What is ITR-3 Form?
ITR-3 is an Income Tax Return form used by individuals and Hindu Undivided Families (HUFs) who have income from business or profession, along with other income sources such as salary, house property, capital gains, or other sources.
Who Should File ITR-3?
You should file ITR-3 if you are an Individual or HUF having:
- Income from proprietary business or profession
- Income from salary or pension
- Income from house property
- Income from capital gains
- Income from interest, dividends, or other sources
- Income as a partner in a firm (not applicable if you are filing ITR-2)
Who is Not Eligible to File ITR-3?
You cannot file ITR-3 if:
- You are not earning from business or profession
- You are opting for presumptive taxation scheme under Section 44AD, 44ADA, or 44AE (such taxpayers should file ITR-4)
- You are a company, LLP, or firm (they should file ITR-5, ITR-6, or ITR-7)
Documents Required for Filing ITR-3
- PAN and Aadhaar Card
- Bank account details
- Form 16 (if salaried)
- Form 26AS and AIS report
- Balance sheet and profit & loss statement
- GST details (if applicable)
- Details of loans, assets, and liabilities
- Capital gains statement (if any)
- Dividend, interest income summary
- Audit report (if turnover exceeds limits under Section 44AB)
Structure of ITR-3 Form
| Section | Description |
|---|---|
| Part A | General personal and business information |
| Part A-BS | Balance Sheet as on 31st March |
| Part A-P&L | Profit and Loss Account |
| Part A-OI | Other Information |
| Part A-QD | Quantitative Details |
| Schedule S | Income from Salary |
| Schedule HP | Income from House Property |
| Schedule BP | Income from Business or Profession |
| Schedule CG | Capital Gains |
| Schedule OS | Income from Other Sources |
| Schedule CYLA | Current Year Loss Adjustment |
| Schedule BFLA | Brought Forward Loss Adjustment |
| Schedule CFL | Losses to Carry Forward |
| Schedule VIA | Deductions under Chapter VI-A |
| Schedule AMT/AMTC | Alternate Minimum Tax |
| Schedule SI | Income Chargeable at Special Rates |
| Schedule AL | Assets and Liabilities |
| Schedule PTI | Pass Through Income |
| Verification | Declaration and digital verification |
Step-by-Step Process to File ITR-3
- Collect financial documents like balance sheet, income statement, bank summary.
- Match TDS with Form 26AS/AIS to ensure no mismatch.
- Calculate taxable income from all income heads.
- Prepare Profit & Loss Account and Balance Sheet in required format.
- Fill Schedule BP for business or professional income.
- Report capital gains and other income if applicable.
- Claim eligible deductions under Chapter VI-A.
- Declare assets and liabilities if income exceeds audit threshold.
- Pay self-assessment tax if tax liability remains after TDS.
- Verify return electronically using Aadhaar OTP, DSC, or net banking.
Business Income Reporting in Schedule BP
- Enter gross receipts or turnover from business or profession
- Deduct business expenses like rent, salary, depreciation, utilities
- Declare profit as per books
- Make adjustments as per income tax rules
- Report section-wise disallowances or deductions
- Enter net taxable income under business head
Audit Requirement Under Section 44AB for ITR-3
| Type of Business | Audit Applicable When |
|---|---|
| Business | Turnover exceeds Rs. 1 crore (Rs. 10 crore if 95% receipts are digital) |
| Profession | Gross receipts exceed Rs. 50 lakh |
| Presumptive Taxation Opted Earlier but Now Opting Out | Audit compulsory for 5 years |
Details to Be Filled in Balance Sheet Section
- Capital account details
- Secured and unsecured loans
- Sundry creditors and debtors
- Cash and bank balances
- Fixed assets and depreciation details
- Stock and work-in-progress
- Investments and advances
Profit and Loss Account Details
- Gross revenue from business or profession
- Direct expenses like purchases, wages, power cost
- Indirect expenses like rent, salary, depreciation
- Net profit before tax adjustments
- Income tax adjustments under the Income Tax Act
Schedule AL (Assets and Liabilities) Requirement
This schedule is mandatory if total income exceeds Rs. 50 lakh. You must provide details of:
- Land and building
- Movable assets like vehicles, jewelry, bonds, mutual funds
- Bank deposits
- Loans and liabilities against assets
Verification and Submission of ITR-3
After completing all schedules:
- Review all data entered
- Compute final tax liability
- Pay remaining tax using challan
- Submit ITR form online
- Verify return within 30 days to complete filing
Methods of verification:
- Aadhaar OTP
- Net banking
- Digital Signature Certificate (DSC)
- Bank account EVC
Common Mistakes to Avoid While Filing ITR-3
- Mismatch between Form 26AS and actual income declared
- Not reporting assets and liabilities above threshold
- Not updating correct bank account for refund
- Missing audit requirement and failing to upload audit report
- Claiming deductions without proper proof
Benefits of Filing ITR-3
- Acts as proof of income for financial transactions
- Helps in loan and credit card approval
- Mandatory for visa processing in many countries
- Enables carry forward of business losses
- Ensures legal compliance and avoids penalties
Certification
