All You Need To Know About The ITR-3 Form

Find out the basic details of ITR-3, who is required to file it and which incomes can be reported in this ITR.

Regular taxpayers would know that there are seven Income Tax Returns (ITR) under the Income Tax Act. Which form you use depends on a variety of factors, including your income type and taxpayer category. 

One of these seven ITRs is ITR-3. In this article, we try to find out all about this ITR, including its applicability and features.

• ITR 3 is one of the seven ITRs you can use to file your annual return
• ITR 3 is one of the most inclusive forms with multiple income disclosures
• There have been a few new introductions in ITR 3 form
• Professional advice may be sought while filing this return, given its complexity

When and to Whom is ITR-3 Applicable?

• ITR-3 is meant for individuals and Hindu Undivided Families (HUF)
• They can report their income from profits and gains from business and profession. This includes professions like law, medicine, architecture, etc.
• Businesses and professions with or without tax audit applicability can file this return
• Rental income from a let-out or deemed to be let out property is also reported
• Salary and pension income can be reported in ITR-3
• Income from other sources like lottery, interest income, dividends, etc
• Capital gains from the sale of capital assets, including shares
• If you have a foreign asset or financial interest in a foreign entity, you must file ITR-3
• ITR-3 is also filed if your income from agriculture exceeds Rs 5,000
• Professionals opting for a presumptive income scheme can file ITR-3 but must disclose additional information
• Taxpayers with the newly taxed income from virtual digital assets must check their ITR applicability 

Who Cannot File ITR-3?

If you are an individual or HUF who is a partner of a partnership firm engaged in business or profession, you cannot file ITR-3. In your case, ITR-2 will be applicable.

Also Read: Strategies to Maximise Tax Refunds: Key Tips For Indian Income Tax Return (ITR)

A Snapshot of ITR-3

The ITR-3 form constitutes Part-A, a long line of schedules, and Part B.

Part A consists of general information, a balance sheet, a manufacturing account, a trading account, a profit-and-loss account, other information, and quantitative details. Part B consists of the computation of total income and tax liability on total income. 

Important Updates

Here are the key updates in ITR-3 that are applicable for the assessment year 2023-24 –

• The schedule VDA was introduced to report income from crypto and other virtual digital assets. All transactions with their date of sale and purchase must be reported

Also Read: Don’t Miss Out On These Income Tax Rules If You Have Crypto Gains

• A few questions are added for taxpayers who had opted out of the new tax regime in previous years
• Foreign institutional investors are now required to mention their SEBI registration number
• In the balance sheet, advances received from individuals must now be reported under “Advances” in the source of funds
• Turnover and income from intraday trading are to be reported in Trading Account

Also Read: Don’t File Your ITR Until You Read About The New Tax Regime

Conclusion

Filing the correct ITR is important, as is the disclosure of correct information. Do not hesitate to consult a financial advisor for timely and correct reporting of your annual income.

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Also Read: A Step-by-Step Guide To Filing Tax Returns Using The IT Department’s Excel Utilities