What is ITR-3 Form and How to File ITR 3?

There are various categories of taxpayers in India, each of which requires a different form to file income tax returns. One such form is ITR-3, which is viewed as the most complicated ITR form for taxpayers, especially for a layman. However, do not worry, as we shall cover the ins and outs of ITR-3 in this article.

So, sit back and let us answer all the queries related to this form.

What is ITR-3?

ITR-3 is a form that is applicable for resident individuals and Hindu Undivided Families (HUFs). In order to file income tax returns with an ITR-3 form, an assessee must earn his/her income from a proprietorship business or a profession. Therefore, if you generate an income through a proprietary business or a profession pertaining to accountancy, architecture, medical, engineering, etc., you can file ITR-3 for income tax returns.

Now that you know what ITR-3 is in income tax, read about its structure too.

What is the structure of an ITR-3 Form?

ITR-3 is broadly divided into the following sections:

Part A
Schedules
Part B
Verification

Let us now elaborate on each of these sections to assess ITR-3 meaning better:

Part A

Part A-GEN: Contains general information and the nature of a business
Part A- Manufacturing account: Presents a manufacturing account for a given financial year
Part A- Trading account: It has a trading account for a given financial year
Part A-P&L: Reveals the profits and losses for a given financial year
Part A-BS: It presents the balance sheet as of the year-end for the proprietary business
Part A-OI: This part includes other information. However, it is optional in a case that is not liable for audit u/s 44AB
Part A-QD: It contains quantitative details, which is also optional in a case that is not liable for audit u/s 44AB

Schedules

Schedule S: Calculates income falling under the ‘Salaries.’
Schedule BP: It computes a taxpayer’s income from a profession or business.
Schedule HP: This section calculates one’s income under ‘Income from House Property.’
Schedule DPM: Determines depreciation on plant and machinery as per the Income Tax Act.
Schedule DOA: It evaluates depreciation on other assets as per the Income Tax Act.
Schedule DCG: Calculation of capital gains on the depreciable assets’ sales.
Schedule CG: Computation of income under the ‘Capital Gains.’
Schedule DEP: Summary of depreciation on all the assets as per the Income Tax Act.
Schedule ESR: It includes deduction under Section 35, i.e., expenditure on scientific research.
Schedule 112A: This requires taxpayers to provide details of capital gains wherein Section 112A is applicable.
Schedule OS: Computes one’s income under the head of ‘Income from Other Sources.’
Schedule 115AD(1)(iii) provision: Applicable for non-residents, this schedule requires details of capital gains wherein Section 112A is applicable.
Schedule CYLA: It is a statement of income after setting off losses in the current FY.
Schedule BFLA: It is a statement of income after setting off unabsorbed losses brought forward from preceding financial years.
Schedule CYLA-BFLA: This presents a statement of income after setting off the current year’s losses as well as unabsorbed losses brought forward from earlier financial years.
Schedule CFL: It presents a statement of losses that shall be carried forward to subsequent financial years.
Schedule ICDS – This section reveals the effect of income computation disclosure standards (ICDS) on profits.
Schedule UD: Indicates unabsorbed depreciation.
Schedule 10AA: It calculates deductions under Section 10AA.
Schedule RA: Includes details of donations to institutions entitled for deduction under Section 35(2AA),35(1)(ii), 35(1)(iia), or 35(1)(iii).
Schedule VIA: Includes deductions from one’s total income under Chapter VI-A.
Schedule 80G: This section contains details of donations subject to deductions u/s 80G.
Schedule 80IC/ 80-IE: Calculates deductions u/s 80-IC or 80-IE.
Schedule 80IB: Computes of deductions u/s 80IB.
Schedule 80IA: It determines deductions u/s 80IA.
Schedule AMT: Determines a taxpayer’s alternate minimum tax payable u/s 115JC.
Schedule AMTC: It calculates one’s tax credit u/s 115JD.
Schedule SPI-SI-IF: Mentions specified persons (spouse, minor, etc.) or association of persons that are included in the income of an assessee.
Schedule EI: It presents a statement of income that is not included in one’s total income.
Schedule TPSA: Refers to secondary adjustment of taxes according to Section 92CE(2A).
Schedule FSI: This section contains the details of a taxpayer’s income earned outside India and applicable tax relaxations.
Schedule PTI: It indicates the income details received from business trusts or investment funds as per Section 115UA, 115UB of the Income Tax Act.
Schedule TR: It is a statement of tax relief claimed by an assessee under Section 90, 90A, or 91.
Schedule 5A: This contains information on the apportionment of income between spouses of an individual.
Schedule DI: It is a schedule of tax-saving deposits, payments, or investments that are subject to deduction or exemption.
Schedule FA: This presents details of a taxpayer’s income from sources outside India as well as foreign assets.
Schedule AL: It reveals the assets and liabilities at the end of a financial year. This is only applicable for taxpayers with a total income exceeding ₹50,00,000.
Schedule GST: This section holds information regarding the turnover or gross receipts reported for GST.

Part B

Part B-TI: It includes computation of a taxpayer’s total income.
Part B-TTI: This section computes the tax liability on one’s total income.

Verification

And lastly, the ITR-3 structure contains verification to authenticate the information furnished above.

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.

How can you file returns with an ITR-3 form?

ITR-3 filing online is compulsory. You can file an ITR-3 online by following these step-by-step instructions:

Step 1: The ITR-3 online filing process starts off with you visiting the official e-filing web portal of the Income Tax Department.
Step 2: Log in to this portal by entering your user ID (PAN), password, and a Captcha code. However, if you are a new user, you need to first register an account with the portal.
Step 3: Select the option ‘e-File’ on the menu and click on ‘Income Tax Return’ from the drop-down menu.
Step 4: This page auto-populates your PAN details. Now, go ahead and select ‘Assessment Year’ for which you are filing the ITR. Then, select ‘ITR Form Number’ and opt for ‘ITR-3’.
Step 5: Choose ‘Filing Type’ as ‘Original.’ If you wish to file a revised return against a previously filed original return, then select ‘Revised Return.’
Step 6: Find the option ‘Submission Mode’ and select ‘Prepare and Submit Online.’ Now, click on ‘Continue.’
Step 7: At this point, you are required to provide details of income, exemptions, deductions as well as investments. Then, add the details of tax payments by way of TDS, TCS, and/or advance tax.
Step 8: Remember to fill all data carefully and accurately. Additionally, click on ‘Save the Draft’ periodically to avoid losing any data.

Step 9: Select your preferred verification option from the following:

Instant e-verification
E-verification at a later date but within 120 days from the date of filing ITR-3
Verification through a duly signed ITR-V sent to CPC (Centralised Processing Centre) via post and within 120 days of filing a return

Step 10: Select ‘Preview and Submit’, and then ‘Submit.’

A point to note here is that it is mandatory to verify returns electronically under digital signature for accounts requiring auditing u/s 44AB.

Furthermore, if one is required to submit a report of audit under specific sections, he/she shall file such a report electronically before filing the ITR. These sections are 115JB, 115JC, 80-IA, 80-IB, 80-IC, 80-ID, 50B, 44AB, 44DA, or 10AA.

Additionally, when you select the option ‘I would like to e-verify,’ you can opt for instant e-verification in any one of the following manners:

Digitally sign the verification part
Authenticate the process by way of an electronic verification code (EVC)
Use your Aadhaar details to enter an OTP
Authenticating through a prevalidated bank or Demat account

This is the detailed procedure regarding how to file ITR-3 online.

ITR-3 filing offline is only possible for select taxpayers. This includes people aged 80 years or more and individuals with an income of less than ₹5 lakhs.

Also, these taxpayers should not have any tax refund requests if they want to file this form offline.

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.

And with that, we have reached the end of this article. We hope that this guide offers an in-depth understanding of ITR-3, so that you can file returns without much hassle.

Frequently Asked Questions

✓ Where can I download the ITR-3 form?

ITR-3 form is available for download on the official e-filing website of the Income Tax Department.

✓ Can I file ITR-3 online?

Taxpayers can only file ITR-3 online. One must furnish data electronically and then submit a verification of his/her through an ITR-V form.

✓ Why must you file an income tax return?

Taxpayers in India should file an ITR to report their income for a given financial year, availing tax deductions as well as claiming refunds on income tax.

✓ What is the last date to file ITR-3 for 2022-23?

The due date to file ITR-3 for FY 2022-23 is 31st July 2023.