ITR for small business and professionals 2026: forms, 44AD, dates

In short

A proprietor or professional on presumptive income with total income up to ₹50 lakh can file the short ITR-4; everyone else with business income files ITR-3.
Section 44AD: turnover up to ₹2 crore (₹3 crore when cash receipts are no more than 5%), profit declared at 6% of digital receipts and 8% of the rest. Section 44ADA: professionals up to ₹50 lakh (₹75 lakh), 50% of receipts.
Under the new regime (the default) a resident individual pays no tax up to ₹12 lakh of total income, thanks to the section 87A rebate. The rebate does not cover special-rate income such as capital gains.
For FY 2025-26 the due date was 31 August 2026 without an audit; with a tax audit it is 21 November 2026 (extended). A belated return can be filed until 31 December 2026, with a late fee.
Presumptive taxpayers under 44AD and 44ADA pay all their advance tax by 15 March; others pay in four instalments.

Which return form

Your situation	Form
Resident individual, HUF or partnership firm (not an LLP) on presumptive income under 44AD, 44ADA or 44AE, total income up to ₹50 lakh	ITR-4 (Sugam), if nothing below rules it out
Business or professional income with regular books, or anyone who cannot use ITR-4	ITR-3
Partnership firm or LLP not on presumptive income	ITR-5
Company	ITR-6

ITR-4 cannot be used by a company director, a person who held unlisted equity shares during the year, one with deferred tax on ESOPs, agricultural income above ₹5,000, assets or income outside India, short-term capital gains or long-term gains under section 112A above ₹1.25 lakh, lottery income, losses to carry forward, or total income above ₹50 lakh. Non-residents cannot use it either.

New for AY 2026-27: ITR-4 allows up to two house properties and long-term gains under section 112A up to ₹1.25 lakh.
ITR-4 now asks for the GSTIN and GST turnover, and for closing balances on 31 March 2026: creditors, stock, debtors, bank and cash. Keep these figures even under the presumptive scheme.
ITR-4 is optional: a presumptive taxpayer can always file ITR-3 instead.

Presumptive tax: declare a fixed share of turnover

	Section 44AD (business)	Section 44ADA (profession)	Section 44AE (goods vehicles)
Who	Resident individuals, HUFs and firms (not LLPs), for most businesses	Resident individuals and firms (not LLPs) in the professions listed in section 44AA(1)	Owners of up to 10 goods carriages at any time in the year
Limit	Turnover up to ₹2 crore; ₹3 crore when cash receipts are no more than 5%	Gross receipts up to ₹50 lakh; ₹75 lakh when cash receipts are no more than 5%	Up to 10 vehicles
Income declared	6% of receipts by account-payee cheque, draft or electronic mode; 8% of the rest	50% of gross receipts	₹1,000 per ton per month for heavy vehicles (above 12,000 kg); ₹7,500 per month for others

For the 5% test, a cheque or draft that is not account-payee counts as cash.
You can always declare a higher profit. Declaring less than these rates means keeping books, a tax audit and filing ITR-3.
The 44AD five-year rule: if you use 44AD and then declare a lower profit in any of the next five years, you cannot use 44AD for the following five years, and in those years you need books and a tax audit when income is above the basic exemption limit.
Section 44AD does not cover professions, commission or brokerage, or agency business.

Tax slabs for FY 2025-26

New regime (the default) for individuals
Total income	Rate
Up to ₹4 lakh	Nil
₹4 lakh to ₹8 lakh	5%
₹8 lakh to ₹12 lakh	10%
₹12 lakh to ₹16 lakh	15%
₹16 lakh to ₹20 lakh	20%
₹20 lakh to ₹24 lakh	25%
Above ₹24 lakh	30%

Rebate: a resident individual with total income up to ₹12 lakh gets a rebate of up to ₹60,000, so pays no tax (with marginal relief just above ₹12 lakh). It does not apply to special-rate income such as capital gains.
Old regime: nil up to ₹2.5 lakh (₹3 lakh from age 60, ₹5 lakh from 80), 5% up to ₹5 lakh, 20% up to ₹10 lakh, 30% above, with the old deductions; the rebate is ₹12,500 up to ₹5 lakh of income.
Choosing the old regime with business income: file Form 10-IEA on or before the due date of the return. Once you have opted out, you can come back to the new regime only once, and after that you cannot choose the old regime again.
Health and education cess of 4% is added to the tax; surcharge applies above ₹50 lakh of income.

Books of account and audit

Business: an individual or HUF must keep books when income is above ₹2.5 lakh or turnover above ₹25 lakh in any of the three previous years (a new business goes by its expected figures).
Specified professions (such as doctors, lawyers, architects, engineers and accountants) keep the books listed in rule 6F once their receipts cross the limit in that rule.
Presumptive taxpayers need not keep those books for the business, but should keep a record of cash and digital receipts and the closing balances the return asks for.
Tax audit: turnover above ₹1 crore (₹10 crore when cash receipts and payments are each no more than 5%), professional receipts above ₹50 lakh, or a lower profit declared under the presumptive schemes. The audit report is due one month before the return.

Advance tax

Due by	Paid so far, as a share of the year's tax
15 June	15%
15 September	45%
15 December	75%
15 March	100%

Taxpayers under 44AD and 44ADA pay the whole advance tax in one instalment by 15 March (anything paid by 31 March still counts). Truck owners under 44AE pay in the four instalments.
No advance tax is due when the tax for the year, after TDS, is under ₹10,000.
Interest is 1% a month under section 234B (less than 90% paid by 31 March), section 234C (an instalment short) and section 234A (tax unpaid after the due date of the return).

Due dates and late filing for FY 2025-26

Return	Last date
No tax audit (business or profession)	31 August 2026
With a tax audit	21 November 2026 (extended from 31 October by CBDT Circular 7/2026); audit report 21 October 2026
Belated return	31 December 2026
Revised return	31 March 2027
Updated return (ITR-U)	Within 48 months from the end of the assessment year, with additional tax

Late fee under section 234F: ₹5,000, or ₹1,000 when total income is up to ₹5 lakh.
A business loss in a return filed after the due date cannot be carried forward.

Before you file: a checklist

Download the AIS and TIS from the e-filing portal and Form 26AS from TRACES, and match every entry with your books: sales, interest, TDS, high-value transactions. Give feedback online on any wrong entry.
Match the turnover with your GST returns; ITR-4 now asks for the GST turnover.
Check TDS certificates (Form 16A) and the advance tax and self-assessment tax challans.
List what you owe micro and small suppliers: amounts unpaid beyond the MSMED Act limit are allowed only in the year they are paid (section 43B(h)).
Decide the tax regime before the due date, and file Form 10-IEA first if you choose the old one.

From tax year 2026-27 (returns filed in 2027) the Income-tax Act, 2025 applies: the presumptive schemes move to section 58 with the same limits, the new regime is in section 202 with the same slabs, and Form 26AS becomes Form 168. New return forms will be notified for that year.

Questions people ask

Which ITR form should a small business owner file?

ITR-4 if you are a resident individual, HUF or firm (not an LLP) on presumptive income under 44AD, 44ADA or 44AE with total income up to ₹50 lakh and none of the excluded items (such as being a director or holding unlisted shares). Otherwise ITR-3.

Can I declare less than 6% or 8% profit under section 44AD?

Yes, but then you must keep books, get a tax audit (when income is above the basic exemption limit) and file ITR-3. If you had used 44AD in the earlier years, you also cannot use it again for five years.

Do I need to keep books under the presumptive scheme?

Not the full books of section 44AA for that business. But the return asks for the split of cash and digital receipts and for closing creditors, stock, debtors, bank and cash, so keep those records.

What is the due date of the return for FY 2025-26?

31 August 2026 for a business or profession without a tax audit, and 21 November 2026 with a tax audit (extended from 31 October). After that a belated return can be filed until 31 December 2026 with a late fee of up to ₹5,000.

Do freelancers have to pay advance tax?

Yes, when the tax for the year after TDS is ₹10,000 or more. A professional under section 44ADA can pay it all by 15 March; otherwise it is paid in four instalments (15 June, 15 September, 15 December and 15 March).

Is there tax on ₹12 lakh of business income?

Under the new regime a resident individual with total income up to ₹12 lakh pays no tax, because of the section 87A rebate. The rebate does not apply to special-rate income such as capital gains, and above ₹12 lakh normal slab rates apply.

Sources

Written from these official pages and notifications, checked on 4 Nov 2026. Rules change by notification: before you act, check the latest position or ask us.

General information, not legal or tax advice for your case. Parishrama Consulting Services is a private firm, not a government office.

Income tax return for small businesses and professionals (FY 2025-26)