ITR-3 Return Filing

itr-3-form

ITR-3 Return Filing

  • Income Tax Return Filing

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Documents required For ITR-3 Return Filing

Form 16 / Salary Slips (in case of income from salary)
Rental Agreement
Proof of Rental Income

ITR 3 Form:

ITR 3 is an income tax return form that is used to file income tax returns by individuals and Hindu Undivided Families (HUFs) who have income from proprietary business or profession. It is also used by persons who are carrying on a partnership business but not opting for the presumptive taxation scheme under Section 44AD/ADA of the Income Tax Act.

The ITR 3 form requires detailed information about the income earned from business or profession, including balance sheet details, profit and loss statements, and other financial statements. It is mandatory to file the ITR 3 form if the individual or HUF has income from a proprietary business or profession.

Who can file ITR 3?   

ITR 3 is an income tax return form that is applicable for individuals and Hindu Undivided Families (HUFs) who have income from proprietary businesses or professions. This form is not meant for individuals who are salaried employees or have income from any other source.

The following individuals and HUFs are eligible to file ITR 3:

  1. Sole proprietors: Individuals who are the sole owners of a business or profession can file ITR 3. For example, freelancers, doctors, lawyers, architects, etc.

  2. Partnership firms: Partnerships are considered separate entities for tax purposes, and they are required to file ITR 3 to report their income.

  3. LLPs: Limited Liability Partnerships (LLPs) are also separate entities, and they are required to file ITR 3 to report their income.

  4. Co-operative societies: Co-operative societies that have income from business or profession are eligible to file ITR 3.

It’s important to note that individuals and HUFs with income from salary, house property, or other sources should not use ITR 3. They should use ITR 1 (SAHAJ) or ITR 2, depending on their income sources.

Overall, ITR 3 is for individuals and HUFs who have income from proprietary businesses or professions, partnerships, LLPs, and co-operative societies.

What are the sources of income that can be reported in ITR 3?

ITR 3 form is applicable to individuals and Hindu Undivided Families (HUFs) who have income from the following sources:

  1. Income from business or profession
  2. Income from salary or pension
  3. Income from house property
  4. Income from capital gains
  5. Income from other sources

It should be noted that ITR 3 is not applicable for individuals who have income from salary or pension, house property, or capital gains, and do not have income from business or profession. In such cases, ITR 1 or ITR 2 would be applicable depending on the specific sources of income.

What documents are required to file ITR 3?

The documents required to file ITR 3 are:

  1. PAN Card: PAN card is mandatory for all taxpayers to file their income tax returns.

  2. Aadhaar Card: It is also mandatory to link Aadhaar with PAN to file ITR.

  3. Form 16: This form is issued by the employer and contains the details of the employee’s salary, tax deductions, and TDS.

  4. Form 26AS: It is a tax credit statement that contains the details of tax deducted at source (TDS) on your income, advance tax, and self-assessment tax payments.

  5. Bank Statements: Bank statements for the financial year are required to calculate the interest income earned from savings account, fixed deposits, and recurring deposits.

  6. Investments Proofs: Documents related to investments made during the financial year such as mutual fund statements, share transaction statements, and other investment proofs.

  7. Rent Agreement: If the taxpayer is claiming House Rent Allowance (HRA) deduction, then rent receipts or rent agreement is required.

  8. Capital Gains: Details of capital gains on the sale of property, shares, mutual funds, or any other asset must be reported in the ITR.

  9. Business or Profession: If the taxpayer has income from business or profession, they should maintain all books of accounts and supporting documents such as balance sheets, profit and loss statements, and audit reports.

  10. Other Income: Any other income such as interest on savings account, gifts, etc., should be reported in the ITR and supporting documents for such income should also be maintained.

How to file ITR 3 Form?

There are two ways to file the ITR 3 Form – offline and online.

Offline: You can furnish the returns in a paper format using a bar-coded return.

Online: You can electronically file the returns using a Digital Signature Certificate after submitting the verification of the return. When filing returns online, the assessee must have two print copies of the ITR 3 Form.

Electronic returns must be filed when the assessee is a resident of India or if the signing authority is located outside India. In addition, assessees with more than Rs.5 lakh total income are required to file returns electronically.

Assessees claiming relief under Section 90, 90A, 91 for whom the schedule FSI and Schedule TR that applies must also file returns electronically.

ITR-3 Return Filing FAQ’s

  1. What documents are necessary for balance ITR 3 filing?

The list of documents necessary for balance ITR 3 filing are: Balance sheet and profit and loss statement, bank account statement, and the passbook.

  1. Is ITR 3 applicable for all the assesses that have business income? 

No, ITR 3 will be applicable for all the individuals or the HUF that have business a professional income not chargeable under the presumptive taxation scheme.

  1. Can we file an ITR 3 without an audit? 

Yes, ITR 3 filing without auditing and paying the taxes on the intraday turnover.

  1. What is the difference between ITR 3 and ITR 4? 

Income Tax Return Form 3 is for all the individuals and HUFs with income under the head profits or gains from business or profession and who are not eligible to file ITR 4 should file ITR 3.

  1. Is it possible to shift from ITR 3 to ITR 4?

Switching from ITR 3 to ITR 4 is not possible unless the sales are declared in 44AD. Also, if the individual gets income from two residential houses he needs to choose ITR3.

  1. Is ITR 3 applicable for individuals under the presumptive taxation scheme?

No, in case the individual has opted for a presumptive taxation scheme ITR 3 is not applicable for him. He can file ITR4 instead.