How to File ITR 4 Sugam for AY 2026-27: Complete Guide

How to File ITR 4 Sugam for AY 2026-27

Who should read this: Small shop owners, traders, freelancers, consultants, doctors and other professionals within the receipts limit, and small transporters.

Reading time: ~15 minutes · Last updated: 30 June 2026 · Applicable FY: 2025-26 · Applicable AY: 2026-27

Written by Hari Priya K (Kondapur, Hyderabad). Reviewed by a Chartered Accountant on our practice team. Figures verified against the CBDT AY 2026-27 ITR notification and the Income-tax Act, 1961. See Sources.

ITR 4 Sugam is the simplest return for small businesses and professionals. It uses the presumptive taxation scheme, so you declare a fixed percentage of turnover as profit, skip detailed books, and file a short form. If you run a small business or freelance within the limits, ITR 4 saves you the work of ITR 3.

What is ITR 4 (Sugam)?

ITR 4, named Sugam (Hindi for "easy"), is the income tax return for taxpayers who opt for presumptive taxation under Sections 44AD, 44ADA, or 44AE. Instead of computing actual profit from books, you declare a prescribed percentage of turnover or gross receipts as income. It is meant for small businesses and professionals with total income up to Rs 50 lakh.

Why Choose Presumptive Tax / ITR 4?

Less compliance: No requirement to maintain detailed books of account or get a tax audit (within limits).
Simple computation: Income is a fixed percentage of turnover, so tax planning is straightforward.
Lower cost: Filing is quick and inexpensive compared to a full books-based ITR 3.
Legal basis: The presumptive scheme is built into the Income-tax Act to ease compliance for small taxpayers.

Who Can File ITR 4 for AY 2026-27?

You can file ITR 4 if you are a resident individual, HUF, or firm (not an LLP) with total income up to Rs 50 lakh from any of these.

Plus salary/pension, one house property, other-sources income, and (new for AY 2026-27) Section 112A LTCG up to Rs 1.25 lakh.

Who Cannot File ITR 4?

Total income above Rs 50 lakh, or turnover/receipts above the presumptive limits.
Capital gains other than 112A LTCG up to Rs 1.25 lakh (any STCG, property, gold, or crypto gain). → ITR 3.
More than one house property.
Director in a company, or holding unlisted shares.
Foreign assets, foreign income, or signing authority abroad.
NRI or RNOR (presumptive ITR 4 is for residents).
LLPs (an LLP files ITR 5).
Income from commission or agency, or a professional who wants to declare profit below the presumptive rate (must use ITR 3 with audit).
Agricultural income above Rs 5,000.

ITR 4 vs ITR 3: The Core Choice

How Presumptive Income Works

Section 44AD (business): Declare 6% of digital/bank turnover and 8% of cash turnover as profit. Example: Rs 40 lakh digital turnover → Rs 2.4 lakh deemed profit.

Section 44ADA (profession): Declare 50% of gross receipts as profit. Example: a freelancer with Rs 30 lakh receipts → Rs 15 lakh deemed income.

Section 44AE (transport): Income is computed per goods vehicle, per month (a fixed amount based on vehicle capacity), for owners of up to 10 vehicles.

See the Section 44AE transport guide for the per-vehicle calculation.

Advance Tax: One Instalment, Not Four

Presumptive filers under 44AD and 44ADA pay the entire advance tax in a single instalment by 15 March 2026, instead of the usual four instalments. Missing it attracts Section 234C interest. See advance tax due dates.

What Changed in ITR 4 for AY 2026-27

August 31 non-audit deadline for ITR 3/ITR 4.
Section 112A LTCG up to Rs 1.25 lakh now allowed within ITR 4.
Investment and bank-balance disclosure is now required for ITR 4 filers under AY 2026-27.
Cash-receipt thresholds 5% test) raising 44AD to Rs 3 crore and 44ADA to Rs 75 lakh continue.
Dual contact and representative-assessee fields captured.
For AY 2026-27, the Income-tax Act, 1961 provisions apply.

Required Documents

Step-by-Step: How to File ITR 4

Worked Examples

Step 1: Small trader 44AD).** Imran has Rs 45 lakh turnover, mostly via UPI/bank. He declares 6% (Rs 2.7 lakh) as profit under 44AD, files ITR 4, and pays nil tax after the 87A rebate.

Step 2: Freelancer 44ADA).** Pooja, a freelance designer, has Rs 28 lakh receipts. She declares 50% (Rs 14 lakh) as income under 44ADA and files ITR 4. Total income under Rs 50 lakh, so she is eligible.

Step 3: Consultant who must use ITR 3.** Karthik's receipts are Rs 80 lakh, above the Rs 75 lakh 44ADA cap, so he cannot use ITR 4. He files ITR 3 with books.

Step 4: Transporter 44AE).** Lakshmi owns 4 trucks and declares income per vehicle per month under 44AE, filing ITR 4.

Common Mistakes

Using ITR 4 above the turnover/receipts limit or with total income above Rs 50 lakh.
Reporting capital gains (other than 112A up to Rs 1.25 lakh) in ITR 4 instead of ITR 3.
Declaring profit below the presumptive rate without books and audit, which is not allowed in ITR 4.
Wrong digital vs cash split, applying 6% where 8% is due.
Missing the single 15 March advance-tax instalment, triggering 234C interest.
Forgetting the five-year lock-in after opting out of 44AD.

Common Notices and How to Respond

Penalties

Section 234F: Rs 5,000 late fee (Rs 1,000 if income up to Rs 5 lakh) for filing after the due date.
Section 234B/234C: Interest for advance-tax shortfall, including the single 15 March instalment.
Belated return: Until 31 December 2026, with loss of carry-forward benefits and default new regime.

Latest Changes

August 31 non-audit deadline for ITR 4.
Section 112A LTCG up to Rs 1.25 lakh allowed.
New-regime Rs 12 lakh rebate applies to presumptive income too.
For AY 2026-27, the Income-tax Act, 1961 governs.

Meaning of Key ITR 4 Terms

Need Help Filing ITR 4?

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Sources

Verified against the CBDT notification of ITR forms for AY 2026-27, the ITR 4 Sugam instructions and e-filing utility on the Income Tax Department portal (incometax.gov.in/iec/foportal/), the Income-tax Act, 1961 (Sections 44AD, 44ADA, 44AE, 87A, 112A, 139, 234C, 234F), and the Finance Acts 2024 and 2025. Confirm the current presumptive limits, the 112A allowance, and due dates against the official CBDT notification before filing.

ITR 4 Sugam Filing Guide for AY 2026-27 Made Simple