ITR-3 is an income tax return form designed for individuals and Hindu Undivided Families (HUFs) earning income from business or profession, along with salary, house property, capital gains, or other sources. Eligible filers include self-employed professionals, business owners, or partners in firms. However, salaried individuals with no business or professional income must file ITR-1 or ITR-2, depending on their income sources. To file ITR-3, essential documents like PAN, Aadhaar, bank statements, financial records, tax payment proofs, and Form 26AS are required. The form is structured into multiple sections covering personal details, income sources, deductions, and tax computations. Filing ITR-3 online is a seamless process via the Income Tax Portal, involving user registration, form selection, data entry, verification, and submission.
What is ITR-3?
ITR-3 is an income tax return form prescribed by the Income Tax Department of India for individuals and Hindu Undivided Families (HUFs) who earn income from a business or profession. It is specifically designed to report income under the heads “Profits and Gains of Business or Profession,” along with other heads such as salary, house property, capital gains, or income from other sources. This form also allows taxpayers to claim deductions, declare exempt income, and calculate tax liability based on their earnings.
Who is Eligible to File ITR-3?
The following individuals and HUFs are eligible to file ITR-3:
- Business Owners and Entrepreneurs: Those earning income from proprietary businesses or self-employment.
- Professionals: Self-employed individuals such as doctors, lawyers, consultants, architects, or freelancers deriving income from professional services.
- Partners in Firms: Partners in a partnership firm earning income in the form of remuneration, interest, or profit share from the firm.
- Income from Multiple Sources: Taxpayers earning income from business or profession alongside salary, rental income, capital gains, or other sources like dividends and interest.
Who Cannot File ITR-3?
The following taxpayers are not eligible to file ITR-3:
- Individuals with Only Salary or Pension Income: Those earning solely from salary or pension are required to file ITR-1 or ITR-2, depending on their income details.
- Individuals with No Business or Professional Income: Taxpayers without income from a business or profession must use other forms like ITR-1 or ITR-2 based on their eligibility.
- Partnerswhip firms, Companies and LLPs: Partnership firms, Corporate entities and Limited Liability Partnerships must file ITR-6 or ITR-5, as applicable, instead of ITR-3.
What are the Documents Needed to File ITR-3?
To accurately file ITR-3, individuals and HUFs must gather the following documents and details:
Personal Information:
- PAN (Permanent Account Number) and Aadhaar details.
- Bank account details, including account number, IFSC, and passbook/bank statements.
Income Details:
- Business or Professional Income: Financial statements such as profit and loss accounts, balance sheets, and audit reports (if applicable).
- Salary Income: Form 16 issued by the employer.
- Income from House Property: Rent agreements, details of tenants, and interest certificates for home loans.
- Capital Gains: Sale and purchase documents of property, mutual funds, shares, or other capital assets.
- Income from Other Sources: Bank interest statements, dividend records, or proof of gifts received.
Tax Deduction Details:
- Form 16A for TDS on other incomes.
- Form 26AS for a consolidated view of all TDS, TCS, and advance tax payments.
- Tax payment challans (if any self-assessment or advance tax was paid).
Investment Proofs for Deductions:
Other Documents:
- Details of exempt income (e.g., agricultural income).
- Audit reports under Sections 44AB or 92E (if applicable).
What is the Structure of the ITR-3 Form?
The ITR-3 form is structured into various sections, allowing taxpayers to provide detailed information about their income, deductions, and tax liability. The key components of the form are:
Part A – General Information:
- Basic details like name, PAN, address, Aadhaar number, and filing status (original or revised return).
- Business/professional code and nature of the business.
Part B – Gross Total Income:
- Breakup of income under different heads: salary, house property, profits from business/profession, capital gains, and other sources.
Part C – Deductions and Taxable Income:
- Total deductions claimed under Chapter VI-A, such as Sections 80C, 80D, and 80G.
- Computation of total taxable income after deductions.
Schedule Details:
- Schedule BP: Income from business or profession.
- Schedule CG: Capital gains.
- Schedule OS: Income from other sources.
- Schedule VIA: Deductions claimed under Chapter VI-A.
- Schedule 80G: Donations eligible for deduction.
Tax Computation and Payments:
- Computation of total tax liability, rebate under Section 87A (if applicable), and relief under Section 89.
- Details of taxes paid, including advance tax, TDS, and self-assessment tax.
Verification Section:
- Declaration by the taxpayer about the correctness of the information provided.
Other Schedules:
- Details of exempt income, foreign assets, liabilities, and presumptive income (if applicable).
How to File ITR-3 Online on the Income Tax Portal?
Filing ITR-3 online on the Income Tax Portal is a straightforward process that involves the following steps:
Step 1: Log In to the Portal
- Visit the Income Tax e-Filing Portal.
- Log in using your PAN as the user ID and your password.
Step 2: Select ITR-3 Form
- Navigate to the ‘e-File’ menu and click on ‘Income Tax Returns’ → ‘File Income Tax Return.’
- Choose the applicable assessment year.
- Select the ‘Online’ mode of filing.
- In the return form section, select ITR-3 and choose the filing type as ‘Original’ or ‘Revised’, as applicable.
Step 3: Provide Basic Information
- Fill in your personal details like name, PAN, address, and contact information.
- Select the nature of business or profession and corresponding codes from the dropdown menu.
Step 4: Enter Income Details
- Income from Business/Profession: Provide details of profits, losses, and income from business or professional activities, including the financial statements.
- Salary/House Property/Capital Gains: Enter relevant income details based on Form 16, rental income, and sale or purchase of assets.
- Income from Other Sources: Include income such as dividends, interest, or any other taxable income.
Step 5: Claim Deductions
Fill out deductions under Chapter VI-A, such as:
Step 6: Compute Tax Liability
- The portal will auto-calculate your total tax liability after considering income, deductions, and applicable tax rates.
- Review any TDS, advance tax, or self-assessment tax already paid, based on Form 26AS.
Step 7: Preview and Validate the Return
- Verify the data entered to ensure accuracy.
- Address any errors flagged by the portal.
Step 8: Submit the Return
- Click on ‘Proceed to Validation’ and then ‘Submit.’
- Verify the return using one of the following methods:
- Aadhaar OTP.
- Electronic Verification Code (EVC) via bank account or Demat account.
- Digital Signature Certificate (DSC).
Step 9: Acknowledge Submission
After successful submission, you’ll receive an acknowledgment (ITR-V) on your registered email. If not verified electronically, download the ITR-V, sign it manually, and send it to the CPC office in Bengaluru within 30 days of filing.
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