From assessment year 2026-27, the ITR-4 form, notified on March 31, will require mandatory disclosure of bank balances, investments, sundry debtors, sundry creditors and cash as of March 31, 2026.
This will enable authorities to cross-check declared income against a taxpayer’s financial position, especially in cases where books of accounts are not maintained, officials said.
The move follows instances of taxpayers reporting income under presumptive provisions while holding disproportionately high bank balances and investments.
“The aforesaid checks shall ensure better reporting of financial transactions and avoidance of misuse of the presumptive scheme,” said a senior official, who did not wish to be identified.
The new requirement is aimed at curbing misuse without significantly increasing compliance burden, as most of this information is already available with taxpayers, according to officials.
The mandatory disclosure of bank balances is expected to strengthen verification. “Bank records become critical in case of non-maintenance of detailed books of accounts, and thus providing bank balance does not require any additional information which is not available with the taxpayers,” the official added.
Tax authorities can use this data, alongside existing financial information, to assess whether reported profits are consistent with actual financial capacity.
Tax experts say the revised form formalises a shift towards data-driven scrutiny. In the future, even those opting for presumptive taxation will need to ensure that their financial records closely support the income they declare.
“These additional disclosures appear aimed at reducing cases where the scheme may have been used without adequate alignment between reported income and actual financial capacity,” said Amit Maheshwari, managing partner, AKM Global. He added that the updated ITR-4 also offers some relief to small taxpayers.