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Ref. No. KLI/22-23/E-BB/492
Ref. No. KLI/22-23/E-BB/490
India offers a variety of tax-saving programs. You must remember that every tax-saving investment is unique and make your investments as such.
Filing an income tax return can be a complex process. Although taxpayers can now file their tax returns online, there still remain certain common errors that most people make. Any mistake while filing the form can lead to issues later. Hence, your income, tax deductions, and personal details like Pan card number, etc., must be correctly filled in and submitted in time to the Income Tax Department.
The eligibility criteria for using the ITR form 3 to file an income tax return:
Another important aspect to keep in mind is selecting the right ITR form, there is a unique ITR form for every category of taxpayers. One of these is the ITR 3 form. This article discusses the ITR 3 form, taxpayers who can use it, and how it should be filled.
1 Individual taxpayers and Hindu Undivided Families (HUFs) can use an ITR 3 form to file their income tax return if they have earned their annual income from profits and gains from a business or profession. In broad terms, this includes the following taxpayers:
Individuals who have earned their income from a business or profession.
Individuals who have earned their income from salary or pension, a property such as a house, and other sources.
1.The taxpayer is the director of a company or business.
2.The taxpayer’s residential status is either resident or non-resident of India.
3.The taxpayer is drawing an income from a pension.
4.The taxpayer is earning an income from house property.
5. The taxpayer has investments in unlisted equity shares.
6.The taxpayer’s income is taxable under ‘profits and gains of business or profession.’ This includes salary, interest, commission, bonus, or remuneration.
1. Income from single-house property or multiple-house properties. Income from a lottery, betting on races, and other forms of gambling that are legal as per Indian law.
2. Income from short-term or long-term capital gains.
3. Income earned from a business or profession that practices under a proprietorship firm owned by the individual or a HUF.
Income earned from foreign assets.
1. Income earned from foreign assets.
2. The following taxpayers are not considered eligible to file an income tax return with an ITR 3 form:
An individual or HUF earning their income from a partnership or as partners from a business or profession. The right income tax return form, in this case, is the ITR 2 form.
ITR-3 is divided into parts, schedules, and verification. Here are the details of each:
1.. 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 2021-22
Part A- Trading Account: Trading Account for the financial year 2019-20
Part A-P&L: Profit and Loss for the financial year 2019-20
Part A-OI: Other Information (this is optional if not liable for audit under Section 44AB)
Part A-QD: Quantitative Details (this is optional if not liable for audit under Section 44AB)
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 of 1961
Schedule DOA: Computation of depreciation on other assets under the Income Tax Act of 1961
Schedule DEP: Summary of depreciation on all the assets under the Income Tax Act of 1961
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)(iii)Provision: 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 VIA: Statement of deductions (from total income) under Chapter VIA
Schedule SPI-SI-IF: Income of specified persons (spouse, minors etc.) includible in the income of the assessee, income chargeable at special rates, info partnership firms in which assessee is a partner
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 the assessee is a partner
Schedule EI: Statement of income not included in total income (exempt incomes)
Schedule PTI: Pass through income details from 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 the Portuguese Civil Code
Schedule AL: Asset and Liability at the end of the year (applicable where the total income exceeds ₹50 lakhs)
Schedule DI: Schedule of tax-saving investments or deposits or payments to claim deduction or exemption in the extended period from 1 April 2020 until 30 June 2020
Schedule GST: Information regarding turnover/ gross receipt reported for GST
3. Part B
Part B-TI: Computation of Total Income. Part B-TTI: Computation of tax liability on total income.
How to file an income tax return using an ITR 3 form?
Taxpayers can use the same order to fill out the ITR 3 form as mentioned above. This is:
1.Start with Part A and enter the general information
2.Proceed to the Schedules
3.Fill Part B TI and Part B TTI
4.Complete the verification
Taxpayers can use ITR 3 form to file their income tax return in both methods – online and offline.
If you choose the online method, you can submit the return online with a digital signature. The acknowledgement of receipt will then be sent to your registered email address.
The offline method is available to taxpayers aged 80 or more. Moreover, the total income should be lower than ₹5 lakhs. You can submit the ITR 3 form on paper by downloading it from the income tax website and mailing it to the CPC office in the Income Tax Department, Bangalore.
1. The following three procedures are available for filling out the ITR-3 Income Tax Return Form:
2.By using a digital signature while submitting a return electronically. (Assessors who require a tax audit must employ this technique.)
3.By electronically transmitting the data in ITR-3 form with an electronic verification number.
4 By sending the information in the ITR-3 form electronically and then mailing the return verification in the ITR-V form to the income tax office. (Taxpayers who use this approach to file ITR-3 forms must complete the acknowledgement in ITR-V.)
Taxpayers who are the director of a company or hold unlisted equity shares need to disclose the ‘type of company’.
Taxpayers must provide the buyer’s name, Pan card, and Aadhaar card if the income has been earned from short-term or long-term capital gains from the sale of land or a building.
Taxpayers should provide details of ‘any other income’ under ‘income from other sources’.
Taxpayers should provide deductions against ‘income from other sources’.
Taxpayers should provide details of ‘capital gains’ and ‘dividends’ in the case of a business trust or investment fund.
A person or HUF is ineligible to submit an ITR-3 if they receive income from being a partner in a partnership firm that is engaged in a trade or profession. In this situation, they may submit ITR 2.
When the assessee receives income that fits into one of the following categories, an ITR-3 form is filed.
1. Earnings from a private business
2. Income from working in a profession
3. Income from a residential property
A person who receives income in the form of interest, a salary, a bonus, a commission, or other compensation subject to tax under the category of “profits and gains of business or profession” must additionally complete Form ITR-3.
Make sure to use the right form for filing an income tax return to avoid hassles later. Moreover, when it comes to saving money, tax savings strategies can help reduce taxes. Kotak Life offers a tax and savings guide that can help individuals build long-term savings and lower taxes in different ways.
Ref. No. KLI/22-23/E-BB/999
Ref. No. KLI/22-23/E-BB/490