ITR-4 Update Blog

ITR-4 Update (AY 2026-27): Bank Balance Disclosure Now Mandatory

The Income Tax Department has introduced a significant update in the ITR-4 utility for Assessment Year (AY) 2026-27. If you are a small businessman or a professional opting for the Presumptive Taxation Scheme (under Section 44AD, 44ADA, or 44AE), this update is critical for your tax filing. Previously, ITR-4 required minimal financial details; however, reporting requirements have now been made more stringent to increase transparency.

🔍 What is the New Reporting Requirement?

Earlier, filing ITR-4 mostly revolved around declaring turnover and profit. Now, Section E has been updated with mandatory fields. As of March 31, 2026, taxpayers must provide:

  • E15 – Sundry Creditors: Total amount owed to vendors/suppliers.
  • E19 – Inventories (Stock): Total value of stock-in-hand at year-end.
  • E20 – Sundry Debtors: Total amount owed to you by customers.
  • E21 – Balance with Banks: The aggregate closing balance of all bank accounts (New Highlight).
  • E22 – Cash-in-hand: Total physical cash available on March 31.

⚠️ Why is Bank Balance (E21) Important?

The balance reported will be cross-verified using AIS (Annual Information Statement) and TIS (Taxpayer Information Summary). Inconsistencies may lead to:

  • Automated Notices: System-generated inquiries for discrepancies.
  • Scrutiny Selection: Higher likelihood of a detailed audit.

🧾 Essential Guidance for Taxpayers

Aggregate All Accounts: Calculate the total closing balance of all Savings and Current accounts held as of March 31, 2026.
Include Mixed-Use Accounts: If a personal account is used for business, its balance must be included.
Avoid Estimates: Do not use round figures. Your figures should exactly match your bank statements to the last rupee.
Maintain Records: Even in a presumptive scheme, keep records of your year-end debtors, creditors, and stock.
The transition to more detailed reporting proves that the "Presumptive Scheme" no longer means "No Records." The Department is moving toward balance-sheet-level disclosure to ensure better compliance.