Income Tax Department explains how to choose between ITR-3 and ITR-4: Quick checklist for taxpayers

Taxpayers with business or professional income often face a key question while filing their income tax return: should they use ITR-3 or ITR-4?

The Income Tax Department has shared a quick checklist on X explaining how taxpayers can select the right form for AY 2026-27.

With the deadline for filing non-audit income tax returns set for 31 August, taxpayers should ensure they select the correct ITR before filing.

According to the Income Tax Department, you should first ask the following questions:

If the answer to both questions is yes, ITR -4 will be the applicable return form.

ITR-4 (Sugam) is applicable to a resident individual, HUF or resident firm (other than an LLP) having total income of up to ₹ 50 lakh and income from business or profession computed on a presumptive basis under sections 44AD, 44ADA or 44AE of the Income Tax Act, 1961.

The return can also include income from certain other sources such as:

ITR-4 cannot be filed by taxpayers who have short-term capital gains or long-term capital gains under Section 112A exceeding ₹ 1.25 lakh. It is also not applicable to those who hold unlisted equity shares or have foreign assets or income.

Taxpayers with losses to be carried forward, deferred ESOP tax, or income chargeable at special rates cannot use ITR-4 either. Directors of companies are also not eligible to file this form.

According to the Income Tax Department, taxpayers can ask themselves these questions:

If the answer to either of these questions is yes, ITR-3 will be the applicable return form.

ITR-3 is applicable to individuals and HUFs having income under one or more of the following heads:

The form is generally applicable where the taxpayer is not eligible to file ITR-1, ITR-2 or ITR-4.

Disclaimer: This is only for informational and educational purposes. Please consult a qualified expert for the latest laws and regulations.