ITR-3 Form – What is ITR3 & How to file ITR-3

 

ITR-3 Form – What is ITR3 & How to file ITR-3

 

 Update

Union Budget 2021 Outcome:

The threshold limit of tax audit for businesses is extended from Rs. 5 crores to Rs. 10 crore w.e.f. A.Y. 2021-22 where digital transactions are not less than 95 per cent of total transactions.

What is the ITR-3 Form?

The ITR 3 is applicable for individual and HUF who have income from profits and gains from business or profession. The persons having income from following sources are eligible to file ITR 3 :

aCarrying on a business or profession (both tax audit and non-audit cases)

The return may include income from House property, Salary/Pension, capital gains and Income from other sources

Note:

The due date for filing ITR-3 in case of a taxpayer subject to tax audit has been extended to 15th February 2021 from 31 January 2021 for the AY 2020-21 (FY 2019-20). The due date for furnishing tax audit report is extended to 15th January 2021 from 31st December 2020.

The threshold limit of Rs 1 crore for a tax audit is proposed to be increased to Rs 5 crore with effect from AY 2020-21 (FY 2019-20) if the taxpayer’s cash receipts are limited to 5% of the gross receipts or turnover, and if the taxpayer’s cash payments are limited to 5% of the aggregate payments.

What is the structure of the ITR-3 Form for AY 2021-22?

ITR-3 is divided into:

Part A

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 2020-21

Part A- Trading Account: Trading Account for the financial year 2020-21

Part A-P&L: Profit and Loss for the financial Year 2020-21

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)

After this, there are the following schedules.

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)(b)(iii)Proviso: 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 VI-A: Statement of deductions (from total income) under Chapter VIA.

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 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 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 income.

Verification

What is the structure of the ITR-3 Form for AY 2020-21?

ITR-3 is divided into:

Part A

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 2020-21

Part A- Trading Account: Trading Account for the financial year 2020-21

Part A-P&L: Profit and Loss for the financial Year 2020-21

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)

After this, there are the following schedules.

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)(b)(iii)Proviso: 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 VI-A: Statement of deductions (from total income) under Chapter VIA.

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 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 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 income.

Verification

How do I file my ITR-3 Form?

A taxpayer has to compulsorily file ITR-3 online. The ITR-3 can be filed Online/Electronically:

By furnishing the return electronically under digital signature

By transmitting the data electronically and then submitting the verification of the return in Form ITR-V

If you submit your ITR-3 Form electronically under digital signature, the acknowledgment will be sent to your registered email id. You can also choose to download it manually from the income tax website. You are then required to sign it and send it to the Income Tax Department’s CPC office in Bangalore within 120 days of e-filing. Remember that ITR-3 is an annexure-less form i.e. you do not have to attach any documents when you send it.

How do you send your ITR-V to the CPC Office?

We have a guide to help you print and send your ITR-V to the CPC office.

Major Changes in ITR form 3 for AY 2021-22

Below changes are incorporated in the ITR-3 form of the FY 2020-21:

Since 1st April 2020, the recipient of the dividend will be liable to pay tax. Relevant sections such as section 10(34), 10(35), 115-O, etc., have been amended in the Act. Accordingly, suitable changes are incorporated in the ITR form.

The taxpayers are given relief from payment of advance tax liability if the dividend is not received. Hence, the ITR form allows the taxpayers to enter quarterly details of dividend income so that interest under section 234C can be computed for default in payment of advance tax.

As per amendment by the Finance Bill 2021 in section 44AB, the threshold limit of tax audit is increased to Rs.10 crores from Rs.5 crores if the cash payments are less than 5 per cent of the total amount of sales or turnover. The corresponding amendment is incorporated in the ITR form.

The Schedule DI inserted for the AY 2020-21 to claim deductions for investments or expenditures made in the extended period (1st April 2020 to 30th June 2020) is removed in the ITR form of AY 2021-22.

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

Part-A General Information is modified where the taxpayer is given to choose the alternative option of new tax regime under section 115BAC.

The taxpayer having income from business or profession and opting for an alternative tax regime is required to mention the date of filing Form no.10-IE and its acknowledgement number.

Major Changes in ITR form 3 for AY 2020-21

The taxpayer should disclose

the amount of cash deposits above Rs 1 crore in the current accounts with a bank,

expenditure incurred above Rs 2 lakh on foreign travel

expenditure incurred above Rs 1 lakh on electricity.

In case an individual is a director in a company or holds unlisted equity investments, the ‘type of company’ should also be disclosed.

In case of short-term or long term capital gains from sale of land or building or both, the details of the buyer(s) i.e. name, PAN or Aadhaar, percentage share of ownership and address have to be given.

A separate schedule 112A for the calculation of the long-term capital gains on the sale of equity shares or units of a business trust which are liable to STT.

Under ‘income from other sources’, a taxpayer should provide the details of ‘any other income’.

The details of the deductions against ‘income from other sources’ should be provided.

The ‘Schedule VI-A’ for tax deductions is amended to include deduction under section 80EEA and section 80EEB.

In the case of a business trust or investment fund, the details of ‘capital gains’ income and ‘dividend’ income should be provided.

The details of tax on secondary adjustments to transfer price under section 92CE(2A).

The details of tax deduction claims for investments or payments or expenditure made between 1 April 2020 until 30 June 2020.

While providing the details of bank accounts, if a taxpayer selects multiple bank accounts for credit of refund, the income tax department may choose any account for processing the refund.

Major Changes in ITR form 3 for AY 2019-20

The field for residential status has been categorised into “Residential status in India (for Individuals)” and “Residential status in India (for HUF)”.In case of “Residential status in India (for Individuals)”, the 3 sub-categories – “Resident”, “Resident but not Ordinarily Resident’ and “Non-resident”, have been mentioned requiring the individual to tick the specific category to which they belong. Taxpayers have to mention the number of days of residency in India.Further, in the case of non-resident, an individual is also required to specify the jurisdiction(s) of residence during the previous year providing the Taxpayer Identification Number(s) of the relevant jurisdictions. Also, in case the individual is a Citizen of India or a Person of Indian Origin (PIO), the duration of stay in India during the previous year (in days) and the duration of stay in India during the 4 preceding years (in days).

In a case where the ITR is filed by a representative assessee, additional information about the capacity of the representative assessee (by way of choice in a drop down provided) has to be given.

An individual taxpayer has to give information about the Directorship held in any company during the previous year, also mentioning whether the shares are listed or unlisted.

An individual taxpayer has to give information about the investment in unlisted equity shares and the movement in such investment throughout the year.

An individual taxpayer who is a partner in a Firm has to disclose details of name and PAN of the Partnership firm.

Partners of partnership firms as against ITR 2 will have to file their returns in ITR 3.

Details of computation of presumptive income under section 44AD, 44ADA and 44AE.

Under Part A-OI, disclose amount of expenditure disallowed u/s 14A.

The break-up of all exempt allowances and deductions under Schedule S – Details of income from salary.

In Schedule HP, under details of income from house property, the PAN of the tenant in case TDS credit is claimed.

In Schedule OS, under any other income chargeable at special rate, taxpayer has to provide the details for each income mentioned therein e.g., interest income, income from units etc.Also, Information has to be provided about accrual/ receipt of income from other sources e.g., winnings from lotteries, crossword puzzles, betting etc for the purpose of calculation of interest under section 234C.

In Schedule 80G, bifurcation of donation qualifying for deduction under section 80G into cash and other mode. Similar disclosure to be made under Schedule RA for donations made to research associations under section 35.

In Schedule VI-A, introduction of section 80TTB deduction for senior citizen.

In Schedule FA, below details, if held during the year:Foreign Depository Accounts (including beneficial interest) Foreign Custodial Accounts (including beneficial interest) Foreign Equity and Debt Interest (including beneficial interest) Foreign cash value insurance contract or Annuity Contract held (including beneficial interest)

In Schedule GST, Information regarding turnover / Gross receipt reported for GST

ITR 3 for AY 2018-19

ITR-3 is divided into:

Part A

Part A-GEN: General information and Nature of Business

Part A-BS: Balance Sheet as of March 31, 2017, of the Proprietary Business or Profession

Part A-P&L: Profit and Loss for the Financial Year 2016-17

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)

Part B: Outline of the total income and tax computation in respect of income chargeable total tax.

Verification

Tax Payments: Details of advance tax, TDS, self-assessment tax.

After this, there are the following schedules.

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

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- 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 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 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 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 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.

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)

What is the structure of the ITR-3 Form for AY 2018-19?

Quoting of Aadhaar Number

Now, it is mandatory to mention the Aadhaar number in the return of income or Aadhaar Enrolment ID if applied for.

Declaration of the value of assets and liabilities by Individuals/HUF earning above Rs 50 lakhs in Schedule ‘AL’

Taxpayers are required to disclose the value of assets and liabilities if their total income exceeds Rs. 50 lakhs and mention the cost of immovable property with details of address, jewellery, bullion, vehicles with details of movable assets, shares, bank and cash balance, etc.

Disclosure of unexplained income and Dividend Income

New fields have been inserted in schedule ‘OS’ to declare unexplained credit or investment and dividend received from domestic companies above Rs 10 lakhs. Such persons cannot opt for ITR 1 Sahaj.

Disclosure of GST related details

In the Profit and Loss schedule, the GST related details have to be disclosed.

Limitation on claim for depreciation

A limitation of maximum 40% is placed on depreciation in all depreciation related Schedules.

Partners filing of income tax return

Partners of partnership firms have to file returns in ITR 3 as against ITR 2

Option to select section 115H

In the general information tab, an option to select section 115H (who is a non-resident Indian in any previous year, becomes assessable as a resident in India in respect of the total income of any subsequent year) has been added.

Major Changes in ITR form 3 for AY 2018-19

In the general information tab, an option to select section 115H (who is a non-resident Indian in any previous year, becomes assessable as a resident in India in respect of the total income of any subsequent year) has been added.

In the Profit and Loss schedule, the GST related details have been added Limitation of maximum 40% depreciation in all depreciation related Schedules

Partners of partnership firms as against ITR 2 will have to file their returns in ITR 3.

How to fill out the verification document?

While filling up the data in the income tax return, a taxpayer should also fill up the verification. Please note that any person making a false statement in the return or in any of the accompanying schedules shall be liable to be prosecuted under section 277 of the Income-tax Act, 1961 and on conviction be punishable under that section with rigorous imprisonment and with fine.

Frequently Asked Questions

I am an individual who has income from business and have opted for presumptive taxation. ITR 3 is applicable for me ?

No, if you are opting for presumptive taxation of business or profession ITR3 is not applicable for you. ITR 4 will be applicable for you.

ITR-3 is applicable for all assessees having a business income?

No, ITR-3 will be applicable for Individuals or HUF having business and profession income not chargeable under presumptive taxation.