It can be somewhat daunting to file your income tax return (ITR), particularly if you must file under ITR 4 as a professional, freelancer, or small business owner. Being well-informed and prepared is crucial given the new financial year laws and compliance needs. Before you start filing your ITR 4 this year, here are certain things you should know.
Recognize Who Needs to File ITR 4
Individuals, Hindu Undivided Families (HUFs), and businesses (except from limited liability partnerships) that have chosen the presumptive income plan under Sections 44AD, 44ADA, or 44AE of the Income Tax Act are the target audience for ITR 4. It is applicable if your entire income is less than ₹50 lakh and consists of the following:
Revenue from businesses under the presumed plan
Section 44ADA’s definition of professional income
Salary or pension income
Revenue from a single residence
Other sources of income (not include winnings from horse racing or the lottery)
The first and most important step is to determine if you are eligible to file an ITR 4.
Prepare all of your financial documents
Prior to filing, collect all required paperwork, including:
Statements from banks
Tax credit statement, Form 26AS
Form 16 (if you are paid)
Information on business revenue or receipts
Evidence of investment for tax deductions (if relevant)
Having correct data guarantees error-free submission and prevents notices from the Income Tax Department, even though ITR 4 is a simplified return form.
Recognize the Advantages of Presumptive Taxation
In the framework of presumptive taxation:
8% of gross receipts (or 6% if they are received digitally) may be declared as income by businesses.
50% of gross receipts may be declared as income by professionals.
It is not necessary for you to keep books of accounting.
This greatly lessens the strain of compliance. Nevertheless, unless you intend to switch back to routine filing with well-maintained books, you will have to stick with this strategy for at least five years.
View the Most Recent ITR 4 Changes
The ITR forms may be updated annually by the tax portal. Make careful to look for:
Updated validation guidelines
New rules for disclosure
revised deduction caps under Sections 80C, 80D, and so forth.
Any new surcharge clauses or tax rates
You can file more accurately and on time if you are aware of these changes.
Carefully verify the pre-filled data
The Income Tax Department uses information from Form 26AS and prior returns to automatically fill in a number of fields. It’s critical to review:
Details of income
TDS deductions
Details of a bank account
Any discrepancy or inaccurate information may result in scrutiny or delays. Before submitting, take the time to carefully check each entry.
To avoid penalties, submit your work before the deadline
Generally speaking, the ITR 4 filing date is July 31 (unless it is extended). Not filing on time may lead to:
A fine of ₹5,000 in accordance with Section 234F
Section 234A/B/C interest on overdue taxes
loss of some tax advantages
Prioritize filing early to prevent mistakes or last-minute rushing.
Make use of e-verification or digital signatures
Verification of the return is required once it has been filed. You could:
Use your bank account, net banking, or Aadhaar OTP to e-verify.
Deliver a hard copy of your ITR-V to CPC in Bengaluru.
If appropriate, use a digital signature (DSC).
Your return is deemed invalid if it is not verified.
In conclusion
Under the presumptive taxation regime, filing ITR 4 could appear simple, but careful preparation and attention to detail are crucial. Recognize your eligibility, prepare your paperwork, confirm the information you’ve already filled out, and make sure to submit on time. You can make the process easy and stress-free by being proactive and knowledgeable.