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ITR 3 form is now applicable to business professionals for filing their tax returns. Understand the changes made to the filing of ITR-3 and how to file it.

ITR 3 – Income Tax Filing For Business Professionals

Last Update Date : June 20, 2018

The only thing in life you can depend on is Change.  Accept that changes happen and the stress arising from changing from old methods to the newer ones, disappear.  Recently, the Income Tax Department renamed ITR Form 4 to ITR Form 3.  The filing of ITR 3 form, for business professionals, is applicable only for AY 2017-18.  If you had filed ITR-3 during FY 2015-16, then you will need to file ITR-2, from hereon.  The procedure to file ITR form 3 is not complex, once understood.

What is ITR 3 Form used for?

It is the form to be used by individuals or HUF’s deriving income from proprietary business or profession.  It is to be used from Assessment Year  2017-18 onwards by the mentioned groups to file their returns.

Who is eligible to file form ITR 3 for AY 2017-18?

It is mandatory for you to furnish the return electronically if you fall in any of the following categories:

  • The resident assessee has assets outside India or if, the signing authority is located outside India.
  • Assessees with total income exceeding Rs.5 lakhs
  • Assessees claiming relief under Section 90, 90A or 91 for whom Schedule FSI and Schedule TR are applicable

[ Not sure which ITR to File? Then read this detailed guide. ]

Who Does not Have to File ITR 3?

As, ITR-3 form is used for business returns, any individual filing his/her personal income tax return, ie. Salaried employee or filing using ITR 1 form, does not have to file ITR-3.

Difference Between ITR 3 & ITR 4?

ITR-3 form is simply the old ITR-4 of AY 2016-17 form, which will be  used from AY 2017-18.

Filing ITR 3 - Business Tax Return

How to file ITR Form 3?

You can file ITR-3 form either via offline method or online method.

Filing ITR-3 using Offline Method:

  • By furnishing the return in a physical paper form. At the time of submission of the paper return, the Income Tax Department will issue you an acknowledgement.
  • With the provided bar-coded return.

Conditions for Filing ITR 3 through Offline Method:

You can file this return in paper form with the Income Tax Department only if you are:

  • Over 80 years of age; or
  • Individual and HUF with total income less than Rs.5 lakhs who has no refund claims

Note: You should file only one copy of the return form.

 

Filing ITR-3 using Online Method:

You can file ITR-3 Form with the Income Tax Department in the below mentioned ways:

  • Submitting it under your digital signature.
  • After sending the data electronically, you can submit the verification of your return in From ITR-V.
  • Verifying the submitted return(ITR-V) electronically with e-verification code (EVC).

For individuals in the following categories, you must file your return electronically:

  • Income of assessee above Rs 5 lakh
  • If assets outside of India are held by the resident assessee or the signing authority is outside India
  • If assesee is claiming exemption u/s 90/90A or 91 and schedule FSI & TR are applicable

 

ITR3 Form Sample Format

Download ITR 3 Form in PDF Format by clicking the image above:

Latest Changes to ITR Form 3 for AY 2018-19

Changes in ITR 3 Details
More details of salary and house property income Old ITR form required the taxpayers to report only the taxable amount but the new ITR forms require you to report detailed calculation of income from salary and house property.
Penalty for late filing of ITR A new field has been added where the late filers need to provide the details of late filing fees paid.
Capital gains as a result of transfer of unquoted shares A new filed has been added for the taxpayers to provide information on unquoted shares in accordance with the amendment in the section 50CA of the Finance Act, 2017.
Reporting gifts A field has been added to report the amount taxable as gift.
Revised depreciation schedule Depreciation schedule has been revised as per which, the highest rate of depreciation for any block cannot exceed 40%.
Claiming proportionate depreciation A new field has been added to report the claim of proportionate depreciation in the event of business reorganisation, i.e. demerger, amalgamation, etc.
Changes in Schedule PL Schedule PL has been modified for the taxpayers to provide GST related details.
Credit of refund to foreign bank account A field has been added where an NRI taxpayer can provide the details of a foreign bank account in which he wants the credit of the tax refund he wants to claim.
Reporting disallowance of expenses A new field has been added to report disallowance of expenses in case of TDS default.
Claiming credit of TDS deducted in the name of another person A new field has been added to facilitate the claim for TDS credit where the TDS was deducted in the name of another person or from a common pool or other similar situations.
Change of applicability for a partner in a firm Partners cannot use ITR 2 – for the Assessment Year 2018-19, an individual or an HUF, who is a partner in a firm, shall be required to file his ITR in Form ITR 3 only.
Claiming relief under DTAA The form now asks the taxpayer claiming relief as per DTAA to report more details like rate as per treaty, rate as per I-T Act and applicable rate etc.
Claiming exemption on capital gains The taxpayers now need to provide more details in the form if they are claiming capital gains exemption.
Reporting remission or cessation of trading liability New forms require separate reporting of remission or cessation of trading liability in case of income from other sources.
Reporting GST payments and refunds New columns have been introduced in the ITR forms to report the details of GST paid and refunded.
Removal of gender Taxpayers now do not need to mention their gender in the form.

All these changes have been made by the tax department in the ITR form are aimed at making the assessment procedure online. Therefore, we can see that the department is seeking more and more information from the taxpayers to facilitate e-assessment.

Major Changes to ITR Form 3 for AY 2017-18

Changes in ITR 3 Details
As per schedule AL, details of assets and liabilities of individual/HUf with income exceeding Rs 50 lakh Costs of immovable(jewellery, shares, cash balance, etc.) assets/properties
Chartered Accountant/Firm Registration number Provide registration number of chartered accountant auditing your ITR form.
Aadhaar Number As per section 139AA, taxpayers must quote aadhaar number or aadhaar enrolment number while filing ITR.
Explanations of unexplained income and income from dividends Unexplained credits from investments and dividends over Rs. 10 lakh, need to be furnished under schedule OS.
Details of cash deposited during demonetisation Cash deposits of Rs 2 lakh and more made during 9th November 2016 – 30th December 2016, in bank accounts or loan accounts need to be reported.

Structure of ITR Form 3

This return form has the following components:

Part A – 5 sub-divisions:

  • Part A-GEN: Basic information about individual and business (ex: PAN, Aadhaar etc.)
  • Part A-BS: As of 31st March 2017, the balance sheet
  • Part A-P&L: The Profit/Loss for FY 2016-17
  • Part A-OI: Miscellaneous information which is optional and not liable for audit u /s 4AB
  • Part A-QD: Numerical details about the principal traded item of goods traded, which is optional and not liable for audit u/s 44AB

Part B – Contains details of income and total taxes due and is followed by:

  • Statutory verification
  • Details of any third party used for preparing taxes, if applicable

34 Schedules

  • Schedule-S: The calculation of income under head salaries
  • Schedule-HP: House income calculations
  • Schedule-BP: Profit/gains computations from business or profession
  • Schedule-DPM:  Values of plan and machinery depreciation
  • Schedule DOA: Depreciation values of other assets
  • Schedule DEP: Total value of depreciated assets
  • Schedule DCG: Capital gains on depreciated assets
  • Schedule ESR: Section 35 deductions (scientific research expenses)
  • Schedule-CG: Total of capital
  • Schedule-OS: Other income sources data
  • Schedule-CYLA: Income statement after losses set off
  • Schedule-BFLA: Income statement after losses set off, which were brought forward from previous years.
  • Schedule-CFL: Losses to be carried forward for future use
  • Schedule-UD: Details of depreciation that is unabsorbed
  • Schedule-ICDS: Income calculated by disclosure standards in profits.
  • Schedule-10A: Details of deductions u/s 10A
  • Schedule-10AA: Details of deductions u/s 10AA
  • Schedule-80G: Donation details of eligible deductions u/s 80G
  • Schedule-80IA: Deductions u/s 80IA.
  • Schedule-80IB: Deductions u/s 80IB.
  • Schedule-80IC/80-IE: Deductions u/s 80IC/80-IE.
  • Schedule-VI-A: Deductions of total income under Chapter VIA.
  • Schedule AMT: Alternate minimum tax payable details u/s 115JC
  • Schedule AMTC: Tax credits u/s 115JD.
  • Schedule SPI: Income arising from spouse/ minor child/ son’s wife or any other persons included in the income of the assessee in Schedules-HP, BP, CG and OS.
  • Schedule SI: Income chargeable at special tax rates
  • Schedule-IF: Partnership details if any
  • Schedule EI: Details of exempt income
  • Schedule PTI: Details of income from Investments and/or Business trust u/s 115UA/B
  • Schedule-FSI: Income outside of India.
  • Schedule TR: Tax relief claimed u/s 90/90A or 91
  • Schedule FA: Details of foreign income and assets
  • Schedule-5A: As per Portuguese civil code, details of distribution of income between spouses
  • Schedule AL: Assets and liabilities by the end of the year, if exceeding Rs 50 lakh

Sending your ITR-V to the CPC Office, Bangalore?

If you e-file your return, and wish to mail it to CPC Bangalore, print out the form from your email and sign it and send it to the CPC office in Bangalore.

The preparation and filing of ITR Form 3 is a change that can be taxing, however, the experts at H&R Block can help you every step of the way, so that the transition is smooth and effortless.

Not sure how to file your Business Tax Return? Let H&R Block help you file your taxes.
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