Big Change in ITR-4: Why Reporting Your "Balance with Banks" is Now Mandatory for AY 2026-27
CBDT introduces stricter disclosure norms for presumptive taxpayers filing ITR-4 under Sections 44AD, 44ADA, and 44AE.
The Central Board of Direct Taxes (CBDT) has officially tightened disclosure norms for small businesses, professionals, and freelancers. If you file your income tax return using Form ITR-4 (Sugam) under the presumptive taxation scheme, a major compliance update requires your immediate attention.
For Assessment Year (AY) 2026-27 corresponding to Financial Year (FY) 2025-26, the Income Tax Department has made it mandatory to report your "Balance with Banks" as on March 31, 2026.
New Mandatory Disclosure Alert: Taxpayers filing ITR-4 must now declare closing bank balances and investments in the revised financial particulars section.
Shift in Disclosure Requirements
Earlier, taxpayers opting for presumptive taxation schemes under Sections 44AD, 44ADA, or 44AE were not required to maintain detailed books of accounts. They only had to disclose a few financial figures at year-end:
- Sundry Creditors
- Inventories / Stock-in-hand
- Sundry Debtors
- Cash-in-hand
What Has Changed for AY 2026-27?
Starting from this filing season, the CBDT has introduced a new mandatory reporting requirement under the Financial Particulars of the Business (Schedule BP) section.
- Balance with Banks must now be disclosed.
- Investments such as fixed deposits, mutual funds, or equity linked to the business must also be reported.
How to Report Bank Balances Correctly in ITR-4
Where to Find the Field?
Taxpayers must log into the Income Tax e-Filing Portal and navigate to the revised Schedule BP section.
- Field Name: Field E21
- Field Title: “Balance with banks”
What Should Be Reported?
You must disclose the aggregate closing balance of all business-related bank accounts as on March 31, 2026. This includes:
- Savings Accounts
- Current Accounts
- Overdraft Accounts
- Joint Accounts used for business transactions
Important Warning for Mixed Usage Accounts
If you regularly receive business or professional income in your personal savings account, then the balance of that account must also be included while filing ITR-4.
Why is the Income Tax Department Doing This?
The main objective behind this amendment is improved transparency and cross-verification.
Through systems like the Annual Information Statement (AIS) and Taxpayer Information Summary (TIS), the Income Tax Department already tracks financial transactions linked to your PAN.
By making bank balance disclosure mandatory, the department can verify whether the declared presumptive income aligns with the taxpayer’s actual financial position and liquid assets.
Penalties and Risks of Non-Compliance
| Violation Category | Potential Consequence |
|---|---|
| Omitting an Active Bank Account | Penalty of ₹10,000 for non-disclosure |
| Income Mismatch / Underreporting | Tax notices and penalties up to 200% of tax evaded |
| Defective Return Filing | Return may be marked defective and require refiling |
Key ITR-4 Filing Deadlines
- Original Due Date: August 31, 2026
- Belated Return Deadline: December 31, 2026
- Revised Return Deadline: March 31, 2027
Quick Tips for Smooth Filing
- Download all bank statements well before filing.
- Verify closing balances as on March 31, 2026 carefully.
- Review AIS and TIS data before submission.
- Track all business-related transfers and investments properly.
- Do not ignore small or inactive business-linked accounts.
Final Words
The new ITR-4 disclosure requirements mark a significant move towards deeper financial transparency and automated scrutiny. Small businesses, freelancers, and professionals under presumptive taxation should now maintain better banking records and reconcile all transactions before filing returns.
Proper disclosure today can help avoid penalties, defective returns, and unwanted scrutiny notices in the future.
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