With the August 31, 2026, deadline for filing income tax returns for non-audit business and professional taxpayers approaching, taxpayers using ITR-3 and ITR-4 should ensure that their income, deductions,
tax payments and other details are correctly reported before submitting the return.
The August 31 deadline applies to AY 2026-27, which covers income earned during FY 2025-26. In the Budget 2026, the government extended the deadline for non-audit business cases from July 31 to August 31 to give taxpayers more time to complete their books and other tax compliances.
This year’s filing also comes during a transition to the Income-tax Act, 2025. However, taxpayers filing their return for FY 2025-26 will still use the applicable old ITR forms under the Income-tax Act, 1961 and select AY 2026-27 on the income tax portal.
ITR-3 vs ITR-4: Which form should you file?
The first and most important step is choosing the correct ITR form. ITR-3 is generally applicable to individuals and Hindu Undivided Families (HUFs) having income from a business or profession, where the taxpayer is not eligible to use ITR-4. It can also cover taxpayers with income from multiple sources, subject to the applicable conditions.
ITR-4, also known as Sugam, is a simpler return meant for eligible resident individuals, HUFs and firms other than LLPs who report business or professional income under the presumptive taxation schemes. For AY 2026-27, the Income Tax Department says ITR-4 can generally be used where total income does not exceed Rs 50 lakh and business/professional income is computed under sections 44AD, 44ADA or 44AE.
For example, an eligible small businessperson opting for presumptive taxation may use ITR-4 instead of maintaining detailed profit-and-loss calculations in the return. A freelancer or specified professional may also be eligible for ITR-4 if the conditions of the presumptive scheme are satisfied.
However, not everyone with business or professional income can use ITR-4. In such cases, ITR-3 may be required.
ITR-3 and ITR-4 filing: Dos
1. Check the correct assessment year
For income earned between April 1, 2025 and March 31, 2026, the return is for AY 2026-27. Do not accidentally select Tax Year 2026-27 while filing the return for FY 2025-26. The Income Tax Department has specifically clarified that the FY 2025-26 return is filed for AY 2026-27 under the old law.
2. Decide between ITR-3 and ITR-4 before filing
Do not select a form simply because it appears easier. Check nature of income, business or professional activity, turnover/gross receipts, whether presumptive taxation is applicable, capital gains, residential status, number and type of house properties, directorship in a company, and other sources of income.
ITR-4 has several eligibility restrictions. For example, it cannot generally be used by a non-resident or RNOR, a person with total income above Rs 50 lakh, a company director, or someone having certain types of capital gains or other specified income.
3. Reconcile income with AIS and Form 26AS
Before submitting the return, check your Annual Information Statement (AIS) and Form 26AS. Compare the information with your own records, particularly salary or professional receipts, bank interest, dividend income, TDS, TCS, securities transactions, and other reported financial transactions.
A mismatch does not automatically mean that the department’s information is correct. If you find an error, verify the underlying transaction and take the appropriate corrective action.
4. Report all sources of income
Do not assume that income needs to be reported only if TDS has been deducted. Interest income, dividend income, rental income, business receipts, professional receipts, capital gains and other taxable income should be considered while preparing the return.
The Income Tax Department’s guidance for ITR-4 specifically includes sources such as savings account interest, deposit interest, income-tax refund interest and other interest income, subject to the eligibility conditions of the form.
5. Check business and professional receipts carefully
If you are filing ITR-3 or ITR-4 because of business or professional income, reconcile your receipts with your books, invoices, bank statements and other records. For professionals and freelancers, this is particularly important because receipts may come from multiple clients and through different payment channels.
6. Be careful with presumptive taxation
ITR-4 is closely linked with presumptive taxation. Under Section 44AD, eligible businesses can declare income on a presumptive basis. Under Section 44ADA, eligible professionals can use presumptive taxation subject to the prescribed conditions.
For Section 44ADA, the normal gross-receipts threshold is Rs 50 lakh, with the limit going up to Rs 75 lakh where the specified cash-receipt condition is satisfied, according to the Income Tax Department’s guidance.
Do not automatically choose presumptive taxation just because your income is below the threshold. First check whether your business or profession qualifies and whether the scheme is appropriate for your circumstances.
7. Check capital gains before choosing ITR-4
This is an important area for investors. ITR-4 has specific restrictions relating to capital gains. For AY 2026-27, the Income Tax Department says ITR-4 can include long-term capital gains under Section 112A up to Rs 1.25 lakh, subject to other conditions. It cannot generally be used where the taxpayer has short-term capital gains.
Therefore, investors should not choose ITR-4 merely because they also have presumptive business income. If your capital-gain profile makes you ineligible for ITR-4, you may need to use ITR-3 instead.
8. Verify deductions before claiming them
Keep documents supporting deductions and exemptions. Depending on your situation, this could include evidence relating to life insurance, health insurance, provident fund contributions, eligible investments, education loan interest, home loan interest, donations, and other eligible deductions. Do not claim a deduction simply because it was available in an earlier year.
9. Check tax regime selection carefully
Taxpayers with business or professional income need to pay particular attention to the choice between the old and new tax regimes and the applicable compliance requirements. Do not assume that the tax regime selected in the previous year automatically settles the position for the current year. Check the relevant option and forms applicable to your case before filing.
10. Pay any remaining tax before filing
Calculate your final tax liability after considering TDS, TCS, advance tax, self-assessment tax, and eligible tax credits. If there is tax payable, pay the required amount and ensure the payment is correctly reflected before completing the return.
The income tax department has also cautioned taxpayers to select the correct assessment year when making payments relating to FY 2025-26.
11. E-verify the return
Filing the return is not the final step. After submitting the ITR, e-verify it within the prescribed time. A return that has been filed but not properly verified can create compliance problems. Keep the acknowledgement and verification records safely.
ITR-3 and ITR-4 filing: Don’ts
1. Don’t choose ITR-4 just because it is simpler
A simpler form is not necessarily the correct form. If your income profile does not meet the ITR-4 conditions, use the appropriate form, even if that means filing ITR-3.
2. Don’t hide income because there was no TDS
No TDS does not mean no taxability. For example, bank interest or professional receipts may not always have TDS deducted, but they may still have to be reported.
3. Don’t blindly copy last year’s return
Income, deductions, investments, bank accounts and tax-regime choices can change every year. Use last year’s return as a reference, not as a template to copy without checking.
4. Don’t ignore AIS mismatches
If AIS shows income or a transaction that you do not recognise, investigate it before filing. Similarly, if you believe a transaction appearing in AIS is incorrect, do not simply change your ITR to match an erroneous entry without verifying the facts.
5. Don’t under-report business or professional receipts
For freelancers, consultants, doctors, lawyers, creators, traders and other professionals, all relevant receipts should be properly accounted for. A bank statement, invoice trail and other financial records should broadly support the income reported.
6. Don’t treat F&O income like normal investment income
Futures and options transactions have specific tax treatment and can require business-income reporting. Taxpayers with F&O activity should carefully reconcile their trading statements and determine the appropriate treatment rather than simply reporting the profit as ordinary capital gains.
7. Don’t claim deductions without documents
A deduction can reduce your tax liability, but unsupported claims can create problems later. Maintain the relevant receipts, certificates, statements and other supporting documents.
8. Don’t forget foreign assets or income
If you have foreign income or assets and your applicable ITR requires their disclosure, do not leave those details out. Foreign income and assets can have separate reporting requirements.
9. Don’t wait until August 31 evening
The deadline is August 31, 2026 for eligible non-audit business and professional cases. Waiting until the final hours can leave little time to resolve portal problems, AIS mismatches, missing documents, tax-payment issues, form validation errors, and bank or demat statement discrepancies. It is better to file early and keep enough time for verification.
10. Don’t forget that audit cases have different deadlines
The August 31 deadline is not applicable to every taxpayer filing ITR-3 or ITR-4. If your business or professional income is subject to tax audit, a different compliance timeline applies. Taxpayers should therefore determine their audit status before assuming that August 31 is their final deadline.
