ITR-1 vs ITR-4 comparison chart for small business owners

ITR-1 vs ITR-4: Which Income Tax Form Should You File as a Small Business Owner?

Choosing the correct Income Tax Return (ITR) form is essential to ensure accurate tax filing and avoid unnecessary scrutiny from the Income Tax Department. For small business owners in India, this decision often comes down to ITR-1 vs ITR-4. While ITR-1 Sahaj is a straightforward form for salaried individuals, ITR-4 Sugam caters specifically to small business owners and professionals opting for presumptive taxation.

At Startup Portal Business Service, we simplify the ITR filing process with expert guidance tailored to your income profile—whether you’re a salaried individual, freelancer, or small entrepreneur.

Let’s explore in detail which form is right for you.

Overview: ITR-1 vs ITR-4

As a small business owner in India, you’re likely to be choosing between ITR-3 or ITR-4, depending on whether you’ve opted for the presumptive taxation scheme. However, confusion often arises between ITR-1 vs ITR-4, especially for those with mixed income sources like salary and side businesses.

Here’s a quick distinction:

ITR-1 Sahaj: For individuals with simple income like salary, one house property, and income from other sources like bank interest or agricultural income up to ₹5,000.
ITR-4 Sugam: For individuals, HUFs, and partnership firms (excluding LLPs) opting for presumptive taxation under Sections 44AD, 44ADA, or 44AE.

What Is the ITR-1 (Sahaj) Form? – Explained for Beginners:

ITR-1, also called Sahaj, is meant for resident individuals having straightforward sources of income.

Features of ITR-1:

Applicable for income up to ₹50 lakh.
For salary/pension, one house property, and income from other sources (excluding lottery or racehorses).
Agricultural income must not exceed ₹5,000.
Easy to file and suited for salaried individuals with no complex income structures.

Who Is Eligible to File ITR-1?

You can file ITR-1 if:

You are a Resident Individual (not an NRI or RNOR).
Your total income is ₹50 lakh or less.
You have income from salary/pension, one house property, or other sources (interest income).
Agricultural income is up to ₹5,000.

If you’re unsure about eligibility, the expert ITR 1 Service in Pune can guide you through the filing process with ease and accuracy.

Who cannot file ITR-1 Form? – Know the Restrictions

You cannot use ITR-1 if:

Your income exceeds ₹50 lakh.
You have more than one house property.
You have capital gains income or foreign income.
You are a director in a company or hold unlisted equity shares.
You are a Non-Resident or Resident Not Ordinarily Resident (RNOR).
You have income from a business or profession.

What Is ITR-4 (Sugam) Form? – Detailed Overview for Small Businesses

ITR-4, also called Sugam, is tailored for small business owners, professionals, and partnership firms (excluding LLPs) who opt for presumptive taxation under:

Section 44AD– Small businesses.
Section 44ADA– Professionals like doctors, CA, designers, etc.
Section 44AE– Goods transport operators.

What is Presumptive Taxation?

Presumptive taxation is a simplified tax scheme that allows eligible taxpayers to declare income at a fixed percentage of turnover or receipts, thereby avoiding the need for detailed bookkeeping or audit. Under this method, you don’t have to maintain books of accounts or get them audited, which is ideal for small business owners and professionals. This is where ITR-4 Sugam comes into play.

Who Should File ITR-4 Form in India?

You should file ITR-4 if:

You are an individual, HUF, or a firm (excluding LLP).
You have income from:
- Business under Section 44AD.
- Profession under Section 44ADA.
- Goods carriage under Section 44AE.
Your total income is ₹50 lakh or less.
Your turnover/gross receipts do not exceed ₹2 crore (business) or ₹50 lakh (profession).
You may also have salary income, income from one house property, or other sources (excluding lottery or gambling).

Startup Portal Business Service helps small businesses seamlessly navigate the ITR 4 service in Pune process under presumptive taxation, ensuring complete compliance and peace of mind.

Who cannot file ITR-4? – Key Limitations You Must Know

You cannot file ITR-4 if:

Your total income exceeds ₹50 lakh.
Your business turnover exceeds ₹2 crore.
You have capital gains, foreign assets, or foreign income.
You are a Director in a company or own unlisted equity shares.
You have agricultural income exceeding ₹5,000.
You have income from the lottery, racehorses, or other speculative businesses.
You haven’t opted for presumptive taxation.
You are a Non-Resident (NRI) or RNOR.

If you don’t qualify for ITR-4, you may need to file ITR-3, which is more detailed and requires the maintenance of books of accounts.

ITR-1 vs ITR-4: Key Differences Between ITR-1 and ITR-4

Let’s break down the ITR-1 vs ITR-4 differences in simpler terms:

ITR-1 Sahaj is for salaried individuals; ITR-4 Sugam is for small business owners under presumptive taxation.
ITR-1 is not applicable if you have business or professional income.
ITR-4 is designed for those opting for simplified tax reporting.
ITR-1 applies only to residents, while ITR-4 applies to residents, HUFs, and firms (non-LLPs).
If you are unsure whether itr 1, itr2, or itr 4 difference affects you, consulting a professional is wise.

ITR-4 Components: What Is Included in the Sugam Form?

ITR-4 includes the following sections:

Personal information
Business/profession details
Income computation under the presumptive scheme
Tax details (TDS, advance tax, self-assessment)
Bank account and verification details

ITR-4 removes the burden of maintaining detailed books by allowing a fixed-rate income declaration.

Documents Required to File ITR-1 Online:

If you’re filing ITR-1, you’ll need:

PAN, Aadhaar
Form 16 (from employer)
Interest income details
House property details (if applicable)
Bank account details
Form 26AS and Annual Information Statement (AIS)

Documents Needed to File ITR-4 for Small Business Owners:

To file ITR-4, you should keep:

PAN and Aadhaar
Bank statements
Turnover/receipt figures
Nature of business/profession
GST data (if applicable)
Investment proofs (for deductions)
Form 26AS and AIS

Let Startup Portal Business Service help you gather and verify the right documents to ensure smooth and timely filing.

ITR-1 vs ITR-4: Key Mistakes to Avoid

Selecting the wrong ITR form can lead to a defective return or missed tax benefits. Here are key mistakes to avoid:

Filing ITR-1 despite having a side business or freelance income.
Ignoring presumptive taxation eligibility under Section 44AD/44ADA.
Skipping interest income from savings or fixed deposits.
Using the wrong form leads to re-filing and potential penalties.

Need help choosing the right form? Startup Portal Business Service is here to guide you at every step.

ITR Filing Due Date for AY 2025-26 – Don't Miss the Deadline:

The due date for filing Income Tax Returns for the Financial Year 2024–25 (Assessment Year 2025–26) is 30th September 2025 for most individual taxpayers filing ITR-1 or ITR-4.

For companies, LLPs, and individuals requiring a tax audit, the deadline is 31st October 2025, subject to any extensions by the Central Board of Direct Taxes (CBDT). Filing after the due date may attract a penalty of up to ₹5,000 and delay your refund. To ensure timely and error-free filing, trust Startup Portal Business Service for expert ITR E-Filing in Pune support.

Conclusion: File the Right ITR with Expert Guidance

Choosing between ITR-1 vs ITR-4 depends on your income type, business structure, and eligibility under the presumptive taxation scheme. Filing the correct form ensures faster processing, accurate tax reporting, and peace of mind during assessments. Whether you’re a salaried employee or a small business owner, selecting the right ITR form is crucial for staying compliant and avoiding penalties.

Need help filing your return?

Let the experts at Startup Portal assist you with end-to-end support—from selecting the correct form to filing your return accurately and on time. Call us today at +918975400253 / +917249645760 or simply tap to connect to Startup Portal – for fast, reliable, and affordable ITR filing assistance from the team at Startup Portal Business Service.