ITR-3 vs ITR-4: which one applies to you

File ITR-4 (Sugam) if you are a resident individual or HUF whose business or professional income is taxed only on a presumptive basis (sections 44AD, 44ADA or 44AE) and nothing else in your year rules it out. File ITR-3 when your business or profession is computed from books of account, or when any other disqualifying condition applies, such as losses to carry forward, speculative or F&O income, or foreign assets.

The rules below are TaxCare's form rules for the tax year 2025-26.

The short comparison

When ITR-4 applies

The conditions are shared with ITR-1. For ITR-4 you need all of these:

• You are a resident individual or HUF.
• Total income does not exceed ₹50 lakh.
• Your business income is only presumptive: section 44AD (business), 44ADA (specified professions) or 44AE (goods carriages, up to ten vehicles).
• You have no speculative or F&O income.
• You have only one house property, no capital gains other than listed-share LTCG up to ₹1,25,000, no lottery or race-horse income, and agricultural income not above ₹5,000.
• You have no loss to set off or carry forward, no foreign assets or income, no directorship, no unlisted shares, no TDS under section 194N, no deferred ESOP tax and no clubbed income.

When you must use ITR-3

You move to ITR-3 when any of these applies:

• Business income is not presumptive: you keep books and compute profit from the profit and loss account. This includes a person who opts out of presumptive tax.
• You have speculative or F&O income.
• Any condition that disqualifies ITR-1 and ITR-4 applies together with business or professional income, for example more than one house property, other capital gains, foreign assets, directorship, unlisted shares or a loss to carry forward.

If you have no business or profession income at all, the form is ITR-2, not ITR-3.

The presumptive schemes in numbers

Read our guide on presumptive taxation for professionals under 44ADA.

Section 44AD is not open to a person carrying on agency business, to earners of commission or brokerage (for example insurance agents), to goods-carriage businesses (which use 44AE), or to a person who must keep books under section 44AA(1). The professions covered by 44ADA are legal, medical, engineering or architectural, accountancy, technical consultancy and interior decoration, and any other profession the CBDT notifies.

Audit and due dates

A tax audit under section 44AB applies for business turnover above ₹1 crore (₹10 crore if cash receipts and payments are within 5%) and for professional receipts above ₹50 lakh. If your accounts are audited, the due date is 31 October. If you have business or professional income without audit, 31 August applies from the tax year 2025-26. Other individuals file by 31 July.

If you declare a profit under 44AD and then, within the next five years, declare it otherwise (or declare less than the deemed rate), you cannot use the scheme for the five years after that, and you must keep books and get them audited if your total income is above the basic exemption limit. In that case ITR-3 applies, not ITR-4.

Choosing in practice

1. Is the business or profession income presumptive only? If not, ITR-3.
2. Is anything else in the year on the ITR-4 exclusion list? If yes, ITR-3.
3. Otherwise, ITR-4.

A HUF files ITR-2, ITR-3 or ITR-4, never ITR-1.

How TaxCare helps

TaxCare derives the form from your data instead of asking you to choose, and explains which fact moved you to ITR-3, such as speculative income or a loss to carry forward. It supports ITR-3 and ITR-4 for tax year 2025-26. If your case needs books of account or an audit, a Tax Expert can take it. See Tax Experts and which ITR form should I file.

This guide gives general information and is not professional tax advice.