ITR – 3 Return

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.

Important Documents & Details Required for Filing ITR-2

Before filing ITR-2, make sure you keep the following documents and details ready:

First thing, you will need to check your Annual Information Statement (AIS)

Profit and Loss Statement and Balance Sheet for the previous year

Form-16 issued by your employer in case of income from salary

Form-16A (TDS Certificate) issued by the 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, such as Cash Book, Journal Book, Sales Register, 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 can be downloaded from the Income Tax Portal

In case you have received rent from any rented house property, you will require local tax payment details, interest on borrowed capital (if any), and tenant details

If you have any capital gain transaction, then you will require a summary of profit or loss statement for computation of capital gains

For claiming tax-saving deductions under Sections 80C, 80D, or 80G, documents such as life insurance premium receipts, health insurance expenditure proofs, donation receipts, rent receipts, or other relevant supporting documents need to be produced

Who Can File ITR-3 Form

ITR-3 can be filed by individuals and HUFs who have income from business or profession. It is applicable in the following cases:

Carrying on a business or profession (both tax audit and non-audit cases)

Income from salary/pension

Income from house property

Income from capital gains

Income from other sources

Who Cannot File ITR-3

The following individuals are not eligible to file ITR-3:

Individuals who do not have income from business or profession

Individuals who are eligible to file ITR-1 (Sahaj)

Benefits of Filing ITR-3

Filing ITR-3 provides several advantages:

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 are the major changes:

An assessee must disclose the following information while filing returns:

Amount of cash deposits in excess of ₹1 crore in the current account with any bank

Expenditure incurred on foreign travel exceeding ₹2,00,000

Electricity charges exceeding ₹1,00,000

Details of sale of building/land including PAN/Aadhaar, address, and ownership percentage

Introduction of separate Schedule 112A for long-term capital gains calculation

Disclosure of ‘Type of Company’ for directors or holders of unlisted equity shares

Details of deductions claimed for investments/payments made between 1st April 2022 to 30th June 2023

Structure for Income Tax ITR-3 Form

Part A

Part A-GEN: General information and nature of business

Part A-Manufacturing Account: Manufacturing account details

Part A-Trading Account: Trading account details

Part A-P&L: Profit and Loss details

Part A-BS: Balance Sheet details

Part A-OI: Other information

Part A-QD: Quantitative details

Schedules

ITR-3 contains multiple schedules such as Schedule-S, Schedule-HP, Schedule-BP, Schedule-CG, Schedule-OS, Schedule-CFL, Schedule-UD, Schedule-VI-A, Schedule-AMT, Schedule-FA, Schedule-GST, Schedule-AL and many more for reporting income, deductions, foreign assets, depreciation, partnership information, and tax calculations.

Part B

Part B-TI: Calculation of total income

Part B-TTI: Calculation of total tax liability

Due Date for Filing Form ITR-3

The due date for filing ITR-3 depends on whether the case is an audit case or a non-audit case.

For Assessment Year 2023-24

Non-audit Cases: Due date is July 31, 2023

Audit Cases: Due date is October 31, 2023

These dates are subject to changes by the Income Tax Department.

Late Filing Penalties for ITR-3 Form

The penalties for late filing of the ITR-3 form 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:

A late filing fee of ₹10,000 may be levied