ITR-3
What is ITR 3 Form?
This return is applicable for Individual and Hindu Undivided Family (HUF) having Income under the head Profits and Gains of Business or Profession and who is not eligible for filing ITR-1, ITR-2 or ITR-4.
What is ITR?
An Income Tax Return (ITR) is a document used by taxpayers to report details about their income earned and the corresponding tax liability to the income tax department. It serves as a formal declaration of an individual or entity’s financial information, ensuring transparency and compliance with tax regulations.
Limit for Senior Citizens is INR 3 lakhs and for Super Senior Citizens INR 5 lakhs.
Who can use ITR 2 Form?
An individual who;
- has income from salary/ pension
- has income from more than one house property
- has income from business or profession
- is a non-resident in India during the previous year
- is a director in a company
- has held any unlisted equity shares at any time during the previous year
- has any asset (including financial interest in any entity located outside India
- has signing authority in any account located outside India
- has income from any source outside India
- is a person in whose case tax has been deducted u/s 194N
- is a person in whose case payment or deduction of tax has been deferred on ESOP
- who has any brought forward loss or loss to be carried forward under any head of income
Late Fee and Penalty for late Filing of ITR-3
Late filing of income tax returns can result in various penalties, depending on your total income.
- Late fee of Rs. 5000 will be levied on Individuals with a total income exceeding Rs. 5 lakhs, while those with income below this threshold will incur a reduced late fee of Rs. 1,000. However, Individuals having total income up to Rs. 2.5 lakhs are not required to pay any late fee for late filing of the return. For Senior Citizens, this limit is Rs. 3 lakhs and for Super Senior Citizens Rs. 5 lakhs.
- Additionally, if you owe taxes and fail to file the return by the due date, you will be liable for additional interest at a rate of 1% per month until you submit the return.
- In more severe cases, penalties can be imposed for underreporting or misreporting of income. Underreporting may lead to penalties of up to 50% of the tax underreported, while misreporting can result in penalties of up to 200% of the misreported tax amount.
- Furthermore, repeated failure to file tax returns despite reminders from tax authorities may lead to prosecution procedures. This could result in imprisonment ranging from three months to seven years, depending on the outstanding tax liabilities.
It is crucial to file your tax returns promptly and accurately to avoid these legal and financial consequences.
How we can assist you?
We provide valuable assistance in filing your ITR-3 return. We start by helping you select the appropriate form based on your income sources, ensuring accuracy in filing.
We meticulously calculate your tax liability, perform error checks, and prioritize timely filing to reduce the risk of penalties or tax notices. If eligible, we assist in processing your income tax refund efficiently.
Our team of tax experts is available to address your queries and provide guidance throughout the process. We also keep you updated on tax law changes and deadlines, ensuring your compliance with the latest regulations. With our secure platform, you can trust us to safeguard your financial data while simplifying your ITR-3 filing experience.
FAQs
What is ITR-3 Form?
ITR-3 is an Income Tax Return form in India used by individuals and Hindu Undivided Families (HUFs) having income from business or profession.
Who should file ITR-3?
Individuals and HUFs with income from a proprietary business or profession should file ITR-3. It is not meant for individuals with income from salary or house property.
What documents are needed to file ITR-3?
Documents like PAN card, Aadhaar card, financial statements, profit and loss account, balance sheet, and other business-related documents are needed.
Can I use ITR-3 if I have income from multiple businesses?
Yes, ITR-3 is suitable for individuals and HUFs with income from multiple businesses or professions.
How is income from business or profession calculated in ITR-3?
Income from business or profession is calculated by preparing financial statements, including profit and loss account and balance sheet.
How is remuneration from a partnership firm reported in ITR-3?
Remuneration received from a partnership firm should be reported under the head "Income from Business or Profession" in Schedule BP. Provide details of the partnership, remuneration received, and other relevant information.
Can I claim a deduction for expenses incurred in earning income from a profession in ITR-3?
Yes, you can claim deductions for genuine business expenses incurred in earning income from a profession. Provide accurate details of such expenses in the appropriate sections.
Are there any specific reporting requirements for income received in kind in ITR-3?
Yes, if you receive income in kind (perquisites), such as accommodation or car, from your business or profession, report the details in the relevant schedules of ITR-3, including their valuation
What is the treatment of presumptive income under Section 44ADA in ITR-3?
If you opt for the presumptive taxation scheme under Section 44ADA, report the presumptive income at 50% of the gross receipts in Schedule BP. No further deductions are allowed under this scheme.
Can I file ITR-3 if I have income from both salary and business or profession?
No, if you have income from salary along with income from business or profession, ITR-4 is generally applicable. ITR-3 is for individuals and HUFs with income only from business or profession.
How are capital gains from the sale of business assets treated in ITR-3?
Capital gains from the sale of business assets are categorized as capital gains. Report the details in Schedule CG (Capital Gains), specifying whether they are short-term or long-term.
How is the turnover calculated for the purpose of presumptive taxation under Section 44AD in ITR-3?
Turnover for presumptive taxation is calculated as the total gross receipts excluding GST. Report the turnover details in Schedule BP along with the presumptive income.
Is there any special reporting requirement for foreign assets and income in ITR-3?
Yes, individuals and HUFs with foreign assets or income need to provide details in Schedule FA (Foreign Assets) and Schedule FSI (Foreign Source Income) in ITR-3.
Can I use ITR-3 for reporting income from freelancing or consulting work?
Yes, if the income is from a profession, ITR-3 is applicable. Provide details of professional income and expenses in the relevant schedules.
Can I file ITR-3 if I have income from a share in a Limited Liability Partnership (LLP)?
: If you have income from a share in an LLP, you should file ITR-5, as ITR-3 is specifically for individuals and HUFs with income from a proprietary business or profession.
