Difference Between ITR-3 and ITR-4 for Business Owners

Here is a clear comparison between ITR-3 and ITR-4 for business owners for Assessment Year 2025–26:

🔹 ITR-3 (For Regular Business Income)
Particular Details
Applicability Individuals and HUFs having income from business or profession under a normal scheme (not presumptive)
Eligible Assessee Individual / HUF / Partnership Firm (other than LLP)
Type of Income - Business/professional income (non-presumptive)
- Income from salary, house property, capital gains, other sources
Books of Accounts Mandatory, as per Section 44AA
Audit Requirement May be required under Section 44AB if turnover crosses prescribed limits
Complexity Detailed form – requires full financial details
Who Should File Business owners and professionals with income above presumptive limits or not opting for Section 44AD/44ADA

🔹 ITR-4 (Sugam Form for Presumptive Income)
Particular Details
Applicability Individuals, HUFs, and Firms (other than LLPs) opting for presumptive taxation under:
- Section 44AD (Business)
- Section 44ADA (Profession)
- Section 44AE (Transporters)
Eligible Assessee Individual / HUF / Partnership Firm (other than LLP)
Type of Income Presumptive business/professional income (also allows income from salary, one house property, other sources)
Books of Accounts Not required under presumptive scheme
Audit Requirement Not required, unless income is declared below the prescribed % and exceeds the basic exemption limit
Complexity Simplified – suited for small taxpayers
Who Should File Small business owners and professionals with turnover ≤ ₹2 crore (business) or ≤ ₹50 lakh (profession) and opting presumptive scheme

✅ Key Differences Summary
Criteria ITR-3 ITR-4
Taxation Method Regular Presumptive (Sec 44AD/ADA/AE)
Turnover Limit No specific limit Business ≤ ₹2 Cr, Profession ≤ ₹50 Lakh
Books of Accounts Required Not Required
Audit Requirement Possible Usually Not Required
Filing Complexity High Low

💡 Tips for Business Owners:
Choose ITR-4 if you're a small business/professional with predictable income and want to avoid accounting and audit hassles.

Opt for ITR-3 if your business is large, has variable profit margins, or you're not eligible for presumptive taxation.