Itr Presumptive

Presumptive business income & ITR-4 (Sugam) — India

⚠️ BETA — book-verified, not yet filing-verified. The statutory rules below carry citations; items marked (portal-observed) come from other filers' published ITR-4 experience (notably the MIT-licensed file-itr project), not from this project's own filings. If you file ITR-4 with this skill, please report corrections via an issue.

1. Eligibility gates (AY 2026-27 figures — verify current year)

Scheme fit first, form fit second.

• 44AD (business): resident individual/HUF/partnership firm (NOT LLP, not non-resident); any business EXCEPT: 44AA professions, commission/brokerage/agency income, and 44AE plying business. Turnover ≤ ₹2 crore, or ₹3 crore where cash receipts ≤ 5% of total turnover (receipt by account-payee cheque/draft/ECS/prescribed digital modes counts as non-cash). Deemed profit: 8% of turnover; 6% for the digitally-received portion realised by the §139(1) due date. Declaring higher actual profit is allowed; declaring lower means keeping books (44AA) — audit follows only via the 44AD(4)/(5) lock-in below or the ordinary 44AB turnover tests, not automatically.
• 44ADA (profession): resident individual/partnership (NOT LLP, NOT HUF — an HUF with professional receipts fits neither 44ADA nor 44AD, whose exclusions cover professions → books/ITR-3); professions per 44AA(1) — legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration + notified ones (film artists, company secretaries, authorised representatives, and information technology — CBDT Notification S.O. 385(E), 4-May-2001). Software/IT freelancers: IT being itself a notified 44AA(1) profession, 44ADA is the natural home (technical consultancy is the fallback characterization); if the work is plainly a business (e.g. reselling, staffing), route via 44AD instead. Gross receipts ≤ ₹50L, or ₹75L where cash receipts ≤ 5%. Deemed profit: 50% of gross receipts (higher allowed; lower ⇒ books + audit u/s 44ADA(4) if income exceeds the basic exemption).
• 44AE (goods carriages): ≤10 vehicles owned at ANY time in the year; per vehicle per month or part of a month owned: heavy (>12MT GVW) ₹1,000/ton of gross vehicle weight (or unladen weight, as applicable), others ₹7,500 — and the income is this statutory amount or actual, whichever is HIGHER. A partnership firm may additionally deduct partner salary/interest within 40(b) limits (the one exception to §3's no-deductions rule). ⚠️ 44AE is NOT in §211(1)(b) — advance tax follows the normal quarterly ladder, not §3's single 15-Mar instalment.
• ⚠️ 44AD(4) five-year lock-in: once 44AD is used, declaring non-presumptive (lower) profit in any of the 5 following AYs bars 44AD for the next 5 AYs AND triggers books + audit (44AD(5)) if income exceeds the basic exemption. Check the prior returns before opting out casually. 44ADA has no lock-in — only the per-year audit trigger.

ITR-4 (Sugam) form gates — ALL must hold: resident (not RNOR/NR) individual/HUF/firm (not LLP; HUF only via 44AD/44AE — see the 44ADA bar above); TI ≤ ₹50L; income only from presumptive business/profession (44AD/44ADA/44AE) + salary/pension + ONE house property (two allowed by the AY 2026-27 forms, CBDT Notification 45/2026 — check the current form) + other sources; CG at most 112A LTCG ≤ ₹1.25L with no CG loss to set off or carry (allowed from AY 2025-26); agri ≤ ₹5,000; and NONE of: directorship, unlisted equity, any foreign asset/income or signing authority in a foreign account, 194N TDS, deferred ESOP, brought-forward OR current-year losses to carry, any STCG, special-rate income (lottery/racehorses, 115BBDA/115BBE), or §5A (Portuguese Civil Code) apportionment. Any disqualifier, or presumptive income inside a bigger return (CG beyond the window, house properties beyond the form's limit, foreign assets) → ITR-3 for individuals/HUF, ITR-5 for firms — out of scope; stop and say so rather than mis-file.

2. Reconcile receipts — documents first, like every other head

Rebuild gross receipts bottom-up and tie every view together:

• Bank credits (all accounts, incl. payment-gateway settlements — Stripe/PayPal/Razorpay settle NET of fees; gross receipts = invoice value, the fee is irrelevant under presumptive but the GROSS drives the 6%/8%/50% base).
• GST returns where registered: turnover per GSTR-1/GSTR-3B must reconcile to declared receipts — ITR-4 discloses GSTIN + GST-reported turnover (mismatch is a standard CPC/scrutiny trigger). Export of services: zero-rated under LUT, still turnover.
• 26AS/AIS TDS: clients deduct 194J (professional fees, 10%) or 194C/194H — every deductor row implies receipts ≥ the amount reported; claim the TDS credit for every row whose income is offered this year (Rule 37BA — credit follows the year/person the income belongs to). Foreign clients deduct no Indian TDS — reconcile via FIRC/bank credit narrations; the receipts are still taxable turnover (any source-country withholding is not TDS credit — it's a Form 67/FTC question, see itr-file).
• Digital-vs-cash split (44AD): classify every receipt — the 6% rate needs the digital trail; keep the split evidence.
• Receipts of a profession and a business can coexist (44ADA + 44AD in one return, separate blocks) — never merge the two bases.

3. Compute — deemed profit, both regimes

Deemed profit per §1 rates (or higher actual if the filer wants to bank the truth — state it explicitly). No expense deductions against presumptive income (they're deemed allowed — including depreciation); Chapter VI-A still applies per regime; salary/HP/OS heads compute normally alongside. Then compute both regimes (checklist in itr-reconcile) with the §5 regime-election rules below — for business filers the choice MECHANICS differ even though the arithmetic is the same. Regime choice is an individual/HUF question only: a partnership FIRM has no 115BAC election at all — flat 30% + surcharge/cess, no old/new comparison, no Form 10-IEA; skip §5 entirely for a firm.

Advance tax is ONE instalment for 44AD/44ADA only: they pay 100% by 15-Mar (§211(1)(b)); 234C is 1% × 1 month on the shortfall vs that single date — not the 15/45/75/100 ladder (and the 234C accrual relief in itr-reconcile still applies: e.g. 112A gains arising after 15-Mar escape it if the tax is paid by 31-Mar). 44AE filers stay on the normal quarterly ladder (§1). 234B still applies from 1-Apr if < 90% paid by 31-Mar.

4. ITR-4 entry walk (portal)

Prefill download → Personal Info (regime — §5 branch below) → Schedule BP: 44AD block (turnover split into digital/cash columns, deemed profit ≥ 6%/8% respectively), 44ADA block (gross receipts, profit ≥ 50%), 44AE per-vehicle rows; Nature of business: pick the code from the utility's current-year dropdown (140xx block for software/IT services, 16019 "Other professional services n.e.c."; creators have used 16021 (portal-observed)) with business name/description; GSTIN + GST turnover if registered → E11–E25 "Financial particulars of the business" — mandatory (portal-observed: validation rejects an empty block); sundry debtors/creditors/inventory may genuinely be 0, but cash and bank balances must be the ACTUAL 31-Mar business figures from the bank statements/cash book — never back-solve a number from retained presumptive profit (the AY 2026-27 form adds bank-balance disclosure that is cross-checked against AIS) → Salary breakup vs Form 16 Part B → house property (one; two from AY 2026-27) → 112A aggregate block (≤ ₹1.25L: consideration, cost, LTCG) → Other Sources → Deductions per regime → Exempt income → Tax Paid (TDS from ALL 194J/C/H deductors vs 26AS + advance/SA challans from AIS Part B3 — same prefill gaps as itr-file §5A) → computed tax vs §3 → refund account. The itr-file §5A gotchas apply throughout (prefill understatement, TDS-2 columns, challan entry, validation gates).

5. Regime election for business filers — the 10-IEA branch (OPPOSITE of the ITR-1/2 rule; individuals/HUF ONLY — firms have no regime election, see §3)

• New regime (115BAC) is the default. An individual/HUF with business/professional income who wants the OLD regime MUST file Form 10-IEA on or before the §139(1) due date — the in-return tick alone is not effective for them (115BAC(6)).
• The escape hatch is single-use: they may later withdraw/re-enter the new regime only ONCE (10-IEA again), and after re-entering can never opt for the old regime again while they have business income.
• Consequence of the itr-reconcile/itr-file warning: an erroneous 10-IEA filed by a no-business filer locks the portal into the old regime (portal-observed — statutorily a no-business filer elects in the return itself) — the "never file 10-IEA" advice there applies to ITR-1/2 filers only. Business filers are the one group the form exists for. File it (if old regime wins §3) BEFORE filing the return, keep the ack.