ITR 03 – Individual/HUF Having Business/Profession Income
ITR-3 is an income tax return form used in India for individuals and Hindu Undivided Families (HUFs) who have income from the following sources:
Income from business or profession
Income from salary or pension
Income from house property
Income from capital gains
Income from other sources
ITR-3 is applicable to taxpayers who have income from any of the above-mentioned sources, except for individuals who have income from profits and gains of business or profession under the presumptive taxation scheme, which is covered under ITR-4.
The ITR-3 form is more comprehensive and allows taxpayers to provide detailed information about their income and deductions across various sources. It consists of different sections where taxpayers need to provide relevant details, such as personal information, computation of total income, details of income from different sources, deductions, taxes paid, and verification.
ITR-3 can be filed by the assesses falling in the following categories:-
Income from a profession or business carried under a proprietorship firm, wherein the taxpayer is a proprietor (both audit and non-audit cases)
Income from more than one house property
Rewards earned by winning a lottery, horse racing, and other activities falling under ‘Income from Other Sources
Income assets by way of assets in a country outside India
Income generated from short or long-term capital gains
Who are not eligible to file ITR-3?
Individuals who file Form ITR‐1 (Sahaj), ITR‐2 or ITR‐4 (Sugam), are not eligible to file ITR-3.
Income earned from foreign assets.
Who is eligible for ITR-3?
An ITR-3 form is applicable to any individual or Hindu Undivided Family (HUF) whose total income for a given assessment year includes the following:
Income from a profession or business carried under a proprietorship firm, wherein the taxpayer is a proprietor (both audit and non-audit cases)
Income earned from one or multiple house properties
Rewards earned by winning a lottery, horse racing, and other activities falling under ‘Income from Other Sources’
Income assets by way of assets in a country outside India
Income generated from short or long-term capital gains
Now that you know about ITR-3 eligibility, let’s delve into how to file ITR-3.
What documents are required to file ITR-3?
Following documents are required for successful filing of the ITR-3:
First thing, you will need to check your Annual Information Statement
Profit and loss statement and Balance sheet for the previous year.
You will need Form-16 issued by your employer- in case of income from salary.
Form-16A (TDS Certificate) issued by TDS Deductor.
Details of Chartered Accountant conducting Tax audit in case the person is covered under section 44AB.
Copies of books of accounts required to be maintained as per section 44AB i.e. Cash book, Journal book, Sales and Purchase register etc. in case of business and Receipt book in case of profession.
Form-26AS to verify TDS on salary as well as TDS other than salary. Form 26AS could be downloaded from the income tax portal.
In case you have received rent from any rented house property then you will require local tax payment, interest on borrowed capital if any, and tenant details.
If you have any capital gain transaction then you will be required the summary of profit or loss statement, for computation of capital gain.
For claiming tax-saving deduction under 80C, 80D, or 80G, such as life insurance premium, health insurance expenditure, donations, rent receipts or relevant documents need to be produced as proof of such expenditure made.
Who can file ITR-3 Form
Carrying on a business or profession (both tax audit and non-audit cases)
The return may include income from house property, salary/pension, capital gains and income from other sources
Who can’t file
Income from profit and gains from business or profession, and also who has income in the nature of: interest. Salary. Bonuitr-2 cannot be filed by any individual or huf, whose total income for the year includes.
Benefits
Any individual or HUF having income from business or profession
Individuals who are eligible to fill out the ITR-1 form (Sahaj)
Benefits
Business and profession income reporting
Partnership firm reporting
Claiming deductions and exemptions
Tax calculation flexibility
Avoidance of penalties
Compliance with tax laws
Ease of e-filing
What are the changes made in ITR-3 for AY 2023-24?
The assessment year 2023-24 brought about a number of key changes in ITR-3. Here is a list of the major changes in this form:
An assessee must disclose the following information when filing returns:
Amount of cash deposits in excess of ₹1 crore in the current account with any bank
Expenditure incurred by the individual on foreign travel exceeding ₹2,00,000
If the taxpayer incurs more than ₹1,00,000 on electricity charges
If an individual earns short or long-term capital gains by selling a building and/or land, he/she must furnish some details of this sale. These details include a taxpayer’s PAN or Aadhaar information, residential address, and percentage share of ownership.
Introduction of a separate schedule 112 A. It shall calculate long-term capital gains on the sale units of a business liable to STT or equity shares.
If a taxpayer holds the position of a company’s director or has unlisted equity investments, the ‘Type of Company’ must be disclosed.
An individual must provide details of tax deduction claims for expenditures, payments, or investments made between 1st April 2022 to 30th June 2023.
Structure for Income Tax ITR 3 Form
Part A
Part A-GEN: This section contains general information and information about the nature of a business.
Part A: Manufacturing Account: This section presents a manufacturing account for a certain fiscal year.
Part A: Trading account: It has a trading account for a certain fiscal year.
Part A-P&L: This section reveals the earnings and losses for a specific fiscal year.
Part A-BS: It shows the proprietary business’s balance sheet at the end of the year.
A-OI: Other information is included in this section. It is, however, optional if the matter is not subject to audit under section 44AB.
Part A-QD: This section contains quantitative information that is optional in cases where an audit is not required under section 44AB.
Schedules
Schedule-S: Income computation under the heading Salaries.
Under the heading Income from House Property, compute your income (Schedule-HP).
Calculation of a business or profession’s income (Schedule BP)
Depreciation on plant and machinery under the Income Tax Act (Schedule DPM)
Depreciation on other assets under the Income-tax Act (Schedule DOA)
Schedule DEP: Summary of depreciation on all assets under the Income-tax Act
Schedule DCG: Depreciation on the sale of depreciable assets under the Income-tax Act
Schedule ESR deduction under section 35 (expenditure on scientific research)
Calculation of income under the category Capital gains on Schedule-CG.
Particulars of Capital Gains in Cases Where Section 112A Applies (Schedule 112A)
115AD(1)(b) of the Schedule (iii) Proviso: If section 112A applies to non-residents, details of capital gains must be provided.
Calculation of income on Schedule-OS under the heading Income from Other Sources.
Schedule-CYLA-BFLA: Income statement after current-year losses have been set off, as well as income statement after unabsorbed losses from past years, have been set off.
Income statements after losses from the current year have been deducted (Schedule-CYLA).
Income statement after set-off of unabsorbed loss carried forward from prior years (Schedule BFLA).
Schedule CFL: Loss statement to be carried over to subsequent years.
Schedule-UD: Unabsorbed depreciation statement.
Effect of Income Computation Disclosure Standards on Profit (Schedule ICDS)
Schedule 10AA: Section 10AA is used to calculate deductions.
A statement of charitable contributions that are qualified for a deduction under section 80G is called a Schedule 80G.
Schedule-80IA is used to calculate the deduction under section 80IA.
Calculation of the deduction under section 80IB using the 80IB Schedule.
Schedule-80IC/80-IE: Deduction computation under sections 80IC/80-IE.
Schedule VI-A: Statement of Chapter VIA deductions (from total income).
Computation of the Alternate Minimum Tax Due Under Section 115JC (Schedule AMT)
Schedule AMTC is used to calculate the tax credit under section 115JD.
Schedule SPI: Income from a spouse, minor child, son’s wife, or any other individual or group of people should be included in the assessee’s income in Schedules HP, BP, CG, and OS.
Statement of income subject to special tax rates (Schedule SI).
Information on partnership firms in which the assessee is a partner (Schedule-IF).
Statement of Income not included in total income (Schedule Exempt Income (EI)).
Schedule PTI: As required by sections 115UA and 115UB, pass through income data from a business trust or investment fund.
Schedule TPSA: Secondary adjustment to transfer price under Section 92CE (2A)
Schedule FSI: Tax incentives and information on income generated outside of India
Statement of tax relief sought under sections 90, 90A, or 91 of the Internal Revenue Code (Schedule TR).
Foreign Assets and Income from Any Source Outside India (Statement of Foreign Assets and Income from Any Source Outside India) (Schedule FA).
Schedule 5A: Details on how the Portuguese Civil Code controls income division between spouses.
Assets and liabilities at the end of the year (Schedule AL) (applicable where the total income exceeds Rs 50 lakhs)
Schedule GST: Information on gross receipts/turnover submitted for Goods and Service Tax.
Part B
Part B-TI is responsible for calculating a taxpayer’s total income.
Part B-TTI: This section calculates the overall income tax liability.
Due Date for Filing Form ITR 3
The due date for filing the ITR-3 form, which is the income tax return, varies depending on whether the case is an audit case or a non-audit case for different assessment years:
For Assessment Year 2023-24:
Non-audit Cases: The due date is July 31, 2023
Audit Cases: The due date is October 31, 2023
These dates are subject to change by the income tax authorities, so it's essential to stay updated with any revisions or extensions of the due dates.
Late Filing Penalties for ITR-3 Form
The penalties for late filing of the ITR-3 form in India are as follows:
If you file your return after the due date but before December 31 of the assessment year:
A late filing fee of ₹ 5,000 may be levied.
If you file your return after December 31 of the assessment year:
