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.

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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.

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

ITR-3 is broadly divided into the following sections:

• Part A
• Schedules
• Part B
• Verification

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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

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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 VDA: Income from transfer of virtual digital assets
  
• 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 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.
• Schedule Tax deferred on ESOP:Information related to Tax deferred - relatable to income on perquisites referred in section 17(2)(vi) received from employer, being an eligible start-up referred to in section 80-IAC
  

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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.

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Verification

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

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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.

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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.

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• 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 30 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 30 days  of filing a return

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• 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.

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

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.

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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.