ITR-4 Compliance Guide: AY 2026-27

ITR-4 Compliance Guide: Mandatory Bank Balance Disclosure (AY 2026–27)

Taxpayers utilizing presumptive taxation schemes must prepare for a significant change in reporting requirements. Starting from Assessment Year 2026–27, disclosing bank balances is no longer optional; it is a mandatory compliance requirement.

Key Regulatory Changes

The reporting of bank balances has shifted from a voluntary disclosure to a compulsory one. Taxpayers are now required to report these figures in Field E21 (Balance with Banks). This change affects all individuals and entities opting for presumptive taxation under the following sections:

  • Section 44AD: Small businesses.
  • Section 44ADA: Professionals such as doctors, lawyers, and consultants.
  • Section 44AE: Goods carriage transporters.

Reporting Requirements for Field E21

Taxpayers must report the aggregate closing balance of all business-related bank accounts as of March 31, 2026. This should be entered as a single consolidated figure.

Assets to INCLUDE Assets to EXCLUDE
• Business Savings & Current accounts
• UPI-linked accounts (GPay, PhonePe, etc.)
• Positive OD/CC account balances
• Active business accounts with zero balance 		• Fixed (FD) and Recurring Deposits (RD)
• Digital Wallets (Paytm Wallet, etc.)
• Credit card outstanding (Show in E16)
• Cash in hand (Show in E22)

Practical Example: How to Calculate

Scenario

Mr. Aryan is a freelance Graphic Designer (Section 44ADA) with the following balances on March 31, 2026:

  • HDFC Current Account (Business): ₹4,50,000
  • SBI Savings Account (Business/UPI): ₹50,000
  • ICICI FD: ₹2,00,000
  • Paytm Wallet: ₹5,000
  • Cash in Drawer: ₹15,000

Reporting in ITR-4:

  • Field E21 (Balance with Banks): ₹5,00,000 (HDFC + SBI)
  • Field E22 (Cash-in-hand): ₹15,000
  • Investments Section: ₹2,00,000 (ICICI FD)

Note: Paytm wallet and individual account details will be listed separately in the relevant schedules.

Frequently Asked Questions (FAQs)

Q1. Mere paas 3 bank accounts hain par main sirf ek use karta hoon. Kya sab disclose karne honge?

Haan. Aapko sabhi active bank accounts ki details (IFSC, Account No.) deni hogi, chahe unme balance zero ho ya vo saal bhar use na hue honge. Field E21 mein sirf business accounts ka total balance aayega.

Q2. Kya personal savings account ka balance bhi Field E21 mein dikhana hai?

Nahi. E21 sirf business-related bank balances ke liye hai. Agar aapka personal account business transactions ke liye use nahi hota, to uska balance isme combine nahi karna hai (halanki account details list karni pad sakti hain refund claim ke liye).

Q3. Agar main disclosure bhool gaya to kya hoga?

Agar koi account disclose nahi kiya to ₹10,000 tak ki penalty lag sakti hai. Agar balance galat bataya aur scrutiny mein mismatch nikla, to ise "Under-reporting of Income" maan kar 200% tak penalty lagayi ja sakti hai.

Q4. Fixed Deposit (FD) ko bank balance mein kyon nahi ginte?

Income Tax rules ke mutabik, FDs aur RDs "Investments" ki category mein aate hain, "Liquid Bank Balance" mein nahi. Inhe assets side par 'Investments' ke column mein dikhana chahiye.

Risks of Non-Compliance
  • Scrutiny and Notices: Bank balances ab AIS (Annual Information Statement) se match kiye jaate hain. Mismatch hone par turant notice aa sakta hai.
  • Financial Penalties: Galat jankari dene par tax chori ka case ban sakta hai.