The Central Board of Direct Taxes (CBDT) has issued the Income-tax (Fourth Amendment) Rules, 2026, introducing a revised ITR-3 form for taxpayers earning income from business or profession.
The notification, published in the Official Gazette, will come into effect from March 31, 2026, and will apply to returns filed for Assessment Year (AY) 2026-27.
What is ITR-3?
The ITR-3 form is applicable to:
- Individuals
- Hindu Undivided Families (HUFs)
- Taxpayers earning income from business or profession
The amendment replaces the existing ITR-3 format under Appendix-II of the Income-tax Rules, 1962.
Key Changes in the New ITR-3 Form
1. Detailed Personal & Contact Information
The revised form mandates:
- Primary and secondary addresses
- Multiple contact details (mobile, email)
- Aadhaar and PAN disclosure
This aims to improve taxpayer identification and communication.
2. Expanded Filing Status & Compliance Tracking
Taxpayers must now specify:
- Type of return (original, revised, belated, updated)
- Section under which return is filed (139(1), 139(4), 139(5), etc.)
This enhances compliance monitoring and audit trails.
3. New vs Old Tax Regime Selection Made Explicit
The form requires taxpayers to clearly choose between:
- New Tax Regime (default under Section 115BAC)
- Old Tax Regime (via filing Form 10-IEA/10-IE)
The notification highlights that the new regime remains the default option, unless opted out within due dates.
4. High-Value Transaction Reporting (Section 139 Proviso)
Even if filing is not mandatory, taxpayers must disclose if they have:
- Deposited over Rs 1 crore in bank accounts
- Incurred foreign travel expenses above Rs 2 lakh
- Paid electricity bills exceeding Rs 1 lakh
This strengthens financial transparency and reporting oversight.
5. Detailed Residential Status Reporting
The updated form includes:
- Expanded classification (Resident, RNOR, Non-Resident)
- Days of stay in India
- Foreign income thresholds
This ensures accurate determination of tax residency status.
6. Disclosure of Directorship & Investments
New reporting requirements include:
- Details of directorship in companies
- Information on unlisted equity shares
- Disclosure of partnership interests
These additions aim to curb undisclosed financial interests.
7. Comprehensive Business & Financial Reporting
The revised ITR-3 introduces detailed schedules for:
- Balance sheet and profit & loss account
- Manufacturing and trading accounts
- Presumptive income (Sections 44AD, 44ADA, etc.)
- Audit details and compliance reporting
This aligns with advanced financial reporting standards.
8. Reporting for Non-Residents & Global Income
Additional disclosures include:
- Significant Economic Presence (SEP)
- Foreign income and jurisdiction details
- Taxpayer Identification Number (TIN) in other countries
This supports global tax compliance and anti-evasion measures.
Impact on Taxpayers
The revised ITR-3 form reflects the government’s broader push toward:
- Digital tax compliance
- Data-driven scrutiny
- Enhanced financial transparency
However, taxpayers should be prepared for:
- More detailed disclosures
- Increased documentation requirements
- Greater compliance responsibility
Effective Date
- Applicable from: March 31, 2026
- Assessment Year: 2026-27
Click here to view/download the official copy of the notification
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