ITR) filing: Who should and should not file ITR form 4

The Income Tax Department has opened the portal for filing ITR form 1, 2 and 4. These three forms are meant to be filed by individuals and Hindu Undivided Families. However, they are different from each other depending upon the type of income. The Income Tax Return (ITR) filing is done for the assessment year 2019-20. Taxpayers must make sure they file their ITR for financial year 2018-19 before due date which is July 31,2019. Here, we will discuss what is ITR form 4, who should and who is not eligible to file, according to IT department. 

What is ITR4 form?

It is called as SUGAM, and can be used by an Individual/HUF/Firm (Other than LLP) whose total income for the year.

Who should file?

1. Business income computed as per the provisions of section 44AD or 44AE; OR 

2. Income from Profession as computed as per the provisions of 44ADA; OR

3. Income from salary/pension; OR

4. Income from one house property (excluding cases where loss is brought forward from previous years); OR

5. 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). 

Also, in 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. 

Who should not file?

Individual and HUFs not liable to file ITR4 form whose:

1. Total income for the year includes income from more than one house property.

2. Total income for the year includes income from winnings from lottery or income from race horses.

3. Total income for the year includes income chargeable to tax under the head “Capital Gains”.

4. Total Income for the year includes income taxable under section 115BBDA.

5. Total income for the year includes income of the nature referred to in section 115BBE.

6. Total income for the year includes agricultural income of more than Rs. 5,000.

7. Total income for the year includes income from speculative business and other special incomes.

8. Total income for the year includes income from agency business or income in the nature of commission or brokerage.

9. Claim reliefs are under section 90, 90A and/or section 91.

Additionally, a resident and ordinarily resident who has any assets (including financial interest in any entity) located outside India or signing authority in any account located outside India cannot file. This also includes, resident having income from any source outside India.

In cases like a taxpayer is engaged in any business eligible for the presumptive taxation scheme of section 44AD or section 44AE or section 44ADA but does not opt for the presumptive taxation scheme, then the taxpayer has to maintain the books of account of the business as per the provisions of section 44AA and has to get these accounts audited. Here, ITR4 form is also not allowed.

Hence, before filing ITR4 form, make sure you are eligible.