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ITR 4 filing AY 2026-27 check these 10 Key Points before filing to Avoid Notice

For Assessment Year (AY) 2026-27, the ITR-4 (Sugam) form is a simplified return designed for small taxpayers opting for presumptive taxation. You can file this form if you meet the specific residency, income, and profession criteria outlined by the Income Tax Department.

1. Who Can File ITR-4 (Eligibility)

You are eligible to file ITR-4 if you are a Resident Individual, HUF, or Partnership Firm (excluding LLPs) meeting these conditions:

Income Source: Your primary income is from a business or profession calculated on a presumptive basis under:
- Section 44AD: Small businesses.
- Section 44ADA: Professionals like doctors, lawyers, and consultants.
- Section 44AE: Goods transport operators.
Income Limit: Your total income from all sources does not exceed ₹50 lakh.
Other Income Sources: You may also include:
- Salary or pension.
- Income from up to two house properties (an update for AY 2026-27).
- Other sources like interest and family pension (excluding lottery winnings).
- Long-term capital gains (LTCG) under Section 112A up to ₹1.25 lakh.
- Agricultural income up to ₹5,000.

2. Who Cannot File ITR-4?

Even if you meet the income limits, you cannot use ITR-4 if you:

Are a Director in any company or hold unlisted equity shares.
Are a Non-Resident (NRI) or Resident but Not Ordinarily Resident (RNOR).
have invested in unlisted equity share
have income-tax is deferred on ESOPs (Employee Stock Ownership Plans)
have agricultural income exceeding Rs. 5,000
hold assets (including a financial interest in any entity) located outside India
Have Short-term Capital Gains (STCG) or LTCG exceeding ₹1.25 lakh.
Have income from Virtual Digital Assets (e.g., Cryptocurrency).
Have brought forward or carry forward losses under any head of income.
Have commission Income.
are doing agency business.

3. Presumptive Taxation Limits for AY 2026-27

The turnover limits for opting into this simplified scheme have been updated:

Businesses (44AD): Limit is ₹2 crore, which increases to ₹3 crore if cash receipts are 5% or less of total turnover.
Professionals (44ADA): Limit is ₹50 lakh, which increases to ₹75 lakh if cash receipts are 5% or less.
Goods Carriage(Section 44AE ) : the number of goods carriages you own must not exceed 10 vehicles at any time during the year.

Detailed Analysis of above limits is as follow

When filing the ITR-4 (Sugam) form for Assessment Year 2026-27, you must report your presumptive income under the specific sections applicable to your business or profession in “Schedule BP”. The details required depend on the presumptive taxation scheme you fall under:

1. Presumptive Business Income (Section 44AD) This section is for eligible businesses declaring income based on gross turnover or receipts.

- Turnover Limits: The standard gross turnover limit is Rs. 2 Crores. However, if your cash receipts (and receipts in any mode other than account payee cheque/draft or electronic modes) are 5% or less of your gross receipts, this limit is extended to Rs. 3 Crores.
- Income Computation: You must declare a minimum of 6% of your receipts acquired through digital/electronic modes or account payee cheques/drafts. For receipts in cash or other modes, you must declare a minimum of 8%. If your actual earned income is higher than these percentages, you must declare the higher amount.
- Important Condition: If you wish to declare income lower than these prescribed percentages, you are required to get a tax audit under Section 44AB and must file a different ITR form.

2. Presumptive Income from Professions (Section 44ADA) This section is for eligible professionals computing their income.

- Gross Receipt Limits: The standard limit for gross receipts is Rs. 50 Lakhs. Similar to businesses, if your cash receipts are 5% or less of your total gross receipts, this limit is extended to Rs. 75 Lakhs.
- Income Computation: Your presumptive income is calculated as 50% of your gross receipts, or the actual amount you claim to have earned, whichever is higher.
- Important Condition: Declaring an income that is less than 50% of your gross receipts makes it mandatory to undergo a tax audit under Section 44AB, and you cannot use the ITR-4 form.

3. Presumptive Income from Goods Carriages (Section 44AE) This scheme is strictly for taxpayers engaged in the business of plying, hiring, or leasing goods carriages.

- Vehicle Limit: To be eligible, the number of goods carriages you own must not exceed 10 vehicles at any time during the year.
- Required Details: You must provide specific details for each vehicle, including its registration number, whether it is owned/leased/hired, its tonnage capacity (in metric tons), and the number of months you owned/leased it.
- Income Computation: For heavy goods vehicles (exceeding 12 metric tons), the income is computed at Rs. 1,000 per ton per month. For all other vehicles, it is computed at Rs. 7,500 per month. You must declare these amounts or the amount actually earned, whichever is higher.
- Deductions for Firms: If the taxpayer is a firm, it is permitted to deduct the salary and interest paid to partners from the computed presumptive income under this section.
- Important Condition: If your profits are lower than the prescribed rates, or if you own more than 10 vehicles, you must file a different ITR form (ITR 3).

4. Mandatory Fields in ITR 4 FILING AY 2026-27

In the ITR-4 form for AY 2026-27, the sources explicitly highlight certain fields that are mandatory to fill out:

Financial Particulars of the Business When providing the financial details of your business as of March 31, 2026, the following fields are mandatory:

E15: Sundry creditors
E19: Inventories
E20: Sundry debtors
E21: Balance with banks*
E22: Cash-in-hand

(*From ay 2026-27 it is mandatory to report Balance with Banks in ITR as on 31st march 2026. Note: The other fields in the financial particulars section only need to be filled if that information is available.)

5. ITR 4 and Income from House Property (Conditional)

If you are declaring income from a let-out house property, the following fields regarding your tenant are conditionally mandatory:

The PAN or Aadhaar Number of the tenant is mandatory if tax was deducted under section 194-IB.
The TAN of the tenant is mandatory if tax was deducted under section 194-I.

6. ITR 4 and Bank Account Details

When filing the ITR-4 form for AY 2026-27, you must provide comprehensive details regarding your bank accounts.

Bank Accounts to Report You are required to report all bank accounts held in India at any time during the previous year. The only exception to this rule is dormant accounts, which do not need to be reported.

Required Details for Each Account For every active bank account you report, you must provide the following specific details:

The IFS Code of the bank.
The Name of the Bank.
The Account Number.
The Type of bank account, which you will select from a dropdown menu provided by the e-filing utility.

Selecting Accounts for Refunds You must select at least one minimum bank account to receive any potential refund credit. If you choose to select multiple accounts for your refund, the Centralized Processing Centre (CPC) will decide which of the validated accounts will receive the refund once the return is processed.

Business Financial Particulars In addition to the general bank account details, the ITR-4 form requires you to report the total “Balance with banks” (Field E21) under the “Financial Particulars of the Business” section. This is a mandatory field that must reflect your business’s bank balances as of March 31, 2026.

7. ITR 4 and Tax Regime Selection

When filing the ITR-4 (Sugam) form for Assessment Year 2026-27, the selection of your tax regime depends heavily on the submission of Form 10IEA. Here is how tax regime selection is structured within the form:

The Default Regime By default, the tax system applicable under section 115BAC(1A) is the “new tax regime”. If you wish to use the “old tax regime,” you are required to explicitly opt out of the new regime under section 115BAC(6) by filing Form 10IEA on or before the due date for furnishing your income tax return.

Declaring Your Regime Selection in ITR-4 The ITR-4 form includes a specific section to declare your tax regime choices, depending on your history of filing Form 10IEA:

Current Year Opt-Out (First Time): If you did not opt out in previous years but want to choose the old tax regime for the current year, you must confirm if you have filed Form 10IEA within the due date of filing ITR. If yes, you must provide the acknowledgment number and file your return under the old tax regime. If no, you must file under the new tax regime.
Previous Year Opt-Outs: The form requires you to state whether you filed Form 10IEA to choose the old tax regime for any earlier assessment year. If you did, you must provide the acknowledgment number and the specific assessment year for which that form was filed.
Continuing with the Old Regime: If you previously opted for the old regime and are not making any changes for the current year, you simply indicate that you are not re-entering the new regime and continue to file your ITR under the old tax regime.
Re-entering the New Regime (Past Years): If you previously chose the old regime but later filed a second Form 10IEA to re-enter the new tax regime in a subsequent year, you must provide the acknowledgment number of that second form and file your current ITR under the new tax regime.
Re-entering the New Regime (Current Year): If you used the old regime in the past but have filed Form 10IEA to re-enter the new tax regime for the current assessment year, you must declare this, provide the new acknowledgment number, and proceed to file your return under the new tax regime.

8. Claiming and Matching TDS in ITR 4 with 26AS

The requirement to specify the exact section code for TDS is present in the ITR-4 form for Assessment Year 2026-27.

When reporting tax deducted at source on income other than salary, you must use Schedule TDS-2. This schedule includes a specific, dedicated column titled “Section under which TDS is deducted”.
For tax deducted from salary (such as under section 192), you will use Schedule TDS-1. This schedule requires the Employer’s TAN, Name, Income under Salary, and Tax Deducted, but does not explicitly feature a separate column to write the section code.

This is meant to enable automated cross-verification with Form 26AS and reduce credit mismatches.

9. Capital Gains and ITR 4 Filing AY 2026-27

For Assessment Year 2026-27, the ITR-4 (Sugam) form allows taxpayers to report specific capital gains under strict conditions:

Eligibility and Limits You are eligible to file an ITR-4 form if you have long-term capital gains (LTCG) specifically under section 112A (Sale of Listed Equity Shares and Mutual Funds), up to a maximum limit of Rs. 1.25 lakh.

Taxability While your long-term capital gains under section 112A are included in the calculation of your “Taxable Total Income,” the form explicitly states that no tax is payable on this specific income.

Reporting Requirements When declaring these gains in the ITR-4 form, you must provide the following specific details under the section for income not chargeable to tax (Section D20a):

Total sale consideration.
Total cost of acquisition.
Long-term capital gains as computed under section 112A.

10. House Property Details and ITR 4 FILING AY 2026-27

When filing the ITR-4 (Sugam) form for Assessment Year 2026-27, you are required to provide comprehensive details regarding your income from house property under Schedule B3.

Here are the key details and requirements you must report based on the sources:

1. Number of Properties You can report income for up to two house properties using the ITR-4 form.

2. Property and Ownership Details For each property, you must provide:

- The complete address, including Town/City, State, Country, and PIN Code.
- Whether the property is co-owned. If yes, you must specify your percentage share, along with the names, PAN/Aadhaar numbers, and percentage shares of the other co-owners.

3. Property Status You need to select the applicable status of the property from the following options:

- Self-occupied
- Let out (rented)
- Deemed let out

4. Tenant Details (If Let Out) If your property is rented out, you must provide specific details about your tenant(s):

- The name(s) of the tenant(s).
- The PAN or Aadhaar number of the tenant(s). This is strictly mandatory if tax was deducted at source (TDS) under section 194-IB.
- The TAN of the tenant is mandatory if TDS was deducted under section 194-I.

5. Income Computation Details To compute the taxable income from the property, the form requires you to declare:

- Gross rent received, receivable, or the lettable value.
- Any rent which cannot be realized (unrealized rent).
- Tax paid to local authorities.
- Interest payable on borrowed capital (e.g., your home loan interest).
- Any arrears or unrealized rent received during the year.
- (Note: The form automatically factors in a 30% standard deduction on the annual value).

6. Maximum Loss Allowed If your computation results in a loss (which often happens when paying home loan interest on a self-occupied property), the maximum loss from house property that you can set off is Rs. 2,00,000.

- Important: If you wish to carry forward this loss to future years, you cannot use ITR-4. The sources note that you must use ITR-3 or ITR-5 to avail the benefit of carrying forward house property losses.