ITR-4 (Sugam) For AY 2026-27: New Reporting Rules For Presumptive Assessees
The ITR-4 (Sugam) return for Assessment Year 2026-27 introduces several subtle but important changes that directly affect small businesses and professionals opting for presumptive taxation. While the basic promise of presumptive schemes under Section 44AD, Section 44ADA and Section 44AE remains intact—no books of account and simplified computation—the Income Tax Department now expects a far more coherent and cross-verifiable financial snapshot at year-end.
This article walks through the key modifications in ITR-4 (Sugam) for AY 2026-27 and explains what assessees and practitioners must adjust in their filing practices.
Mandatory Disclosure Of Bank Balances As On 31 March
Compulsory Reporting In Field E21
In the “Financial Particulars of the Business” schedule, a critical change has been made: the closing bank balance disclosure is no longer optional. Field E21 now must contain the closing balance with banks as on 31 March.
Earlier, figures like sundry debtors, sundry creditors, inventory and cash in hand were typically reported, and while “bank balance” existed in the format, it was often treated casually. That approach will no longer work.
How To Compute The Figure For E21
Assessees need to report a single combined figure for closing balances with banks, computed as follows:
Identify all bank accounts used for business purposes:
- Savings accounts used for business transactions
- Current accounts
- Overdraft (OD) accounts with positive balance
- Cash credit (CC) accounts with positive balance
As on 31 March, note the closing balance in each such account.
Add all positive balances to arrive at a consolidated closing balance.
Enter this aggregate amount in Field E21.
Important:
If any OD or CC account has a negative balance (i.e., overdrawn), do not net this off against the positive bank balances for E21. Negative balances should not be adjusted against the figure reported in E21 but must be dealt with separately in the relevant part of the form or internal workings.
Why This Bank Balance Field Matters More Now
The figure in E21 will not operate in a vacuum. The Income Tax Department already has multiple data sources such as:
- Bank statements and related information
- AIS (Annual Information Statement)
- SFT (Statement of Financial Transactions)
- GST turnover data, wherever applicable
A bank balance that appears inconsistent with declared turnover or presumptive income can easily trigger scrutiny. For example, if an assessee declares modest turnover under Section 44AD, but ends the year with unusually large balances in business accounts, that mismatch may prompt a query.
Practical Compliance Tip
- Reconcile the figure in E21 with the 31 March bank statements for all business-linked accounts.
- Maintain a detailed working paper of this reconciliation in the file, so it can be furnished promptly if a notice is issued.
New “Investments” Line Item – Field E18a
Strengthening The Asset Side Of The Simplified Balance Sheet
Another noteworthy addition in the “Financial Particulars of the Business” schedule is a fresh field for “Investments” at Field E18a. Until now, the asset side of this simplified format was fairly skeletal.