The income tax laws in India classify taxpayers into different categories based on income and its sources. The Income Tax Department has put forth 7 different types of ITR forms that each set of taxpayers need to file. Among these forms is ITR 3.
Resident individuals and HUFs who have profits or gains from a business or profession and are ineligible for ITR 1, ITR 2, and ITR 4 must file this form. Choosing the right ITR form is crucial to ensure that your income tax return is accurate and valid.
As such, having a thorough understanding of the 7 ITR Forms is essential. Read on to learn what is ITR 3, its applicability, and how to file ITR 3 online.
ITR 3 Form is applicable to individual taxpayers and Hindu Undivided Families (HUFs) only under certain conditions. The first condition is that you should have income (as an individual or HUF) that goes under the head of ‘profits or gains from business or profession’.
The other condition for you to be eligible to file ITR 3 is that you should be ineligible for ITR 1, ITR 2, or ITR 4.
Here is a brief overview of the various sections available in an ITR 3 Form:
Part A is further divided into seven sections:
Part A - GEN which focuses on the nature of a business
Part A - Manufacturing Account which provides the details of the manufacturing account during a specific assessment year
Part A - Trading Account with details of a trading account for a financial year
Part A - P&L details the losses and profits incurred during a financial year
Part A - BS provides information regarding the balance sheet
Part A - OI mentions other information
Part A - OD gives quantitative information
While there are more than 15 schedules listed under Form ITR 3, Part B comprises only two parts to compute a taxpayer’s total income along with tax liability. Finally, you have to submit a verification as a confirmation that you have provided accurate information.
Before you understand how to file ITR 3, you must know if it is applicable to you or not. Your income must include the following to qualify for the ITR 3 applicability:
Income from a profession
Income from a business under a proprietorship firm (both non-audit and audit)
Income from capital gains, house properties, and other sources
Income generated from the assets held in foreign countries
If you are wondering how to fill out ITR 3, you can do so both online and offline. Download ITR 3 form in the .PDF form from the Income Tax website. Simply click on ‘Forms/Downloads’, and then ‘Income Tax Returns’. Choose ‘Form No. ITR- 3’ from the list and click on the ‘PDF’ icon.
Once the page loads, click on the download symbol to download the form. This process is part of the offline mode, wherein you print the form, fill it and mail it to the tax authorities.
Alternatively, you can use the online facility on the e-Filing portal of the Income Tax Department.
Here is how to file ITR 3 online in a few simple steps:
Step 1: Sign in to the portal using your credentials
Step 2: Navigate to the ‘e-File’ menu
Step 3: Choose the ‘Income Tax Return’ option from the drop-down menu
Step 4: Check the auto-generated PAN details
Step 5: Enter the current year as your assessment year and select ITR-3 under the ‘ITR form Number’ category
Step 6: Choose the ‘Original/Revision Return’ as the ‘Filing Type’
Step 7: Opt for ‘Prepare and Submit Online’ under the ‘Submission Mode’ section and click on ‘Continue’
Step 8: Fill out all the mandatory and applicable sections in your ITR 3 form and select the type of verification under the ‘Tax Paid and Verification’ tab
Step 9: Find the ‘Preview and Submit’ option to check the details entered by you
Step 10: Navigate to the ‘Submit’ button in order to complete the process of ITR 3 filing
Note that balance sheets that need to have undergone auditing under Section 44AB of the Income Tax Act require electronic verification. Hence, if you are filing an ITR 3 form as a taxpayer requiring an audit, you will need to verify it using a digital signature.
Moreover, some taxpayers need to attach an audit report under the relevant sections of the Income Tax Act. If applicable, you can upload the report on the e-Filing portal before you complete the ITR 3 filing process.
The following are some of the changes made in the ITR forms for the assessment year 2023-24, as notified by the Central Bank of Direct Taxes (CBDT):
A new Schedule VDA, that requires you to provide details about your transactions and gains in virtual digital assets
A new section named ‘Trading account’ has been added where you need to add details of your earnings from intraday trading
A questionnaire has been added to the form in order to check if you switched from the new to the old tax regime in previous years
At the time of ITR filing, you will need to provide additional information about your balance sheet in the new form
Advances received from individuals as mentioned under Section 40A(2)(b) of the I-T Act must be reported as ‘Advances’ under the head ‘Sources of Income’
Foreign Institutional and Portfolio Investors (FIIs and FPIs) need to fill in their SEBI registration number at the time of ITR filing
These new changes have come into effect from April 1, 2023. Be mindful of these modifications when filing your ITR 3 form for the assessment year 2023-24. Missing any information may result in you filing a rectified return or delayed return.
Remember to file your ITR before the due date to avoid any penalties and punishment. For ITR 3 filing and other forms, the due date is July 31, 2023, for taxpayers who need not audit their books.
Keep in mind that the due date is subject to extension, so check the official income tax website to stay updated. Be sure to keep all the required details ready before you start filing ITR 3 to have a seamless return filing experience.
No, if you have opted for a presumptive taxation scheme under Sections 44AD, 44ADA, and 44AE, you can file ITR 4.
ITR 3 is applicable to resident individuals and Hindu Undivided Families (HUFs) earning income as profits or gains from a business or profession.
No, the audit report is not mandatory for filing ITR 3.
There are no ITR 3 filing charges. The facility of ITR 3 filing is absolutely free on the e-Filing portal.