Everything You Need to Know About the ITR-3 Form

Your CA has asked you to fill the form ITR-3 to file your income tax returns. And these questions have started to plague your mind — what is ITR-3? How to file ITR-3? And which website lets you do an ITR-3 download? Before you get lost in the sea of information, we have collated here for you the answers to all the important questions on ITR-3.

What is ITR-3 form?

Income Tax Returns or any ITR form allows taxpayers to fill information pertaining to their income and the applicable tax with the Income Tax Department. There are seven types of ITR forms from ITR-1 to ITR-7.

Specifically, the ITR-3 form for income tax returns applies to Indian individuals and HUF (Hindu Undivided Family) who earn their income from gains and profits from their profession or business. The taxpayer may be a partner in a firm or business but doesn’t run it under proprietorship.

Who can file ITR-3 form?

The ITR 3 Form can be used by Hindu Undivided Family (HUF) and individuals who run a business or carry a profession. The list below mentions the type of people who can fill the ITR 3 Form.

• The individual is the director in the business or company
• The residential status of the individual is Resident or Non-Resident.
• The individual has or had investments in the unlisted equity shares during the financial year.
• Income from other sources, such income of the individual if they’re a partner in the firm.
• Income from pension or salary
• Income from property or house (one or many)
• Earnings from capital gains, foreign income, foreign assets
• The individual has income under the head “Profits or gains of business or profession”. And, is not eligible to file ITR 1, ITR 2 or ITR 4.

Who is not eligible to file ITR 3?

• Trusts
• Companies
• Local Authority
• Co-operative Society
• Firm including LLP
• Artificial Juridical Person
• BOI, AOP

Note:

The final date to file returns under ITR-3 for taxpayers awaiting a tax audit is 31st October 2020, for the assessment year 2020-21 (i.e. the Financial year 2019-20). The audit report should be submitted by 30th September 2020.

It has been proposed to increase the minimum limit for tax audits from 1 crore INR to 5 crore INR for the financial year 2020-21 (the assessment year 2021-22) if the cash receipts of the taxpayer do not exceed 5% of the turnover or gross receipts. Further, the cash payments should not be greater than 5% of the total payments.

How to file ITR-3 form online?

The ITR-3 form should be submitted online with the Income Tax Department. The government strictly advocates online e-filing of ITR-3 form. However, the verification of the ITR 3 form can be done in 3 ways: 

• Providing digital signature for verification
• Verification using the Electronic Verification Code (EVC)
• By filling the Return Form ITR-V

Here are some key points to note when you fill the ITR-3 form online: 

• The online process involves entering the details electronically into the system. In this case, the individual has to electronically verify the details entered in the ITR-3 form with the help of a digital signature or Electronic Verification Code. Only after the e-verification from the customer, the form gets completely submitted and becomes eligible for assessment by the Assessing Officer. An acknowledgment for the same is then emailed to the registered email address. Alternatively, you can download the acknowledgment from the Income Tax Department website.
• If the individual fills the ITR-3 form electronically, but without the digital signature or the Electronic Verification Code (EVC), then they need to verify the ITR-3 Form physically or through the offline method to successfully finish the process of filing their ITR returns.
• In this process, the individual fills the ITR-3 Form online. But, instead of providing a digital signature to verify the Form online, the individual fills the Return Form ITR-V to verify the income tax returns.
• ITR-V or Income Tax Returns Verification is a one-page document, like an acknowledgement, which shows that you have filed income tax returns online without the digital signature.
• In this process, the individual must take a print out of the ITR-V form and physically post it to the “Centralized Processing Centre (CPC) office of the Income Tax Department, Post Bag No. 1, Electronic City Office, Bengaluru – 560500”.
• The Form must reach within 120 days of filing the ITR-3 form electronically, successfully completing the process of income tax returns and making it eligible for assessments by the Assessing Officer.
• ITR-3 form does not have an annexure, which means that you need not enclose any other documents while posting the acknowledgement.
• Significant changes have been introduced in The ITR-3 form for Assessment year 2019-20. So, kindly check the relevant changes before filing your ITR-3 form.

How to fill the details in the ITR 3 Form electronically?

• If any schedule is not relevant, mention “NA” and move to the next.
• If any of the items are not applicable, write “NA” and continue.
• To denote figures that are nil, write “Nil”.
• For a loss figure or negative figure, write “-” before these numbers.
• All the figures should be rounded off to the nearest rupee value. But the final total income or total loss figure should be rounded off to the nearest multiple of ten rupees.

The Income Tax Department has advised all assessees to follow a particular sequence while filling out the ITR-3 form. The sequence is as follows:

• Part A – General information on Page 1
• Schedules as per relevance
• Part B – Total income or TI and part B – Taxable Total Income or TTI
• Verification

This sequence has to be followed to ensure minimum errors and a smooth form filling process.

How to fill the verification document?

When filling the details in the ITR-3 form electronically, the individual should also fill up the verification document. Kindly note that if an individual makes a false statement in any of the two parts and the 23 schedules, they are liable to be prosecuted under Section 277 of the Income Tax Act, 1961. If found guilty and convicted, the offence is punishable with rigorous imprisonment and fine.

Filing ITR-3 Form Offline

Only individuals who fall in the following criteria are allowed to file the ITR-3 Form offline.

• The age of the individual is 80 years or more
• The income of the individual is lower than Rs 5 lakhs and they do not possess any income tax refund request

Individuals who fall into this criteria are eligible to submit their ITR 3 Form in barcoded format or in paper form.

The ITR-3 Form can be easily downloaded from the official website of the income tax department. Click here to download it. The ITR-3 form is spread across two parts and 23 schedules:

• Part A requires your general information.
• Part B requires the details of your total income and tax computation for the taxable income.
• The 23 schedules mention the different sources of income and relevant tax computation applicable under ITR-3. The taxpayer should fill up the schedules according to the categories applicable to their earnings.

By following these guidelines, you can successfully fill your ITR-3 form offline and claim income tax returns. Make sure you fill your details in the appropriate schedule that matches your criteria. Seek the assistance of an expert CA if required while filing ITR-3.