Professionals such as doctors, engineers, chartered accountants (CAs), and others who run their own businesses opt for the presumptive income tax scheme to simplify their tax structure so that they can allocate more time to their businesses. Recognising this, the Income Tax Department has significantly eased compliance requirements under the scheme by reducing or eliminating the need to maintain detailed books of accounts, undergo tax audits, and fulfil other procedural formalities.
However, under the presumptive taxation scheme, you need to pay a fixed percentage of your turnover as tax and then file the income tax return (ITR). If you are declaring a lower profit than the specified limit in the presumptive taxation scheme, then a tax audit can be required.
Read below to know which ITR to file if you are availing of the presumptive taxation scheme and the process to do it:
Which ITR to file for presumptive taxation scheme?
Chartered Accountant Suresh Surana said to ET Wealth Online that, for taxpayers opting for the presumptive taxation scheme, the applicable ITR form would generally depend on the taxpayer's status, nature of income, and eligibility conditions.
Also read: ITR filing: How to calculate taxable income for salaried, professional, freelancers and others
For AY 2026-27, ITR-4 (Sugam) may be filed by a resident individual, HUF (Hindu Undivided Family), or firm, other than LLP, having a total taxable income of up to Rs 50 lakh and income from a business, or profession computed on a presumptive basis under Sections 44AD, 44ADA, or 44AE of the Income-tax Act, 1961.
The Income Tax Department has also clarified that ITR-4 is not mandatory but is a simplified return form that may be used at the option of an eligible assessee declaring business or professional income on a presumptive basis.
Surana said that ITR-4, however, cannot be used in certain cases, like when the taxpayer is a non-resident/resident but not ordinarily resident; has a total taxable income exceeding Rs 50 lakh; has short-term capital gains; long-term capital gains under Section 112A exceeding Rs 1.25 lakh; has foreign assets or foreign income; brought-forward/carry-forward losses; or is otherwise not covered by the ITR-4 eligibility conditions.
"In such cases, the taxpayer may be required to file the appropriate form, such as ITR-3 in the case of individuals/HUFs having business or professional income, or the relevant form applicable to firms / LLPs, as the case may be," Surana said.
What documents do you need to file ITR with presumptive taxation scheme
Surana said that taxpayers should maintain relevant records, such as PAN, Aadhaar, bank account details, Form 26AS, AIS/TIS, TDS certificates, GST turnover details, invoices/receipts, bank statements, proof of digital receipts, investment proofs for deductions, and details of advance tax or self-assessment tax paid.
According to Surana, the taxpayer should also ensure that PAN is active, residential status is correctly determined, at least one bank account is validated on the e-filing portal, and e-verification facilities, such as Aadhaar OTP, EVC, net banking, bank account, or demat account verification, are available.
