Kamal Ghorui
Ahmedabad: In a significant compliance change aimed at tightening scrutiny over possible tax evasion, small businesses and professionals opting for the presumptive tax scheme will now have to disclose their investment details in the income tax return this year, reports Parag Dave. The new disclosure requirement has been introduced in ITR-4 (Sugam), recently released by the Central Board for Direct Taxes for taxpayers filing under the presumptive taxation scheme. The form applies to businesses with turnover of up to Rs 2 crore and professionals with gross receipts of up to Rs 75 lakh. Those covered include doctors, chartered accountants, lawyers, architects and consultants.The presumptive taxation scheme allows small taxpayers to declare income at a fixed percentage of turnover, reducing compliance by removing the need for mandatory bookkeeping and audits for eligible taxpayers. Businesses must declare a minimum profit of 6% of turnover where receipts are through electronic modes and 8% where receipts are in cash.Professionals are required to declare 50% of gross receipts as income. If the declared profit is lower than the prescribed rates, the taxpayer must get the accounts audited. If profit is higher, tax must be paid accordingly.Tax experts said the move reflects the I-Tax department’s sharper focus on taxpayers allegedly misusing the presumptive tax mechanism by declaring lower-than-actual profits to reduce tax liability.Tax expert Mukesh Patel said, “The I-T department is now more watchful and alert and aims to catch any tax avoidance through mischievous use of the provisions of this scheme.”Patel said this is the first time I-T dept has directly sought investment-related details up to March 31, 2026, in the presumptive tax return. “The investment declaration is expected to enable tax authorities to compare declared income with investment patterns and identify cases where spending or asset creation appears disproportionate to reported earnings.”He added that the Annual Information Statement also helps authorities check income declared by a taxpayer against investments made.Experts said misreporting of income attracts a penalty equal to 200% of the tax payable, while the applicable tax, surcharge and cess together amount to 39%.“Accordingly, once such undisclosed income is detected, the combined tax and penalty burden works out to 117% of the misreported income,” Patel said.
