Choosing the right ITR form between ITR-3 and ITR-4 can be confusing for self-employed individuals in India. ITR-3 caters to businesses and professionals who maintain detailed income and expense records. It's ideal for shopkeepers, consultants, freelancers, etc. ITR-4, on the other hand, simplifies ITR filing for those falling under the presumptive taxation scheme. This scheme estimates income based on business turnover, making it suitable for small businesses with basic records.
ITR-3 is for individuals and Hindu Undivided Families with income from profits and gains from business or profession
ITR-4 is for those individuals and HUFs who have opted for the presumptive income scheme
ITR-3 requires detailed information about business income, expenses, and profits, without any approximations
ITR-4 allows taxpayers to declare their income based on prescribed rates, simplifying the calculation process
The presumptive scheme under Section 44AD allows taxpayers to file ITR by estimating their income based on a percentage of their business turnover (sales)
ITR-3 is for businesses with high turnover or complex transactions, while ITR-4 is for simpler businesses
ITR-4 is for small business owners whose turnover does not exceed ₹2 Crores and professionals earning up to ₹50 Lakhs