The ITR-3 form holds significant importance for individuals earning income from a business or a profession. It serves as a crucial tool in the Income Tax Department's mission to gather comprehensive financial details, thereby ensuring tax compliance.
What is ITR-3?
ITR-3 is designed for individuals and Hindu Undivided Families (HUFs) who derive income from profits and gains from business or profession. Those eligible to file ITR-3 include individuals engaged in business or a profession (both in cases requiring tax audit and those exempt from it). The return may also encompass income from house property, salary/pension, capital gains, and income from other sources.
Who Should File ITR-3 Form?
ITR Form 3 is intended for filing income tax returns by individuals or Hindu Undivided Families (HUFs) who fulfill the following eligibility criteria:
Directorship: The taxpayer holds a directorship position in a company or is engaged in a business.
Residential Status: The taxpayer's residential status can be either resident or non-resident of India.
Pension Income: The taxpayer receives income from a pension.
House Property Income: The taxpayer earns income from house property.
Investments in Unlisted Equity Shares: The taxpayer has investments in unlisted equity shares.
Income Under 'Profits and Gains of Business or Profession': The taxpayer's income falls under the category of 'profits and gains of business or profession.' This can include income elements like salary, interest, commission, bonus, or remuneration.
Additionally, individuals and HUFs can use ITR Form 3 if their total income comprises the following:
Income from one or multiple house properties.
Income is generated from activities such as lotteries, race betting, and other legal forms of gambling as per Indian law.
Income from short-term or long-term capital gains.
Income derived from a business or profession conducted under a proprietorship firm owned by the individual or a HUF.
Income earned from foreign assets.
Meeting these eligibility criteria permits individuals and HUFs to utilize ITR Form 3 for filing their income tax returns, provided their income aligns with the specified categories mentioned above.
Changes Made in ITR-3 for AY 2023-24
For the assessment year 2023-24, several notable changes have been introduced in ITR-3. Here is a summary of the major modifications in this form:
Additional Disclosures: Assessee is now required to provide the following information when filing their returns:
Cash deposits exceeding ₹1 crore in the current account with any bank.
Expenditure on foreign travel exceeding ₹2,00,000.
Electricity charges exceeding ₹1,00,000.
Capital Gains on Property Sale: Individuals who earn short-term or long-term capital gains from the sale of buildings and/or land must furnish specific details related to the sale. This includes PAN or Aadhaar information, residential address, and percentage share of ownership.
Introduction of Schedule 112 A: A new schedule, Schedule 112 A, has been introduced to calculate long-term capital gains on the sale of units of a business subject to Securities Transaction Tax (STT) or equity shares.
Disclosure of Directorship and Unlisted Equity Investments: Assessees who hold the position of a company director or have investments in unlisted equities must disclose the 'Type of Company' involved.
Details of Tax Deduction Claims: Individuals must provide information about tax deduction claims for expenses, payments, or investments made during the period from April 1, 2022, to June 30, 2023.
These changes in ITR-3 for the assessment year 2023-24 aim to enhance transparency and capture additional financial information for tax assessment purposes.
Tax & Process
Step 1: Visit the official e-filing web portal of the Income Tax Department.
Step 2: Log in to the portal using your user ID (PAN), password, and Captcha code. If you're a new user, you'll need to register an account first.
Step 3: Select 'e-File' from the menu and choose 'Income Tax Return' from the drop-down menu.
Step 4: Your PAN details will be auto-populated. Next, select the 'Assessment Year' for which you are filing the ITR. Then, choose 'ITR Form Number' and opt for 'ITR-3.'
Step 5: For 'Filing Type,' select 'Original.' If you're filing a revised return for a previously filed original return, choose 'Revised Return.'
Step 6: In the 'Submission Mode' section, select 'Prepare and Submit Online.' Click 'Continue.'
Step 7: Provide details of income, exemptions, deductions, and investments. Add information about tax payments through TDS, TCS, and/or advance tax.
Step 8: Ensure all data is filled accurately. Periodically click 'Save the Draft' to prevent data loss.
Step 9: Choose your preferred verification option:
E-verification within 30 days from the date of filing ITR-3
Verification through a duly signed ITR-V sent to CPC within 30 days of filing the return.
Step 10: Select 'Preview and Submit,' then click 'Submit.'
Note: Electronic verification with a digital signature is mandatory for accounts requiring auditing under section 44AB. If you need to submit an audit report under specific sections (115JB, 115JC, 80-IA, 80-IB, 80-IC, 80-ID, 50B, 44AB, 44DA, or 10AA), file the report electronically before submitting the ITR.
When selecting 'I would like to e-verify,' you can choose instant e-verification through:
Electronic verification code (EVC) authentication
Aadhaar OTP verification
Prevalidated bank or Demat account authentication.
PAN (Permanent Account Number)
Bank account details (account number and IFSC code)
Form 16, if applicable (for salaried individuals)
Details of your investments
Books of accounts (if you have income from business or a profession)
Who Cannot File the ITR-3 Form?
Individuals or Hindu Undivided Families (HUFs) who earn income as partners of a partnership firm engaged in a business or profession should not use ITR-3; they should opt for ITR-2 instead.
What is the Due Date for Filing the ITR-3 Form for Non-Audit Cases in the Assessment Year 2023-24?
For non-audit cases in the assessment year 2023-24, the due date is July 31, 2023.
What Are the Penalties for Late Filing of the ITR-3 Form in India?
Late filing of the ITR-3 form may incur penalties. If filed after the due date but before December 31 of the assessment year, a late filing fee of Rs 5,000 may apply. If filed after December 31, the late filing fee may increase to Rs 10,000. The specific fee may vary based on income and other factors.
How Many Sections Are There in the ITR-3 Form?
The ITR-3 form is organized into six sections: General Information, Income Details, Deductions and Taxes Paid, TDS/TCS Credit, Verification and Declaration, and Schedules.
What are TDS and TCS Credit in the ITR-3 Form?
TDS stands for Tax Deducted at Source, and TCS stands for Tax Collected at Source. You should include details of these credits in the respective sections of the ITR-3 form.