Filing a tax return can be hectic, especially for those with diverse income sources like capital gains or cryptocurrency holdings. As the new financial year dawns, so does the need to file your income tax return. This process can be daunting for many, filled with unfamiliar forms and cryptic terminology.
Think of ITR 3 as the all-encompassing form for individuals and Hindu Undivided Families (HUFs) with income from business or professions. This includes professionals like doctors, lawyers, crypto miners and stakers, and crypto business owners. Even if you have income from other sources like salary, capital gains, or house property, you can still utilise ITR 3 to report it all in one place.
This blog series is designed to be your one-stop shop for navigating the intricacies of Form 3 of the income tax return. So, read along as we dive deep into the nitty gritty and understand everything in detail.
Understanding The Layout Of ITR 3
Let’s now go through the structure of the ITR-3 form so that you know what information to fill in and where. In general, the ITR-3 form is categorised into four different sections:
- Part A
- Schedules
- Part B
- Verification
Let’s delve into these sections to understand the ITR-3 format better.
Part A
Here are the components that are to be included in Part A of the ITR 3 Form:
Part A-GEN (General Information):
This section outlines fundamental information about the business and its operations.
Part A- Manufacturing Account:
This part presents a detailed account of manufacturing activities undertaken by the business during a particular financial year.
Part A- Trading Account:
The trading account within this section illustrates the trading activities of the business for the specified financial period.
Part A-P&L (Profit and Loss Statement):
This pivotal segment unveils the profits and losses incurred by the business throughout the financial year, serving as a critical indicator of its economic performance.
Part A-BS (Balance Sheet):
The balance sheet, a vital component, provides a snapshot of the business’s financial position as of the year-end, offering insights into its financial health for proprietary companies.
Part A-OI (Other Information):
This includes supplementary information relevant to the business. However, its inclusion is optional for cases not subject to audit under Section 44AB.
Part A-QD (Quantitative Details):
This section provides quantitative data detailing various aspects of the business operations. Like other optional sections, its inclusion depends on the audit status under section 44AB.
Schedules Of ITR 3
The schedules included in ITR 3 are listed below for your reference:
Schedule S:
This schedule calculates income from ‘Salaries,’ determining taxable earnings from employment sources.
Schedule BP:
Computes income from profession or business activities, aiding in tax assessment for self-employed individuals.
Schedule HP:
Determines income from House Property, assessing earnings from rental or owned properties for taxation purposes.
Schedule DPM:
Assesses depreciation on plant and machinery according to Income Tax Act guidelines, which impacts taxable income calculations.
Schedule DOA:
Summarise depreciation on other assets according to Income Tax Act regulations, influencing taxable income determination.
Schedule DCG:
It contains details of capital gains from depreciable asset sales, which affect tax liability based on profit from asset disposition.
Schedule CG:
This schedule denotes income from Capital Gains, determining tax obligation from profits gained through asset sales.
SSchedule DEP:
Summarises depreciation on all assets as per the Income Tax Act, influencing taxable income for asset holders.
Schedule ESR:
It includes deductions under Section 35 for scientific research expenditure, reducing taxable income.
Schedule 112A:
It requires details of capital gains subject to Section 112A, impacting tax liability on applicable gains.
Schedule OS:
Computes income from Other Sources, accounting for earnings beyond salaries, business, or property.
Schedule 115AD(1)(iii):
This is an obligation for non-residents, detailing capital gains under Section 112A for tax assessment.
Schedule VDA:
Reports income from virtual digital asset transfers for tax assessment purposes.
Schedule CYLA:
It provides an income statement after setting off losses in the current financial year, which affects taxable income.
Schedule BFLA:
It presents an income statement after setting off carried forward losses from previous financial years, which impacts tax liability.
Schedule CFL:
Presents a statement of losses carried forward to subsequent financial years, influencing future tax obligations.
Schedule ICDS:
Reveals the impact of Income Computation Disclosure Standards on profits for tax assessment.
Schedule UD:
Indicates unabsorbed depreciation, affecting taxable income calculation for asset holders.
Schedule 10AA:
Calculates deductions under Section 10AA, impacting tax liability for eligible entities.
Schedule RA:
Includes details of deductible donations under relevant sections affecting taxable income.
Schedule VIA:
Lists deductions under Chapter VI-A, reducing total taxable income.
Schedule 80G:
Contains details of donations eligible for deductions under Section 80G, impacting taxable income.
Schedule 80IC/80-IE:
This schedule calculates deductions under Sections 80-IC or 80-IE, reducing taxable income.
Schedule 80IB:
Computes deducAtions under Section 80IB, reducing taxable income for eligible entities.
Schedule 80IA:
Determines deductions under Section 80IA, impacting taxable income.
Schedule AMT:
This section determines alternate minimum tax payable under Section 115JC, affecting tax liability.
Schedule AMTC:
This part calculates tax credit under Section 115JD, impacting overall tax liability.
Schedule SPI-SI-IF:
This section includes provisions for specifying individuals such as a spouse, minor children, or any association of persons whose income is included in that of the assessee.
Schedule EI:
This schedule presents income not included in total revenue, affecting tax liability.
Schedule TPSA:
This part refers to the secondary adjustment of taxes under Section 92CE(2A), impacting tax obligations.
Schedule FSI:
This schedule details income earned outside India and applicable tax relaxations affecting tax liability.
Schedule PTI:
Indicates income from business trusts or investment funds under relevant sections, affecting tax assessment.
Schedule TR:
This section provides a statement of tax relief claimed under relevant sections, impacting overall tax liability.
Schedule 5A:
This schedule contains information on income apportionment between spouses, affecting tax assessment for couples.
Schedule DI:
Lists tax-saving deposits, payments, or investments eligible for deduction, impacting taxable income.
Schedule FA:
This schedule presents details of income from foreign sources and assets influencing tax assessment.
Schedule AL:
Reveals assets and liabilities for taxpayers with income exceeding INR 50,00,000, affecting tax assessment.
Schedule GST:
Information on turnover or gross receipts reported for GST impacts tax obligations.
Schedule Tax Deferred on ESOP:
This section provides information on tax-deferred income from ESOPs under Section 17(2)(vi) for eligible startups under Section 80-IAC.
Part B
Here are the components of Part B of the ITR-3 form:
Part B-TI:
Comprises calculating taxpayers’ total income, incorporating various sources and deductions for comprehensive assessment.
Part B-TTI:
Determines the tax liability based on the computed total income, ensuring accurate assessment and compliance with tax regulations.
Verification
Lastly, the ITR-3 structure includes a verification section to authenticate the information provided in the tax return.
How To File ITR 3 Online?
Filing Income Tax Return 3 (ITR-3) online is a mandatory process, and here’s a guide to help you navigate through it smoothly:
Step 1: Visit the official e-filing web portal of the Income Tax Department.
Step 2: Login by entering your user ID, Permanent Account Number (PAN), password, and CAPTCHA code. If you are a new taxpayer, create an account first.
Step 3: Select ‘e-File’ from the menu and choose ‘Income Tax Return.
Step 4: Your PAN details will be auto-populated. Proceed by selecting the Assessment Year and opting for ‘ITR-3.’
Step 5: Depending on your situation, choose ‘Filing Type‘ as either ‘Original’ or ‘Revised Return. ‘
Step 6: Under ‘Submission Mode,’ select ‘Prepare and Submit Online’ and then click ‘Continue.’
Step 7: Provide details of your income, exemptions, deductions, and investments. Also, include tax payments like TDS, TCS, and advance tax.
Step 8: Ensure all data is filled accurately and periodically save the draft to prevent loss.
Step 9: Select your preferred verification option. There are three ways to verify your ITR-3 form:
Instant e-verification through the following methods:
Digitally sign the verification part
Authenticate with an electronic verification code (EVC)
Use Aadhaar details to receive an OTP
Authenticate through a prevalidated bank or Demat account
E-verification within 30 days from the date of filing.
Verification via a duly signed ITR-V sent to CPC Bengaluru within 30 days from the date of ITR-3 filing.
Step 10: Click ‘Preview and Submit,’ then ‘Submit.’
Note that electronic verification under digital signature is mandatory for audited accounts under section 44AB. If an audit report is required under specific sections, file it electronically before ITR submission (sections 115JB, 115JC, 80-IA, 80-IB, 80-IC, 80-ID, 50B, 44AB, 44DA, or 10AA).
Conclusion
With the final click of submitting your ITR 3 online, you’ve successfully navigated another tax season. We hope this comprehensive guide has equipped you with the knowledge and steps to confidently e-file your return.
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