The form depends on two things: what kind of entity earns the income, and how its business income is worked out. Proprietors file ITR-3, or ITR-4 if they use presumptive taxation. Partnership firms and LLPs file ITR-5, except that a small firm (not an LLP) on presumptive income may use ITR-4. Companies file ITR-6. Trusts and institutions that must file under the charitable and research provisions file ITR-7.
One timing point matters this year. The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. Returns being filed now, in 2026, are for income earned in 2025-26 (assessment year 2026-27), and that income is still governed by the old Act. These returns use the familiar ITR forms. Income earned from 1 April 2026 falls under the new Act and its “tax year” framework. Its returns are filed in 2027.
Entity-by-entity: which return applies for AY 2026-27
| Who earns the business income | Usual form | When a different form applies |
|---|---|---|
| Proprietor (individual) or HUF | ITR-3 | ITR-4 (Sugam) if resident, total income up to ₹50 lakh and business income computed on a presumptive basis |
| Partnership firm | ITR-5 | ITR-4 if resident, total income up to ₹50 lakh and presumptive income |
| Limited liability partnership | ITR-5 | None. An LLP cannot use ITR-4 |
| Private or public company | ITR-6 | ITR-7 if the company must file under the provisions for charitable, research or educational bodies |
| Trust, society, AOP or BOI | ITR-5 | ITR-7 if required to file under sections 139(4A) to 139(4D) of the 1961 Act, for example a charitable or religious trust |
These positions come from the department’s AY 2026-27 help pages for individuals with business income, firms and LLPs, domestic companies and AOPs, BOIs and trusts. If you would rather not work through the schedules yourself, Complianto’s income tax return service prepares the return from your accounts and files it for you.
Proprietors: the ITR-3 versus ITR-4 decision
A sole proprietorship is not a separate taxpayer. The owner reports business profit in their personal return. The real question is whether the owner keeps full accounts and declares actual profit (ITR-3), or uses a presumptive scheme (ITR-4).
Under the 1961 Act, which still governs 2025-26 income, the presumptive schemes worked as follows:
- Small businesses (old section 44AD). Profit is taken as 8% of turnover, or 6% of the part received through account-payee cheque, draft or electronic modes. This is available up to ₹2 crore of turnover, or ₹3 crore if cash receipts stay within 5% of the total, as the ITR-4 FAQ explains.
- Specified professionals (old section 44ADA). Profit is taken as 50% of gross receipts. This is available up to ₹50 lakh, or ₹75 lakh under the same 5% cash condition.
- Goods carriage operators (old section 44AE). Income is a fixed amount per vehicle.
Choosing presumptive income does not lock you into ITR-4. ITR-4 also has its own limits. Total income must be no more than ₹50 lakh. It cannot be used by a company director, by someone with short-term capital gains, unlisted shares, foreign assets or income, or by someone carrying forward losses. A proprietor who fails any of these tests files ITR-3 even with presumptive income. ITR-4 is optional, so an eligible person may still file ITR-3.
Firms and LLPs: one form, one exception
Partnership firms and LLPs both normally file ITR-5. The only way out is ITR-4, and it is open to a firm only, never an LLP. The firm must be resident, have total income up to ₹50 lakh and compute income on a presumptive basis. Partners do not report the firm’s profit in their own returns. They report their remuneration and interest from the firm, which is business income in their hands, so a working partner usually files ITR-3.
For AY 2026-27 the department’s firm page states that a partnership firm, including an LLP, is taxed at 30%, with surcharge and cess on top, and alternative minimum tax where it applies.
Companies: ITR-6 for almost everyone
Every company other than one claiming exemption for income from property held for charitable or religious purposes files ITR-6. This includes private limited companies, one person companies and public companies. A company must file even in a loss year or a year with no business. A company return has no small-taxpayer alternative. ITR-4 is not available to companies.
Trusts, societies and other bodies
A trust or society running a business, or an AOP or BOI, normally uses ITR-5. ITR-7 replaces it where the entity must file under the 1961-Act provisions for charitable or religious trusts, political parties, research associations and similar bodies, and certain universities and institutions. If your trust is registered for exemption, ITR-7 is the form to expect.
Due dates for the returns being filed now
- No audit required: the due date for business and profession cases whose accounts did not need audit has passed. A belated return may still be possible, with consequences. Check your position on the portal.
- Audit cases: originally 31 October 2026. CBDT Circular 7/2026 extended the return due date to 21 November 2026 for the persons it covers, and the tax audit report date to 21 October 2026.
Income earned from 1 April 2026: what changes
The department’s FAQ on the new Act confirms that the 1961 Act stands repealed from 1 April 2026. The “previous year” and “assessment year” pair is replaced by a single “tax year”. The three presumptive schemes are merged into one provision, section 58 of the 2025 Act.
For a business, the entity-to-form logic is expected to carry over, but the forms themselves will be issued under the new Act and the Income-tax Rules, 2026. Those forms apply to Tax Year 2026-27, which you file in 2027. Until CBDT notifies them, do not assume the old ITR numbers will stay the same. The portal’s forms FAQ tells taxpayers to select AY or TY correctly so the system offers the right form.
Frequently asked questions
My proprietorship had a loss this year. Which form do I use?
ITR-3. A loss to be carried forward rules out ITR-4, and a loss can be carried forward only if the return is filed by the due date.
Does a company with no income still file?
Yes. Every company files ITR-6 each year, even with nil income.
Can a freelancer use ITR-4?
A freelancer in a profession covered by the presumptive scheme for professionals can, if receipts are within the limit and the other ITR-4 conditions are met. Otherwise the return is ITR-3.
Complianto (complianto.in), operated by Mentorcorp Private Limited, is a private consultancy and is not affiliated with any government body. We do not issue official documents. We charge a professional fee for application assistance and advisory services. Applicants can apply directly to the government without our fees via the official portals: MCA (mca.gov.in), Income Tax (incometax.gov.in), GST (gst.gov.in), MSME (udyamregistration.gov.in), FSSAI (foscos.fssai.gov.in), Startup India (startupindia.gov.in), and IP India (ipindia.gov.in).
This article is general information, not legal or tax advice.
