ITR-4 Sugam for AY 2026-27: Who Can and Cannot Use It

What ITR-4 Is and What It Is Based On?

The form ITR-4 is specifically designed for resident individuals, HUFs, and corporations whose total income does not exceed ₹50 lakhs and use the presumptive taxation method under Section 44AD, 44ADA, or 44AE.

Presumptive taxation scheme is a special tax provision that allows certain tax payers to claim their income by declaring a certain percentage of their gross receipts without actually determining their profit or maintaining books of account.

According to the provisions of section 44AD, for most small business entities, the income will be presumed at 8% of the turnover when the receipt is in cash and at 6% when the receipt is in kind. According to section 44ADA, for certain professionals including doctors, advocates, architects, and consultants, income is presumed to be 50% of the gross receipts.

Who Can File ITR-4 for AY 2026-27?

To be eligible, a few conditions must all be satisfied at the same time.

The taxpayer must be a resident individual, a Hindu Undivided Family (HUF), or a partnership firm. Limited Liability Partnerships, or LLPs, are excluded. Total income from all sources must not exceed ₹50 lakh. The primary business or professional income must be declared under one of the three presumptive sections mentioned above.

Turnover ceiling, as per Section 44AD, is ₹2 crores for all business except when the amount of cash received during the accounting period is less than 5% of total gross receipts, in which case the limit can be extended up to ₹3 crores. For professionals covered under Section 44ADA, the gross receipts limit is ₹75 lakhs.

In addition to business or professional income, the filer can also have income from salary or pension, income from up to two house properties, and income from other sources such as bank interest or family pension.

A Change for AY 2026-27: Two House Properties Now Allowed

However, one important change introduced this year is that taxpayers with income from up to two houses can now use ITR-4 for AY 2026-27, whereas earlier, eligibility was restricted to those with only one house property.

For AY 2026-27, investment and bank balance details are also now required to be disclosed in ITR-4, adding a layer of reporting that was not previously part of this form.

Who Cannot File ITR-4?

This is where many people go wrong, and it is worth being specific.

Taxpayers who cannot use ITR-4 include those who are a resident with assets or financial interests outside India or who hold signing authority in a foreign account; individuals claiming relief for foreign tax paid under Sections 90, 90A, or 91; those who have earned income from lottery, racehorses, or legal gambling; individuals for whom TDS has been deducted under Section 194N; and those who have gains from virtual digital assets such as cryptocurrency.

You also cannot file ITR-4 if your business turnover exceeds the presumptive scheme limits. If turnover goes above ₹3 crore under Section 44AD or above ₹75 lakh under Section 44ADA, you are required to switch to ITR-3 and maintain proper books of accounts. Similarly, if you are a director in a company or hold unlisted equity shares, ITR-4 is not applicable.

Non-residents cannot use this form either. ITR-4 is only for individuals who qualify as resident Indians for the relevant financial year.

The Due Date for AY 2026-27

The last date to file ITR-4 for FY26 (AY 2026-27) has been changed under Budget 2026 to August 31, 2026 for non-audit taxpayers. If you miss that date, a belated return can still be filed up to December 31, 2026, though a late fee of up to ₹5,000 applies under Section 234F, along with applicable interest under Section 234A on any tax due.

A Few Other Updates to Know

For AY 2026-27, deductions under Sections 80C to 80U must now be selected from a drop-down menu on the e-filing portal, and the exact clause or sub-section must be specified. The 28-digit Aadhaar enrolment ID is no longer accepted in the form; only a valid 12-digit Aadhaar number will be accepted. An additional column has been added in the TDS details schedule to specify the section under which TDS was deducted.

The new tax regime remains the default for individuals. Taxpayers who wish to opt out and use the old regime must do so directly through the ITR. First-time opt-outs must provide the acknowledgement number and details of Form 10-IEA, which must be filed before the return filing due date.

Where to File ITR-4?

ITR-4 can be filed online through the Income Tax Department's e-filing portal at incometax.gov.in. Both online filing and an offline Excel or JSON utility are available. The portal will ask you to confirm eligibility before proceeding. It is advisable not to rely on the auto-suggested form alone, as the portal has been known to misclassify profiles in some cases. Cross-check your eligibility manually before confirming the form selection.

Conclusion

Although ITR-4 continues to remain one of the simpler choices available in relation to tax returns for those individuals who like presumptive taxation, there have been some key changes made in AY 2026-27, which include eligibility norms and information disclosure requirements. Ideally, it would be best if the individual confirms his eligibility for Sugam first, as wrong use of the tax form leads to defective return notification.