In a major step toward enhancing compliance and transparency, the Central Board of Direct Taxes (CBDT) has notified the revised ITR-3 form for Assessment Year 2025-26 through Notification No. 41/2025 dated April 30, 2025. This new form, applicable from April 1, 2025, aims to streamline income tax return filing for individuals and Hindu Undivided Families (HUFs) with income from business or profession.
This article covers all the critical changes introduced, the implications for taxpayers, and how to prepare for the new reporting requirements.
Who Should File ITR-3?
The ITR-3 form is applicable to:
- Individuals and HUFs having income under the head "Profits and Gains from Business or Profession".
- Those not eligible to file ITR-1 (Sahaj), ITR-2, or ITR-4 (Sugam).
- Taxpayers involved in Futures & Options (F&O) or speculative business (e.g., share trading).
Key Features and Updates in the Revised ITR-3 Form
1. Expanded Disclosure Requirements
Taxpayers must now disclose:
- Gross receipts, Profit and Loss Account (P&L) figures, and balance sheet data.
- Enhanced reporting of manufacturing, trading, and other income heads such as interest, dividends, and capital gains.
2. Choice of Tax Regime (Section 115BAC)
- Taxpayers must declare if they are opting into or out of the new tax regime.
- Mandatory disclosure of Form 10-IEA submission date and acknowledgment number.
- Important: Once a taxpayer opts out of the new regime, reverting back is allowed only once in a lifetime.
3. Capital Gains Split (Pre/Post July 23, 2024)
As per Finance Act, 2024, capital gains must now be split into two periods:
- Before July 23, 2024
- On or after July 23, 2024
This change is intended to ensure proper computation in line with updated tax rules.
Check the official notification here: CBDT Notifies New ITR-3 Form for AY 2025-26
4. Buyback Losses & Dividend Income
-
Taxpayers can report capital losses from share buybacks, provided the dividend income is shown under "Income from Other Sources" (as per changes effective from October 1, 2024).
5. Audit & Financial Statements
If the taxpayer is subject to audit under:
- Section 44AB (business turnover threshold),
- Section 92E (international transactions),
or any other applicable law,they must provide:
- Auditor's details, audit date, UDIN, and
- Nature of business/profession.
6. Presumptive Taxation (44AD/44ADA/44AE)
-
Separate, clearly structured fields introduced for those under presumptive schemes.
7. Foreign Assets & Residency
Disclosures required for:
- Residential status
- Foreign assets
- Foreign income
- Tax residency of non-residents and details of any Significant Economic Presence (SEP) in India.
8. Director/Shareholder Reporting
If the taxpayer was:
- A director in a company, or
- Held unlisted equity shares during FY 2024-25,
They must disclose:
-
Company names, PANs, cost of acquisition, and sale proceeds.
9. Threshold-Based Transaction Reporting
You must report if you:
- Deposited ₹1 crore+ in current accounts
- Spent ₹2 lakh+ on foreign travel
- Paid electricity bills exceeding ₹1 lakh
New Limits and Enhancements
- Asset & Liability Reporting: Now mandatory for taxpayers with total income > ₹1 crore.
- Reference to Section 44BBC: Introduced for entities in the cruise business.
- TDS Reporting: Inclusion of TDS section codes for more detailed reconciliation.
- Enhanced Deductions Reporting: Granular inputs for sections like 80C, 10(13A) (HRA), etc.
Filing Deadlines for AY 2025-26
| Taxpayer Type | ITR-3 Filing Due Date |
|---|---|
| No audit required | July 31, 2025 |
| Audit under Section 44AB | October 31, 2025 |
| International transactions (92E) | November 30, 2025 |
| Belated return | December 31, 2025 |
Important Advisory: Choosing the Right Tax Regime
Choosing between the old and new tax regimes is a strategic decision. Taxpayers opting out of the new regime can revert only once in their lifetime. A detailed computation of tax liability under both regimes is highly advisable before final submission.
Conclusion
The revised ITR-3 form brings greater transparency, better tracking of high-value transactions, and clarity on income heads-especially for professionals, traders, and businessmen.
CAclubindia
