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Introduction:

Form ITR-3 is tailored for resident individuals and Hindu Undivided Families (HUFs) receiving income through business or profession. If the income is derived from activities like accounting, architecture, medicine, engineering, etc., Form ITR-3 is the right choice for filing Income Tax returns.

Form ITR-3 simplifies tax liability complexity for individuals and HUFs with business or professional income. Understanding its nuances is crucial for accurate filing, covering various income sources from gains to losses. Join us to explore the benefits of ITR-3 and ensure smooth compliance with regulatory requirements.

Eligibility for ITR-3: 

The ITR-3 form is applicable to individuals or Hindu Undivided Families (HUFs) whose total income for a specific assessment year comprises the following:

• Income earned from a profession or business operated through a proprietorship firm, where the taxpayer serves as the proprietor (both audit and non-audit cases).

• Income acquired from winning lotteries, horse racing, and other activities categorized as ‘Income from Other Sources.’

• Income arising from short-term or long-term capital gains.

• Income derived from one or multiple house properties.

• Income generated from assets situated outside India.

Not eligible for ITR-3:

If an individual or Hindu Undivided Family (HUF) earns income as a partner in a partnership firm engaged in a trade or profession, they cannot file their Income Tax return using the ITR-3 Online form. In such cases, they should utilize the ITR-2 form to file their return.

Documents Required for ITR-3 Filing:

Here is a comprehensive guide to filing ITR-3 Online, tailored specifically for individuals with income from business or profession, as well as those engaged in intra-day trading or Futures and Options (F&O) trading. To streamline the process, ensure you have the following documents ready:

• Aadhaar card

• PAN

• Bank account details

• Form 16

• Investments Details

• Books of accounts

Structure of an ITR 3 Form : 

The ITR-3 form is segmented into the following sections to offer a comprehensive understanding of its purpose:

•  Part A

• Schedules

• Part B

• Verification

Now, let’s delve into each of these sections to gain a clearer understanding of the meaning and content of ITR-3.

Part A:

• This section contains general information and describes the nature of a business.

• This section presents the manufacturing account for a specific financial year.

• This section provides the trading account for a given financial year.

• This section reveals the profits and losses for a particular financial year.

• This section presents the balance sheet as of the year-end for the proprietary business.

• This section includes optional additional information for cases not subject to audit under section 44AB.

• This section contains optional quantitative details for cases not subject to audit under section 44AB.

Schedules : 

• Schedule S calculates income under the ‘Salaries’ category.

• Schedule BP calculates income derived from a profession or business.

• Schedule HP computes income from house property.

• Schedule DPM calculates depreciation on plant and machinery.

• Schedule DOA computes depreciation on other assets.

• Schedule DCG computes capital gains from the sale of depreciable assets.

• Schedule CG calculates income under the ‘Capital Gains’ category.

• Schedule DEP summarizes depreciation on all assets.

• Schedule ESR allows for deduction for expenditure on scientific research

• Schedule 112A provides details of capital gains applicable under Section 112A

• Schedule OS calculates income under the ‘Income from Other Sources’ category,  

•  Schedule 115AD(1)(iii) Provision requires details of capital gains applicable to non-residents under Section 112A.

• Schedule CYLA presents the income statement after setting off losses in the current financial year

•  Schedule BFLA displays the income statement after setting off unabsorbed losses brought forward from preceding financial years.

•  Schedule CYLA-BFLA presents the income statement after setting off both current year’s losses and unabsorbed losses from earlier financial years.

• Schedule CFL offers a statement of losses carried forward to subsequent financial years

•  Schedule ICDS reveals the effect of income computation disclosure standards (ICDS) on profits

•  Schedule UD indicates unabsorbed depreciation

• Schedule 10AA calculates deductions under Section 10AA.

• Schedule RA includes details of donations eligible for deductions under various sections

•  Schedule VIA lists deductions under Chapter VI-A

• Schedule 80G contains details of donations eligible for deductions under Section 80G

• Schedule 80IC/80-IE calculates deductions under Section 80-IC or 80-IE

• Schedule 80IB computes deductions under Section 80IB

• Schedule 80IA determines deductions under Section 80IA

• Schedule AMT calculates alternate minimum tax payable under Section 115JC

•  Schedule AMTC computes tax credit under Section 115JD

•  Schedule SPI-SI-IF specifies persons or associations of persons included in the income of an assessee.

• Schedule EI presents a statement of income not included in the total income

•  Schedule TPSA refers to the secondary adjustment of taxes under Section 92CE(2A)

•  Schedule FSI contains details of income earned outside India and applicable tax relaxations

•  Schedule PTI indicates income received from business trusts or investment funds under Section 115UA, 115UB.

• Schedule TR displays tax relief claimed under Section 90, 90A, or 91. 

• Schedule 5A includes information on the apportionment of income between spouses. 

• Schedule DI lists tax-saving deposits, payments, or investments eligible for deduction or exemption. 

• Schedule FA presents details of income from sources outside India and foreign assets. 

• Schedule AL reveals assets and liabilities at the end of a financial year (applicable for total income exceeding ₹50,00,000). 

• Schedule GST provides information on turnover or gross receipts reported for GST.

Part B:

• TI:  calculates the taxpayer’s total income.

• TTI:  calculates the tax liability based on the total income.

How to File Returns Using an ITR-3 Form: 

Online filing of ITR-3 is mandatory .You can file your ITR-3 form by following these step-by-step instructions:

• Initiate the online filing process by visiting the official e-filing web portal of the Income Tax Department.
• Log in to the portal using your user ID (PAN), password, and a Captcha code. If you are a new user, you must register an account before proceeding.
• Go to the menu and select the “e-file” option and then the Income Tax return from the drop-down menu..
• Your PAN details will be automatically filled on the page. Choose the relevant ‘Assessment Year’ for which you are filing the ITR. Then, select the ‘ITR Form Number’ and choose ‘ITR 3’.
• Select the ‘Filing Type’ as ‘Original.’ If you are filing a revised return for a previously filed original return, choose ‘Revised Return.’
• Locate the ‘Submission Mode’ option and choose ‘Prepare and Submit Online.’ Then, click on ‘Continue.’
• Enter accurate details of your income, exemptions, deductions, and investments. Input the information regarding tax payments made through TDS, TCS, and/or advance tax.
• Ensure meticulous accuracy when filling in all the data. Periodically click on ‘Save the Draft’ to prevent the loss of any information.
• Select your preferred verification option from the available choices. Such as Electronic Verification Code (EVC), Digital Signature Certificate (DSC) and Physical verification by sending a signed ITR-V to the Centralised Processing Center (CPC)
• If you are required to file an audit report under any sections (115JB, 115JC, 80-IA, 80-IB, 80-IC, 80-ID, 50B, 44AB, 44DA or 10AA), you must file the report electronically before filing ITR.

Instructions While Filing ITR 3 : 

Here is a list of important instructions to be followed while filing the ITR-3 form:

• If the schedule is not applicable to the assessee, simply enter ‘-NA-‘.
• If there is no figure to denote, specify ‘Nil’.
• If there is a negative balance written against a profit column, precede the figure with a ‘-‘ sign.
• Round off the figures to the nearest one rupee.
• Round off the total income or payable loss to the nearest multiple of ₹10.
• Complete Part A first, followed by the 23 schedules in Part B, and finally, verify the document.

Conclusion:

Filing ITR-3 online for is a critical task requiring careful attention and adherence to deadlines. By following the step-by-step guide outlined above, you can ensure a smooth and accurate filing process. Remember to gather all necessary documents, stay aware of due dates, and remain updated with any changes or notifications from the Income Tax Department. Filing the ITR-3 form on time not only fulfills your legal obligations but also helps maintain financial transparency and avoid penalties.