If you are a freelancer using Section 44ADA, your income tax return is ITR-4, also called Sugam. It is the simplest form the department offers for professional income, and most freelancers with foreign clients can file it in an afternoon once the documents are in one folder.
The catch is that the form assumes a few things about you, and foreign income is where those assumptions get tested. Here is how to check you qualify, where each number goes, and what to reconcile before you hit submit.
Who can file ITR-4?
You can use ITR-4 if all of the following are true.
- You are a resident individual, HUF or partnership firm (not an LLP)
- Your professional income is declared under Section 44ADA (or business income under 44AD or 44AE)
- Your total income for the year is up to ₹50 lakh
- Your other income is limited to salary or pension, one house property, and other sources like interest
Note that ₹50 lakh is total income, not gross receipts. A freelancer with ₹70 lakh of gross receipts under 44ADA has presumptive income of ₹35 lakh, which is within the ITR-4 limit.
We have a complete guide on Section 44ADA and who qualifies here.
The foreign income question
ITR-4 cannot be used if you have income from any source outside India or hold assets outside India. Freelancers read that and panic. Here is the distinction.
Payment from a foreign client for work you performed in India is income that accrues in India. The source is your service, and you rendered it here. It goes in ITR-4 as professional receipts like any other.
What pushes you out of ITR-4 is different. A bank account, e-wallet or receiving account held abroad in your name, even one you use only to collect client payments, is a foreign asset. If you hold one, you have to file ITR-3 and report it in Schedule FA. The same applies if a foreign client withheld tax and you want to claim credit for it, since that needs Schedule FSI and Form 67, which only ITR-3 has.
This is one reason how you get paid matters at filing time. Payments that land directly in your Indian bank account through an AD bank keep you inside the simpler form. Confirm your own position with your CA, because the foreign asset rules are strict and the penalties for missing Schedule FA are not.
Documents to have ready for ITR-4
Collect these before you open the form.
- Every invoice raised in the financial year
- Bank statements for every account that received professional income
- FIRA for every foreign payment, showing the purpose code and INR credit
- Form 26AS and the Annual Information Statement (AIS) downloaded from the portal
- GST returns for the year if you are registered, to match turnover
- Advance tax challans
- Proof of deductions if you are on the old regime (Section 80C, 80D, NPS and so on)
Where the numbers go in ITR-4
Part A, General
Your details, residential status, and the return type. Under nature of business or profession, select the code that matches your service. Software development and software consultancy have their own codes in the dropdown. Pick the one that matches your purpose code on the FIRA, so the two descriptions agree.
Schedule BP, presumptive income under 44ADA
This is the core of the return. You enter:
- Gross receipts from the profession for the year
- The split of those receipts between amounts received through banking channels and amounts received otherwise, which is what decides whether the ₹75 lakh threshold applies
- Presumptive income, which must be at least 50% of gross receipts
Foreign client payments go into gross receipts at the INR amount credited to your bank, which is the figure on the FIRA. Not the USD invoice value converted at some other rate. The bank's INR credit is the number the department already has.
Schedule for other income
Interest on savings and deposits, any salary, one house property if applicable.
Tax computation and regime
ITR-4 defaults to the new regime. If you want the old regime with its deductions, you file Form 10-IEA before the return due date. Once you opt out of the new regime with business income, switching back is restricted, so this is a decision to make with your CA, not a checkbox to click.
Tax paid
TDS from Form 26AS (foreign clients will not have deducted any, Indian clients under Section 194J may have), advance tax, and self-assessment tax.
Reconcile with AIS before you file
The Annual Information Statement is what the department already knows about you. For a freelancer with foreign clients, it includes the foreign inward remittances your bank reported, along with interest, TDS and high-value transactions.
Do this before submitting:
- Add up the foreign remittances shown in AIS for the year.
- Add up the INR credits on your FIRAs for the year.
- Add up the gross receipts you are about to declare.
All three should match, or you should be able to explain the difference (a payment that hit the bank on 2 April belongs to next year, for example). A return that declares less than AIS shows is the most common trigger for a notice, and the FIRA is what explains each line if one arrives.
Advance tax under 44ADA
Presumptive taxpayers get one concession. Instead of four instalments, you can pay the full year's advance tax in a single instalment by 15 March. Miss it and interest under Sections 234B and 234C applies. If your income lands mostly in the second half of the year, this is genuinely useful. Estimate gross receipts, take 50%, compute tax at your slab, pay by 15 March.
Filing and after
The due date for a non-audit return is 31 July following the financial year. After submitting, verify within 30 days, by Aadhaar OTP, net banking or a signed ITR-V sent to CPC. An unverified return is treated as not filed.
Keep everything for at least six years from the end of the assessment year. If a notice comes in year four, the FIRA folder is the answer.
A worked example
A freelance designer earns $40,000 from US and UK clients, all credited to her HDFC account, with FIRAs for each payment. At an illustrative average rate of ₹90, gross receipts are ₹36 lakh, all through banking channels.
She has no foreign account, no Indian clients, ₹40,000 in savings interest, and is on the new regime.
- ITR-4 applies: resident, 44ADA, total income well under ₹50 lakh, no foreign assets.
- Schedule BP: gross receipts ₹36 lakh, all through banking channels. Presumptive income ₹18 lakh.
- Other sources: ₹40,000 interest.
- Total income: ₹18.4 lakh, taxed at new regime slabs.
- Advance tax: paid in one instalment by 15 March.
- AIS: shows ₹36 lakh of foreign remittances. Matches.
Her CA files it in under an hour because the FIRAs did the reconciliation for her.
Key takeaway
ITR-4 is the right form for most freelancers under 44ADA, as long as the money lands in an Indian bank account and you hold nothing abroad. Gross receipts go in at the INR credit on the FIRA, presumptive income is 50%, and AIS must match. The documents you need are the four you should already be keeping. Invoices, bank statements, FIRAs and the return itself.
Your CA files. You make sure the FIRA folder is complete before they ask.
How DashX helps at filing time
DashX operates through RBI-authorised AD Category I banks (JP Morgan and HDFC) and PA-CB licensed partners. Every payment from a foreign client, whether by bank transfer or in USDC or USDT, settles into your own Indian bank account, which keeps you inside ITR-4 rather than pushing you to ITR-3 with a foreign asset schedule.
- FIRA for every payment, with the INR credit that goes into gross receipts
- The correct RBI purpose code on each FIRA, matching the profession code you select in the return
- A dashboard with your payment history and export documents in one place for the AIS reconciliation
DashX does not file taxes or determine which form you should use. That is for you and your CA. We make sure the documentation exists.
Start with DashX and have your FIRA folder ready before July. Try DashX.
Before filing, compare your records with the AIS and TIS guide.
