What is the presumptive taxation scheme for users filing ITR-4?

Income Tax Return is a document or form that must be submitted to the Income Tax Department of India. It comprises information on a person’s earnings and the taxes that must be paid on those earnings throughout the year.

Those taxpayers who are crossing the threshold limit prescribed by the government for filing income tax, are required to file ITR.

One of the forms for filing income tax returns is the ITR-4 Sugam. It is intended for taxpayers who selected a presumptive income plan. Sections 44AD, 44AE, and 44ADA all describe this plan in detail. However, take note that the taxpayer must submit an ITR-3 if the company’s revenue surpasses 2 crores.

Presumptive taxation scheme for users filing ITR-4:

A person engaged in a company or profession is required to keep regular books of accounts under certain restrictions as per particular conditions, as per Section 44AA of the Income Tax Act (1961). The presumptive taxation scheme u/s 44AD, 44ADA, and 44AE was created by the Income Tax Act to alleviate small taxpayers of this compliance load. The presumptive taxation structure allows users to declare income at a set rate. Presumptive taxation systems (for ITR-4 users) have been outlined in the Act as follows:

Section 44AD: Estimated income computation for taxpayers who are resident individuals, resident HUFs, or resident partnership firms (other than LLPs) engaging in specified commercial activity.

Section 44ADA: Under certain restrictions, the computation of professional income for an assessee who resides in India and practises a profession listed in section 44AA (1) is done on an approximated basis.

Section 44AE: Estimated income computation for taxpayers (including individuals, HUFs, firms (other than LLPs), and other persons, both residents and non-residents) engaged in the business of operating, leasing, or hiring goods carriages, and who at any given time during the previous year owned no more than ten such carriages.