ITR-4 (Sugam): presumptive income explained

ITR-4 (Sugam) is the return form for a resident individual or HUF whose business or professional income is taxed on a presumptive basis: a fixed percentage of turnover or receipts is taken as income, so you do not need full books of account. Total income must be ₹50 lakh or less, and the other ITR-1 limits, such as one house property, also apply.

The rates and limits below are those TaxCare applies for the tax year 2025-26, which are signed off. The tax year 2026-27 values are carried forward, provisional, and not yet signed off against the Income-tax Act, 2025.

The section numbers 44AD, 44ADA and 44AE below are those of the 1961 Act. The Income-tax Act, 2025 brings these presumptive schemes together in one section, section 58, set out in a table.

The three presumptive schemes

Section 44AD: businesses

If your turnover is within the limit, you declare at least 8% of it as income (6% on the part received digitally). Whatever the real profit is, you may declare the presumptive amount and skip detailed books. A higher declared profit is also fine.

Section 44ADA: professions

For a specified profession (such as legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, film artist and similar), 50% of gross receipts is the presumptive income. The nature-of-profession codes on the ITR-4 form include, for the tax year 2025-26, legal, accounting, architecture, engineering, interior decoration, photography, medical, film artist and social media influencers.

Section 44AE: goods carriages

For each goods carriage owned (not more than ten), income is a fixed amount per month or part of a month: ₹1,000 per ton of gross vehicle weight for a heavy vehicle (over 12,000 kg), or ₹7,500 for any other goods carriage.

Who cannot use ITR-4

ITR-4 is not available if any of these apply:

• You are a non-resident, or resident but not ordinarily resident.
• Total income is above ₹50 lakh.
• You own more than one house property.
• Long-term capital gains on listed shares or equity funds exceed ₹1,25,000, or you have other capital gains.
• Agricultural income is above ₹5,000.
• You have lottery or race horse income.
• You have a loss to set off or carry forward.
• You hold foreign assets or have foreign income.
• You are a director in a company or hold unlisted shares.
• TDS was deducted on cash withdrawals, or you have deferred ESOP tax.
• Someone else's income is clubbed with yours.
• Your business income includes anything other than presumptive income, or you have speculative or F&O income.

In all these cases the form is ITR-2 or ITR-3. See which ITR form should I file.

Worked example

A consultant in a specified profession receives ₹30,00,000 in the year, all by bank transfer.

• Gross receipts: ₹30,00,000, within the ₹50 lakh limit.
• Presumptive income at 50%: ₹15,00,000.
• Add interest or other income, subtract eligible deductions, and tax is computed on the total.

A small shop with turnover of ₹1,00,00,000, of which ₹80,00,000 comes in digitally and ₹20,00,000 in cash: 6% on the digital part is ₹4,80,000 and 8% on the cash part is ₹1,60,000, so presumptive income is ₹6,40,000. Here the cash share is 20%, above 5%, so the turnover limit is ₹2 crore, and ₹1 crore is within it.

Things to watch

• You cannot also claim business expenses. The presumptive income is meant to cover them.
• Opting out has a cost. If you declare less than the presumptive income, you generally need books and an audit, and ITR-4 is not available. If you opt out of the scheme, it is not available to you for the next five years, and you must keep books and get them audited if your income is above the basic exemption limit.
• Audit limits. For a business, an audit is needed above a turnover of ₹1 crore, or ₹10 crore where cash receipts and payments are within 5%. For a profession, above ₹50 lakh of receipts. These apply when you are not on the presumptive scheme.
• Due date. In TaxCare's rules a person with business or professional income without an audit has until 31 August (31-Aug-2026 for the tax year 2025-26) and with an audit until 31 October.
• Advance tax. A presumptive taxpayer under 44AD may pay the whole advance tax in one instalment on or before 15 March of the tax year. Late payment attracts interest.

Which TDS and GST points matter

Clients may deduct TDS from your receipts, and it is claimed in the return. Check it in your AIS and Form 26AS or Form 168. GST registration is a separate rule from income tax, so check it separately.

How TaxCare helps

TaxCare picks ITR-4 from your facts when the business income is only presumptive and no other limit is crossed, and explains why if your facts move you to ITR-3 or ITR-2. It brings in TDS and receipts from the portal, calculates the presumptive income, and compares both regimes. If your case needs books or an audit, a Tax Expert can take it. See pricing and how to file an income tax return online.

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