ITR-3 Filing for FY 2024-25 (AY 2025-26): Step-by-Step Guide for Business & Professional Income Tax Return

File your ITR3 before the deadline with IndiaFilings experts!!

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What is ITR-3?

ITR-3 is an income tax return form in India designed for individuals and Hindu Undivided Families (HUFs) who earn income from a proprietary business or profession. It is applicable to those whose income includes profits and gains from business or profession, as well as other sources like salary, pension, house property, capital gains, or even foreign assets. The form is comprehensive and requires detailed reporting of income, deductions under sections like 80C and 80D, tax computation, and bank account details. Filing ITR-3 is mandatory for taxpayers subject to audit under Section 44AB and must be done electronically, with verification either through a digital signature or other prescribed methods.

Who is Eligible to File ITR-3 Returns?

• Income from House Property(Income Can be from more than one house property)
• Income from Salary and Pension
• Income from Capital Gains or loss on the sale of property (Both Short Term and Long Term)
• Income from Other Sources (including Winning from Lottery, bets on Race Horses, and other legal means of gambling)
• Income from Foreign Assets
• Agricultural Income more than Rs.5000

Who is not eligible to file ITR-3 returns?

Below, we have given several entities and individuals who are not eligible for ITR-3 filing:

• Entities other than individuals and Hindu Undivided Families (HUFs) are not eligible to file ITR-3. This includes:
• Companies
• Limited Liability Partnerships (LLPs)
• Trusts, associations, and other artificial juridical persons
• Individuals and HUFs who do not have:
• Income from a proprietary business or profession, or
• Income as a partner in a partnership firm

Income Tax Slab Details for ITR 3 Filing Process

Income Tax Slab under the New Tax Regime

Old Tax Regime for Individuals Below 60 Years & HUF

Old Tax Regime for Senior Citizens (60-80 Years)

Old Tax Regime for Super Senior Citizens (80+ Years)

Structure of the ITR-3 Form

The ITR-3 Form is structured into multiple sections, covering different aspects of an individual’s or HUF’s financial details related to business, profession, and other incomes. The form is divided into the following parts:

Part A: General and Financial Details

• Part A-GEN – General information and nature of business.
• Part A-BS – Balance Sheet as of March 31, of the proprietary business or profession.
• Part A-Manufacturing Account – Details of the manufacturing account for the financial year.
• Part A-Trading Account – Trading account details for the financial year.
• Part A-P&L – Profit and Loss statement for the financial year.
• Part A-OI – Other information (optional if not liable for audit under Section 44AB).
• Part A-QD – Quantitative details (optional if not liable for audit under Section 44AB).

Income Computation Schedules

• Schedule-S – Computation of income from salaries.
• Schedule-HP – Computation of income from house property.
• Schedule-BP – Computation of income from business or profession.
• Schedule-CG – Computation of income under capital gains
• Schedule-OS – Computation of income from other sources.

Depreciation and Deduction Schedules

• Schedule-DPM – Depreciation on plant and machinery.
• Schedule-DOA – Depreciation on other assets.
• Schedule-DEP – Summary of depreciation.
• Schedule-DCG – Deemed capital gains on depreciable assets.
• Schedule-ESR – Deduction under Section 35 for scientific research expenses.

Set-off and Carry Forward of Losses

• Schedule-CYLA – Set-off of current year losses.
• Schedule-BFLA – Set-off of unabsorbed losses from earlier years.
• Schedule-CFL – Statement of losses to be carried forward to future years.
• Schedule-UD – Statement of unabsorbed depreciation.

Deductions under Income Tax Act

• Schedule 10AA – Deduction under Section 10AA.
• Schedule-80G – Donations eligible for deduction under Section 80G.
• Schedule-RA – Donations to research associations eligible under Sections 35(1)(ii), 35(1)(iia), etc.
• Schedule-80IA, 80IB, 80IC/80-IE – Computation of deductions under various sections.
• Schedule-VI-A – Statement of deductions under Chapter VI-A.

Minimum Tax and Tax Credit Schedules

• Schedule-AMT – Computation of Alternate Minimum Tax (AMT) under Section 115JC.
• Schedule-AMTC – Computation of tax credit under Section 115JD.

Special Income, Partnership, and Foreign Income Schedules

• Schedule-SPI – Income from a spouse, minor child, or others to be clubbed.
• Schedule-SI – Income taxed at special rates.
• Schedule-IF – Details of partnership firms where the assessee is a partner.
• Schedule-EI – Statement of exempt income.
• Schedule-PTI – Pass-through income details from business trusts or investment funds.
• Schedule-TPSA – Secondary adjustment to transfer price under Section 92CE(2A).
• Schedule-FSI – Details of foreign income and tax relief.
• Schedule-TR – Tax relief under Sections 90, 90A, or 91.
• Schedule-FA – Foreign assets and foreign income disclosure.
• Schedule-5A – Income apportionment under the Portuguese Civil Code.
• Schedule-AL – Statement of assets and liabilities (for income exceeding ₹50 lakhs).
• Schedule-Tax Deferred on ESOP – Tax deferral details for ESOPs from eligible start-ups under Section 80-IAC.
• Schedule-GST – Turnover/gross receipts reported for GST.

Tax Computation and Verification

• Part B-TI – Computation of total income.
• Part B-TTI – Computation of tax liability on total income.
• Verification – Declaration by the taxpayer.

Below, we have given a sample ITR-3 form for your reference.

Documents required for Filing ITR-3 Form

Here is a list of essential documents required to file the ITR-3 return form,

• PAN Card: Mandatory for filing income tax returns and linked with bank accounts for refunds.
• Aadhaar Card: Required for verification purposes and can be used in place of PAN if linked.
• Form 16: For salary income, detailing gross salary and TDS deductions.
• Form 26AS: Annual tax statement showing all TDS deductions and tax credits.
• Business/Professional Income Details: Profit & Loss account, Balance Sheet, and details of income and expenses.
• Investment Proofs: Documents supporting claims under sections like 80C (e.g., Provident Fund contributions, ELSS investments) and 80D (e.g., health insurance premiums).
• Interest Certificates: From banks and post offices for interest income.
• Rent Agreements: If applicable.
• Interest Certificates for Home Loans: For claiming deductions.
• Municipal Tax Receipts: For property tax payments.
• Sale and Purchase Deeds: For property transactions.
• Capital Gains Statements: From brokers for equity and mutual fund transactions.
• Bank Statements: Reflecting income and expenses related to business or profession.
• Schedule FA: Details of foreign assets and income from abroad.
• Audit Reports (if applicable): Under Section 44AB for businesses with turnover exceeding ₹1 crore or professionals with receipts over ₹50 lakhs.
• ITR-V Form: For verification of the return, which must be signed and sent by post if not verified digitally.

Procedure for filing and verification of ITR3 Form

• Digitally signing the verification part
• Authenticating by way of an electronic verification code (EVC)
• Aadhaar OTP
• By forwarding duly signed paper Form ITR-V (Acknowledgment) by post to CPC at the following address after filing form ITR 3 for salaried person, 
  • Centralized Processing Centre
  • Income Tax Department
  • Bengaluru— 560500
  • Karnataka

This is how the filing of ITR 3 for business income process works and is verified through Form ITR-V.

Due Dates for ITR-3 filing for AY (2024-2025)

If you are an individual with business income and require an audit, the deadline to file ITR3 for the 2023-24 financial year (AY 2024-25) is October 31, 2024. Businesses not requiring an audit and individuals using ITR-1 (SAHAJ) and ITR-4 (SUGAM) have a deadline of July 31, 2024.

** The due dates for filing the ITR 3 form for the financial year 2024-25 (AY 2025-26) are yet to be updated.

Penalties for Late/Non-Filing of ITR-3 returns

Failing to file ITR-3 returns on time can lead to penalties under the Income Tax Act, 1961. Here are the key penalties:

• Late Filing Penalty under Section 234F:
• A maximum penalty of ₹5,000 applies if the return is filed after the due date but before December 31 of the assessment year.
• For small taxpayers with total income below ₹5 lakh, the penalty is limited to ₹1,000.
• Interest Penalty under Section 234A:
• An interest of 1% per month or part of a month is charged on the outstanding tax amount until it is paid.
• Consequences of Non-Filing:
• Non-filing can lead to additional penalties under other sections, such as Section 270A, which may impose a penalty of up to 50% of the total tax payable on under-reported income.
• Failure to file returns prevents the carry-forward of losses (except for house property losses) to future years.

Audit Requirements for ITR-3 Filing

The audit requirements for filing ITR-3 are governed by specific sections of the Income Tax Act, 1961. Here are the key points regarding audit requirements:

Audit under Section 44AB:

• Mandatory Audit: An audit is required if the total sales, turnover, or gross receipts of the business exceed ₹1 crore in any previous year. Additionally, if the total gross receipts of a profession exceed ₹50 lakhs, an audit is also mandatory.
• Profit and Loss Ratio: If the profit and loss account shows a profit of less than 6% of the turnover, an audit is required, regardless of the turnover amount.

Audit under Section 92E:

• International Transactions: An audit is necessary if the taxpayer has entered into international transactions or specified domestic transactions during the previous year.

Audit Report Filing:

• The audit report must be filed in Form 3CA-3CD or Form 3CB-3CD, depending on the type of audit required. This report must be submitted to the e-filing portal.

ITR 3 Form Download Process

Follow these steps for ITR 3 download:

• Visit the Income Tax Department Portal: Open the official Income Tax e-Filing website.
• Navigate to 'Downloads': Click on the "Downloads" tab available on the homepage.
• Select ITR 3: Choose the appropriate Assessment Year and click on "ITR-3" under the "Forms (ITR)" section for ITR 3 form download.
• Choose the Format: Format options for ITR 3 download are Excel, Java Utility, or JSON are available, based on your filing method.
• Install Pre-requisites: Ensure you have the necessary utilities (like Java or Excel) installed to open and complete the ITR 3 download.

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Other ITR-related articles

• ITR-1 return filing
• ITR-2 return filing
• ITR-4 return filing
• ITR-5 return filing
• ITR-6 return filing
• ITR-7 return filing

FAQs

1. Who has to file ITR-3?

Individuals and Hindu Undivided Families (HUFs) with income from business or profession must file ITR-3.

2. Who is eligible to file ITR-3?

Eligibility includes individuals with proprietary business, professionals, and those earning from house property, salary, or partnership firms.

3. Is it mandatory to file ITR-3?

Yes, it is mandatory for those who meet the eligibility criteria to file ITR-3 to comply with tax laws.

4. Should I file ITR-1 or ITR-3?

File ITR-1 if your income is from salary, pension, or interest. Use ITR-3 if you have business or professional income.

5. Who should file ITR 2 and 3?

ITR-2 is for individuals with capital gains or income from foreign assets. ITR-3 is for those with business or professional income.

6. What is the difference between ITR 1 and ITR-3?

ITR-1 is for salaried individuals, while ITR-3 is for those with business or professional income.

7. Is ITR 3 or ITR 4 for freelancer?

Freelancers with business income should file ITR-3. ITR-4 is for those under presumptive taxation schemes.

8. Can 44AD file ITR-3?

No, those under Section 44AD should file ITR-4, as it is for presumptive taxation.

9. Can we file ITR-3 without a CA?

Yes, you can file ITR-3 without a CA by using online platforms or doing it yourself.

10. Can I file previous year ITR now?

Yes, you can file a belated return for the previous year, but penalties may apply.

11. Can ITR 3 be filed without a balance sheet?

Generally, a balance sheet is required for businesses. However, for ITR-3, you must provide financial details, but the form itself does not require attaching a balance sheet.

12. What is the benefit of ITR-3?

Benefits include compliance with tax laws, facilitating loan approvals, and maintaining a formal income record.

13. What is exempt income in ITR-3?

Exempt income includes certain allowances and deductions, which are detailed in the Income Tax Act.

14. Where to show interest on housing loan in ITR-3?

Interest on a housing loan is typically claimed under deductions in the relevant schedule of ITR-3.

15. What is the schedule 3 of ITR?

Schedule 3 in ITR forms generally pertains to deductions under Chapter VIA, but specifics can vary by form type.

16. What is the limit of ITR 3 exemption?

There is no specific exemption limit for ITR-3; exemptions depend on the Income Tax Act provisions.

17. What is the last date to file ITR-3?

The due date for non-audit cases is July 31, and for audit cases, it is October 31.

18. What is the processing time for ITR-3?

Processing time varies but typically takes a few weeks to a few months after verification.

19. How much income is tax-free?

The tax-free income limit varies based on age and other factors, typically up to ₹2.5 lakh for most individuals.

20. Can we claim unclaimed TDS of previous year in the current year?

Yes, you can claim unclaimed TDS by filing a revised return for the previous year or by adjusting it in the current year's return

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