The Central Board of Direct Taxes (CBDT) notified the instructions to help the taxpayers for filling the particulars in Income Tax Return Form‐4 for the Assessment Year 2021‐22 relating to the Financial Year 2020‐21.
What is ITR‐4 SUGAM?
The ITR 4 Sugam Form is for the taxpayers who are filing returns under the presumptive income scheme in Section 44AD, Section 44ADA and Section 44AE of the Income Tax Act. If the turnover of the aforementioned business becomes more than Rs 2 crores then the taxpayer can’t file ITR-4.
Who is eligible to use this Return Form?
This Return Form is to be used by an individual or HUF, who is resident other than not ordinarily resident, or a Firm (other than LLP) which is a resident, whose total income for the assessment year 2020‐21 does not exceed Rs.50 lakh and who has income under the following heads namely Income from business where such income is computed on presumptive basis under Section 44AD (i.e. Gross Turnover upto Rs. 2 crore) or Section 44AE (income from goods carriage upto ten vehicles); or Income from Profession where such income is computed on presumptive basis under Section 44ADA (i.e. Gross receipt upto Rs. 50 lakh); or Income from Salary/ Pension; or Income from One House Property; or Interest income and / or income from family pension taxable under Other Sources.
It is noteworthy, the income computed on presumptive basis under sections 44AD or 44AE or 44ADA shall be presumed to have been computed after giving full effect to every loss, allowance, depreciation or deduction under the Income‐tax Act. However, a person having loss after giving effect to proviso to sub‐section 3 of Section 44AE shall file ITR5.
Further, in a case where the income of another person like spouse, minor child, etc. is to be clubbed with the income of the assessee, this Return Form can be used only if the income being clubbed falls into the above income categories.
Who is not eligible to use this Return Form
This Return Form should not be used by a person who is a Director in a company; has held any unlisted equity shares at any time during the previous year; has any asset (including financial interest in any entity) located outside India; has signing authority in any account located outside India; or has income from any source outside India, has deferred tax on ESOP received from employer being an eligible start‐up.
This return form also cannot be used by a person who has any income of the nature during the previous year namely Profits and gains from business and professions which is not required to be computed u/s 44AD, 44ADA or 44AE, such as income from speculative business, agency business, commission or brokerage income etc.; Capital gains; Income from more than one house property; Income under the head from other sources; Income to be apportioned in accordance with provisions of section 5A; or Agricultural income in excess of Rs.5,000.
SUGAM form not mandatory
Form ITR‐4 (Sugam) is a simplified return form to be used by an assessee, at his option, if he is eligible to declare profits and gains from business and profession on presumptive basis under section 44AD, 44ADA or 44AE. However, in case the assessee keeps and maintains all books of accounts and other documents referred to in section 44AA, and also gets his accounts audited and obtains an audit report as per section 44AB, filling up the Form ITR‐4 (Sugam) is not mandatory. In such a case, other regular return forms viz. ITR‐3 or ITR‐5, as applicable, should be used and not this Form.
Key changes (as compared to ITR for AY 2020‐21)
Firstly, the option to avail benefit of the new tax regime u/s 115 BAC is provided in ITR‐4. Form‐10 IE filing is mandatory to avail benefit of new tax regime and should be filed within the due date mentioned as per section 139(1).
Secondly, Resident Individuals having Income‐Tax deferred on ESOP are restricted to file ITR‐4.
Thirdly, Quarterly breakup of dividend income to be provided.
Fourth, Schedule DI is removed.
Manner of filing and verification of this Return Form
This Return Form can be filed with the Income Tax Department either electronically or in paper form.
If the return is filed electronically on the e‐filing web portal of Income‐tax Department (www.incometaxindiaefiling.gov.in) [www.incometax.gov.in from 7‐June‐2021] and verified by digitally signing the verification part, or authenticating by way of electronic verification code (EVC), or Aadhaar OTP, or by sending duly signed paper Form ITR‐V ‐ Income Tax Return Verification Form by post to CPC at the following address – “Centralized Processing Centre, Income Tax Department, Bengaluru— 560500, Karnataka.
The Form ITR‐V ‐ Income Tax Return Verification Form should reach within 120 days from the date of e‐filing the return.
The confirmation of the receipt of ITR‐V at Centralized Processing Centre will be sent to the assessee on e‐mail ID registered in the e‐filing account.
If the return is filed in paper form, at the designated offices of Income‐tax Department, along with duly signed Form ITR‐V. This mode of furnishing return is permissible only in case of super senior citizens (i.e. an individual of the age of 80 years or more at any time during the previous year).
Obligation to file return
Every individual or HUF whose total income before allowing deductions under Chapter VI‐A of the Income‐tax Act, exceeds the maximum amount which is not chargeable to income tax is obligated to furnish his return of income. The claim of deduction(s) under Chapter VI‐A is to be mentioned in Part C of this Return Form.
If new Tax Regime u/s 115 BAC is not opted the maximum amount of Rs.2,50,000 which is not chargeable to income tax for Assessment Year 2021‐22, in case of an individual who is below the age of 60 years or a Hindu Undivided Family (HUF)
If new Tax Regime u/s 115 BAC is not opted the maximum amount of Rs.3,00,000 which is not chargeable to income tax for Assessment Year 2021‐22, in case of an individual, being resident in India, who is of the age of 60 years or more at any time during the financial year 2020‐21 but below the age of 80 years.
If new Tax Regime u/s 115 BAC is not opted the maximum amount of Rs.5,00,000 which is not chargeable to income tax for Assessment Year 2021‐22, in case of an individual, being resident in India, who is of the age of 80 years or more at any time during the financial year 2020‐ 21
If the New Tax Regime is opted u/s 115 BAC he maximum amount of Rs.2,50,000 which is not chargeable to income tax for Assessment Year 2021‐22, in case of an individual who is below the age of 60 years, in case of an individual, being resident in India, who is of the age of 60 years or more at any time during the previous year 2020‐ 21, and in case of an individual, being resident in India, who is of the age of 80 years or more at any time during the previous year 2020‐ 21.
Obligation to file form 10‐IE
Any individual or HUF opting for new tax regime u/s 11 5BAC has to mandatorily file Form 10‐IE before the due date of filing of return u/s 139(1). Form 10‐IE once filed cannot be withdrawn during the year. After filing Form 10‐IE, original return or revised return is required to be filed mandatorily to avail the benefit of new tax slab u/s 115 BAC and Acknowledgement no. & Date of filing Form 10IE are mandatory fields in ITR‐4. If Form 10‐IE is filed within the due date then even if the return is filed after the due date, the benefit of 115 BAC will be allowed.