Filing an income tax return is a chore many of us complete every single year. For an employee, it's straightforward; you report your salary and some other investment income. If you are running a business or working as a professional (such as a consultant, freelancer, or independent practice), the details become slightly more involved; this is the primary use case for the ITR-3 Form.
The ITR-3 Form is specifically for Individuals and Hindu Undivided Families (HUF) that earn income from:
Business (proprietary, or partnerships)
Profession, for example: doctor, lawyer, architect, freelancer, consultant.
As well as this, you may have house property income, salary, capital gains income, or income from other sources; however, the main eligibility is that you have business or professional income.
Filing an income tax return is a chore many of us complete every single year. For an employee, it's straightforward; you report your salary and some other investment income. If you are running a business or working as a professional (such as a consultant, freelancer, or independent practice), the details become slightly more involved; this is the primary use case for the ITR-3 Form.
In this article, we will highlight everything you need to know about filing the ITR-3 form online. Who needs the form, the documentation you will need, the step-by-step process, and some tips to avoid mistakes along the way.
The ITR-3 Form is specifically for Individuals and Hindu Undivided Families (HUF) that earn income from:
Business (proprietary, or partnerships)
Profession, for example: doctor, lawyer, architect, freelancer, consultant.
As well as this, you may have house property income, salary, capital gains income, or income from other sources; however, the main eligibility is that you have business or professional income.
To make it very clear with examples. You are to file ITR-3 if you-(a) are a Proprietor -running a small shop or trading business or any other independent business in your name;(b) a Professional -like Chartered Accountant, Doctor, Lawyer, Architect, Designer or Consultant;(c) Partner in a Firm - earning from business partnership (other than salary) will file; (d) Freelancer having multiple clients; for ex. IT consultants, content creators, marketing consultants and (e) you may also have other income sources like rental income, capital gains or dividends -- you still file all this in ITR-3.
Important points of ITR-3
It is useful to know what the form covers before we start with the filing process. Below are some important highlights:
1. Income detail - Business or professional income, salary, house property, capital gains and other sources.
2. Balance Sheet & Profit & Loss Account - For businesses and professionals, you must provide your financials.
3. Presumptive taxation option - Applicable if your turnover does not exceed 2 crore (business), 50 lakh (professional). You may opt for the presumptive scheme under Section 44AD, 44ADA, or 44AE.
4. Audit Requirements - If you end up exceeding the prescribed Turnover Limit, you will include details of the tax audit.
5. Claims of deduction - You can also claim deductions under Chapter, etc.)
Now, let’s get into the practical aspect – online filing of your ITR-3.
Step 1: Log in to the Income Tax Portal
Go to www.incometax.gov.in
Log in with your PAN as a user ID and with the password.
If you are New, then you need to register first.
Step 2: Click on “File Income Tax Return”
Go to e-File > Income Tax Returns > File Income Tax Return.
Choose the assessment Year - for FY 2024–25, you will file AY 2025–26
Click ITR-3 from the available forms.
Step 3: Enter your income
Enter personal details (name, PAN, Aadhaar, etc.)
Report income from your business/profession and after that, report income from other sources i.e, Salary, house property, Capital Gains, and other income (if any).
If you are under presumptive taxation, then you can report income as a percentage of turnover without maintaining the entire detailed books.
Step 4: Enter Deductions claims
Enter investments and expenses that are eligible under Sections 80C, 80D, 80E, 80G, etc.
This will reduce your taxable income.
Step 5: Verify tax computation
The system auto-computes your tax liability.
Check the TDS, indirect tax, or advance tax, and self-assessment tax you have already paid.
This can be done by signing an electronic form (no e-verification at this point).
Be sure to keep note of key dates that furnish penalties for late filings (1st half of the previous AY, etc.).
This file can be helpful if snags bore out of aspects mentioned above.
Many taxpayers make little mistakes that may lead to notices or delays. You should try to avoid these mistakes:
Mismatch with Form 26AS/AIS: You should always cross-check your income and TDS on your return with what is captured in the Form 26AS in AIS.
There are bank accounts that are omitted: All active bank accounts must be disclosed.
Interest income unreported: Interest earned on even small savings accounts must be disclosed.
Listing incorrect business codes: Make sure to select the correct nature current business/profession code.
Did not verify the return: Failure to verify the return means that you have not filed the return.
Avoid penalties: When you file your returns before the due date, you will be able to avoid additional late fees under Section 234F.
Easier loans & marriages: The income tax return will be accepted as an income proof for loans.
Carry forward losses: You can carry forward current business losses or capital losses into future years.
Peace of mind: If you timely file your tax returns, you may not have to worry about tax notices or any compliance issues in the future.
At first, filing ITR-3 online can be a little bit intimidating; however, if you focus on the steps, it can be easy to do. Think of it like an annual check-up on your financial health – you just need to collect information about your income, report it correctly, claim your appropriate deductions, and pay your taxes.
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