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Difference between ITR-4 and ITR-4S

Varsha singh 
on 29 May 2017

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ITR-4 is a detailed form, possibly one of the two longest of all tax return forms (see summary at the end). If you run a business it's likely you have heard of the ITR-4S, a much shorter form which is also applicable to businesses. But not all businesses can file ITR-4S.

When you have to report income of a business or a profession, ITR-4 is your tax return form. Almost everyone who has a business, however big or small, can file this form. There is no minimum income you should earn to file this return. A shopkeeper, a  Doctor, a tutor, a retailer, a wholesaler, an insurance agent, interior decorator or fashion designer, everyone can be their tax return in ITR-4.

ITR-4 is a detailed form, possibly one of the two longest of all tax return forms. If you run a business it's likely you have heard of the ITR-4S, a much shorter form which is also applicable to businesses.

But not all businesses can file ITR-4S. ITR-4S is a special case ITR, applicable for businesses where income is calculated on 'presumptive method'. In simple words the presumptive method lets you report your income as 8 per cent of your gross receipts (as per Section 44AD of the income tax act) or as Rs 7,500 per month for each vehicle if you are in the business of plying, leasing or hiring trucks (as per section 44AE). You don't have to maintain accounting records of your business and advance tax rules don't apply to you.

To top it all, ITR-4S is barely a four page document, which you can fill in a short time. But there is a catch; you need to meet the following conditions to file ITR-4S -

• Your gross receipts or turnover must be less than R 1 crore.
• You must be resident of India.
• You may be an individual, a HUF or a partnership firm but not a company.

Also ITR-4S is not allowed to be filed where there is:

• Income from commission or brokerage

• Agency business

• Income of professionals: Who are carrying on profession of legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, an authorized representative, film artist, company secretary and information technology. Authorized representative means: Any person, who represents someone, for a fee or remuneration, before any tribunal or authority under law. Film artist includes a producer, actor, cameraman, director, music director, art director, dance director, editor, singer, lyricist, story writer, screenplay writer, dialogue writer, dress designer - basically any person who is involved in his professional capacity in the production of a film. (These are the professions listed under section 44AA(1)).

• Ownership of more than one house property

• Capital gains

• Losses to be carried forward

• Agriculture income or exempt income more than R 5,000

• A resident taxpayer who is a signing authority in any bank account located outside India or has income from any source outside India

• Speculative income like winning from lotteries, horse races

• Relief claimed by taxpayer under Section 90, 90A or 91

In all such cases, ITR-4 must be filed for your business. It's possible you have more than one business, and you have opted for presumptive scheme for one of them. In such a case, you still have to file ITR-4, since you can file only one return form. You can include income of presumptive business in ITR-4.

Let's understand with some examples:

Case 1: Rahul is clothing merchant and has opted for the presumptive income scheme. Rahul can choose to file ITR-4 or ITR -4S (provided is gross turnover is less than R 1crore).

Case 2: Neha is an interior decorator and wants to know which ITR form she should file. Neha cannot file ITR-4S, her profession is listed as non-eligible to file ITR-4S. Neha has to file ITR-4.

Case 3: Deepika had opted for presumptive income for FY 2013-14. She runs a wholesale business and her turnover for FY 2014-15 was R 1.20 crores. Since Deepika's turnover exceeds R 1 crore, for financial year 2014-15 she will have to file ITR-4 as ITR-4S is not applicable in cases where turnover exceeds R 1crore.

Case 4: Rahul is an insurance agent and his income was R 18lakhs in financial year 2014-15, he wants to file ITR-4S. Those running insurance commission business cannot file ITR-4S. Therefore Rahul has to file ITR -4 for financial year 2014-15.

Case 5: Shashank is a practicing heart specialist and his turnover for financial year 2014-15 is Rs.55 lakhs. Shashank wants to file ITR-4S. Doctors are not eligible to file ITR-4S. Even though Shashank's income is less than R 1crore, he has to file ITR-4.

Case 6: Prashant carries on 2 businesses. He has a manufacturing business with a turnover of R 1.4crores and another business of truck hiring and leasing, which is eligible for presumptive income as per section 44 AD. Prashant wants to know which ITR to file. Even though Prashant runs a business which is eligible under section 44AD, he shall have to file ITR-4. Return of income must include income from all sources and given Prashant's first business, ITR-4 shall be applicable for filing his consolidated income details.

Case 7: Ashish is in the business of plying, hiring, or leasing goods carriage. In the financial year 2014-15 he owned 13 lorries. Presumptive method of taxation under section 44AE is applicable only in cases where not more than 10 trucks are owned. Therefore, Since Ashish owns more than 10 trucks he has to file ITR-4.

Case 8: Vijay is in the business of plying, hiring, and leasing goods carriage and owns 5 goods carriage but Vijay chooses not to opt for 44 AE scheme and want to declare income lower than the income estimated under section 44AE. Vijay can declare income lower than what is calculated under section 44AE, however he shall have to maintain books of accounts as prescribed and will have to file ITR-4 for his income.


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