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business tax Filing

Bussiness Tax Filing

​ITR-3 is an income tax return form that is filed by individuals and Hindu Undivided Families (HUFs) who have income from profits or gains from business or profession. This form requires taxpayers to provide details of their income, deductions, and tax payments, and is used to calculate their tax liability for the year.

ITR 3 Form Filing

ITR 3 is a form that individuals and Hindu Undivided Families (HUFs) having income from profits and gains from business or profession can use to file their income tax returns in India. The form requires the taxpayers to provide details of their income, deductions, and tax liability for the financial year. Fulfilling ITR 3 before the due date is essential to avoid penalties and interest on any unpaid tax. Taxpayers can file their returns online through the income tax department's e-filing website or offline by submitting a physical copy at the designated income tax office.

Eligibility for filing ITR 3 Form

If you are an individual or a Hindu Undivided Family (HUF) and have income from profits and gains from business or profession, you are eligible to file ITR 3 form. Here are some of the specific situations where you may need to file ITR 3:

  • Business Income: If you are a self-employed professional, a freelancer, or a sole proprietor and earn income from any business or profession, you must file ITR 3.

  • Capital Gains: If you have earned capital gains from selling any property or investments like shares, mutual funds, or bonds, you need to file ITR 3.

  • Income from Partnership Firm: If you are a partner in a partnership firm, and your share of the revenue from the firm is taxable, you need to file ITR 3.

  • Foreign Assets: If you have any foreign assets, including bank accounts, investments, or property, you must file ITR 3, even if you have no taxable income.

  • Income from Renting Property: If you own and earn rental income from any property, you need to file ITR 3.

  • Carry Forward of Losses: If you have any losses from business or profession, capital gains, or house property in the current year, which you want to carry forward for set-off against future profits, you must file ITR 3.

  • Income from Other Sources: If you have any other sources of income, like interest on fixed deposits, recurring deposits, or savings bank accounts, you need to file ITR 3.

Who is not eligible to file ITR 3 Form?

In case if the individual or the Hindu Undivided Family is functioning as a partner of the partnership firm that is carrying out business or profession then he cannot file form ITR 3 as he will be eligible to file Form ITR 2.

Structure of Form ITR 3

ITR-3 is divided into:

Part A includes-

  • Part A-GEN: General information and Nature of Business

  • Part A-BS: Balance Sheet as of March 31, 2020, of the Proprietary Business or Profession

  • Part A- Manufacturing Account: Manufacturing Account for the financial year 2019-20

  • Part A- Trading Account: Trading Account for the financial year 2019-20

  • Part A-P&L: Profit and Loss for the Financial Year 2019-20

  • Part A-OI: Other Information (optional in a case not liable for audit under Section 44AB)

  • Part A-QD: Quantitative Details (optional in a case not liable for audit under Section 44AB)

Schedules include:

  • Schedule-S: Computation of income under the head Salaries.

  • Schedule-HP: Computation of income under the head Income from House Property

  • Schedule BP: Computation of income from business or profession

  • Schedule-DPM: Computation of depreciation on plant and machinery under the Income-tax Act

  • Schedule DOA: Computation of depreciation on other assets under the Income-tax Act

  • Schedule DEP: Summary of depreciation on all the assets under the Income-tax Act

  • Schedule DCG: Computation of deemed capital gains on the sale of depreciable assets

  • Schedule ESR: Deduction under section 35 (expenditure on scientific research)

  • Schedule-CG: Computation of income under the head Capital gains.

  • Schedule 112A: Details of Capital Gains where section 112A is applicable

  • Schedule 115AD(1)(iii)Provision: For Non-Residents Details of Capital Gains where section 112A is applicable

  • Schedule-OS: Computation of income under the head Income from other sources.

  • Schedule-CYLA-BFLA: Statement of income after set off of current year’s losses and Statement of income after set off of unabsorbed loss brought forward from earlier years.

  • Schedule-CYLA: Statement of income after set off of current year’s losses

  • Schedule BFLA: Statement of income after set off of unabsorbed loss brought forward from earlier years.

  • Schedule CFL: Statement of losses to be carried forward to future years.

  • Schedule- UD: Statement of unabsorbed depreciation.

  • Schedule ICDS: Effect of Income Computation Disclosure Standards on Profit

  • Schedule- 10AA: Computation of deduction under section 10AA.

  • Schedule 80G: Statement of donations entitled for deduction under section 80G.

  • Schedule RA: Statement of donations to research associations etc. entitled for deduction under section 35(1)(ii) or 35(1)(iiA) or 35(1)(iii) or 35(2AA)

  • Schedule- 80IA: Computation of deduction under section 80IA.

  • Schedule- 80IB: Computation of deduction under section 80IB.

  • Schedule- 80IC/ 80-IE: Computation of deduction under section 80IC/ 80-IE.

  • Schedule VIA: Statement of deductions (from total income) under Chapter VIA.

  • Schedule SPI-SI-IF: Income of specified persons(spouse, minor, etc) includable in the income of the assessee, Income chargeable at special rates, info partnership firms in which assessee is a partner.

  • Schedule AMT: Computation of Alternate Minimum Tax Payable under Section 115JC.

  • Schedule AMTC: Computation of tax credit under section 115JD.

  • Schedule SPI: Statement of income arising to spouse/ minor child/ son's wife or any other person or association of persons to be included in the income of the assessee in Schedules-HP, BP, CG, and OS.

  • Schedule SI: Statement of income which is chargeable to tax at special rates.

  • Schedule-IF: Information regarding partnership firms in which the assessee is a partner.

  • Schedule EI: Statement of Income not included in total income (exempt incomes).

  • Schedule PTI: Pass-through income details from a business trust or investment fund as per section 115UA, 115UB.

  • Schedule TPSA: Secondary adjustment to transfer price as per section 92CE(2A).

  • Schedule FSI: Details of income from outside India and tax relief.

  • Schedule TR: Statement of tax relief claimed under section 90 or section 90A or section 91.

  • Schedule FA: Statement of Foreign Assets and income from any source outside India.

  • Schedule 5A: Information regarding apportionment of income between spouses governed by Portuguese Civil Code.

  • Schedule AL: Asset and Liability at the end of the year(applicable where the total income exceeds Rs 50 lakhs).

  • Schedule DI: Schedule of tax-saving investments or deposits or payments to claim deduction or exemption in the extended period from 1 April 2020 until 30 June 2020.

  • Schedule GST: Information regarding turnover/ gross receipt reported for GST.

  • Part B-TI: Computation of Total Income.

  • Part B-TTI: Computation of tax liability on total.

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Instructions to be followed while filing ITR 3 Form

ITR 3 is a necessary form for individuals and Hindu Undivided Families (HUFs) with income from profits and gains from business or profession. Here are some instructions to follow while filing ITR 3 form:

  • Verify Personal Information: Check and verify your personal information, like name, address, email, and phone number, before filing the form.

  • Collect Documents: Collect all relevant documents like Form 16, bank statements, balance sheets, profit and loss accounts, and other supporting documents for accurate income reporting.

  • Choose Correct Assessment Year: Choose the correct assessment year for filing the return. In the assessment year, you point to the recovery following the financial year.

  • Report All Income Sources: Report all your income sources, including salary, business income, capital gains, and other income sources.

  • Report Deductions: Report all deductions like sections 80C, 80D, 80G, and others to reduce taxable income and claim tax benefits.

  • Fill in Accurate Tax Liability: Fill in the accurate tax liability based on the income and deductions reported in the form. Verify the calculation and cross-check it with the tax payable amount mentioned in Form 26AS.

  • Verify Bank Account Details: Verify and enter your bank account details accurately to enable the income tax department to process your refund, if any, directly to your account.

  • E-Verify Return: After filing the return, e-verify it using methods like Aadhaar OTP, net banking, or sending a physical ITR-V to the CPC Bangalore.

  • File on Time: Ensure that you file your ITR 3 form before the due date to avoid penalties and interest on unpaid tax.

Major Changes made to the ITR 3 Form for the AY 2021-2022

The Changes that are incorporated in the ITR 3 Form are:

The recipient of the dividend will be liable to pay taxes from 1st April 2020. Relevant Sections such as Section 10(34), 10(35), 115-O are amended in the Act and accordingly, suitable changes are incorporated in the ITR Form.

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In case if the dividend is not received the taxpayers are given relief payment of advance tax liability. So the ITR Form allows the taxpayers to enter the details of the dividend income every quarter so that the interest under Section 234C can be computed for default in the payment of advance tax.

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With the amendments in the Finance Bill 2021 in section 44AB the threshold limit of the tax audit is increased from Rs. 5 crores to Rs.10 crores if the cash payments are less than 5 percent of the total amount of sales or turnover. The corresponding amendment is incorporated in the ITR Form.

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The Schedule DI inserted for the AY 2020-2021 to claim the deduction for the investments or expenditures that are made in the extended period ( 1st April 2020 to June 30th, 2020) is removed in the ITR Form for the AY 2021- 2022.

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Schedule 112A and Schedule 115AD (1) (b) (iii) proviso are changed with an additional column to mention the details of the nature of the securities that are transferred for the resultant capital gains tax under the Section 112A or Section 115 AD (1) (b) ( iii) of the Income Tax Act. The schedules are also modified so that the taxpayers can provide information for the sale price, fair market value, and the cost of acquisition of the security.

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The Part A of the ITR 3 Form has general information that is modified where the taxpayer is given to choose the best alternative option of the new tax regime under Section 115 BAC.

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The assessee that earns income from business or profession and opting for an alternative tax regime is needed to mention the date of filing the Form 10-IE and the acknowledgment number.

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