ITR Filing For Business Owners: ITR 3

The income tax department provides different prescribed formats for furnishing returns for incomes earned through varied sources. Hence, the income tax form applicable to most proprietorship business owners or professionals is ITR 3 form. Additionally, this form is applicable for ITR filing of income earned by individuals or HUFs earning income from a business or profession. However, there are a lot of aspects involved with the entire process of figuring out ITR 3 and its applicability. Besides, Through this article you can understand what is ITR 3 and the situations under which you need to file returns. 

What is ITR 3? 

ITR 3 is a form that facilitates furnishing income tax returns for a certain sect of individuals and business owners. Even the Hindu Undivided Families (HUF) earning their income from business also need to file their returns through the ITR 3. Besides, there are other 6 ITR related forms applicable to persons earning their incomes from other various sources. Such as, ITR 1 for salaried employees, ITR 4 for business owners claiming benefits of the presumptive taxation scheme and more. Before you file your returns, it is very important to understand the correct form applicable to you. 

What is the eligibility criteria for ITR 3? 

The following individuals and entities are entitled to furnish their returns through ITR 3: 

• Firstly, individuals earning income from sole proprietorship business; 
• Professionals earning their income from providing professional services; 
• Income from one or more than one house property; 
• Other income from sources, such as salaries, pension, gratuity, and more; and
• Lastly, small business not falling under the presumptive taxation scheme. 

Who cannot file ITR  3?

All other types of entities and individuals who do not fall under either of the above categories cannot file income tax returns in ITR 7. These persons include: 

• Trusts, religious institutions; etc.
• Companies;
• Research centers; 
• Partnership firms; 
• Individual earning profit from being a partner; 
• Business falling under the presumptive taxation system; and 
• Lastly, HUF acting as a partner in a partnership firm. 

Point to remember: For businesses’ that fall under the presumptive taxation scheme, ITR 4 is applicable. 

What is ITR 3 format? 

All income tax return forms come with a prescribed format. As a result, taxpayers need to file their returns in the format as suggested by the authorities. Further, the form ITR 3 is divided into three different parts: 

Part A

While filing the ITR 3, certain information in the part A of online ITR is auto populated on the basis of information you provide. Further, this part of the ITR 3 includes the generic details of the business owner or the professional. So, let’s take a look at the sub-parts of ITR 3: 

• Firstly, General Information;
• Secondly, Balance Sheet information; 
• Thirdly, Details of Manufacturing Account; 
• Fourthly, Credits to Trading Account;
• Then, Quantitative Details; and
• Lastly, Other information. 

Part B

This is the last part of the ITR 3 form. Once you furnish the information as required under Part B, you will be able to see your final tax liability. Besides, there are two sub-parts to this, as follows:

• Computation of Total Income; and
• Total tax liability on the income. 

Also Read: How to file ITR online?

Schedule to ITR 3

Schedule	Information
S	Firstly, details of Income from Salary
HP	Income from House Property
BP	Income from business or profession
DPM	Depreciation on Plant and Machinery (Other than assets on which full capital expenditure is allowable as deduction under any other section)
DOA	Depreciation on other assets (Other than assets on which full capital expenditure is allowable as deduction)
DEP	Summary of depreciation on assets (Other than assets on which full capital expenditure is allowable as deduction under any other section)
DCG	Deemed Capital Gains on sale of depreciable assets
ESR	Expenditure on Scientific Research etc.
CG	Capital Gains
115AD(1)(b)(iii) proviso	For NON-RESIDENTS – From sale of equity share in a company
VDA	Transfer of virtual digital assets
CYLA	Income after set-off of current years losses
BFLA	Brought Forward Losses of earlier years
CFL	Losses to be carried forward to future years
UD	Unabsorbed depreciation and allowance under section 35(4)
ICDS	Income Computation Disclosure Standards on profit
10AA	Deduction under section 10AA
80 G	Details of donations under section 80G
80GGA	Donations for scientific research or rural development
RA	Donations to research associations etc.
80-IA	Profits of an undertaking
80-IB	Deductions under 80-IB
80-IC or 80-IE	Under 80-IC or 80-IE
VI-A	Deductions under Chapter VI-A
AMT	Alternate Minimum Tax payable under section 115JC
AMTC	Tax credit under section 115JD
SI	Special Rate of Taxation
IF	Information regarding partnership firms in which you are partner
EI	Exempt Income
PTI	Pass Through Income details from business trust or investment fund
FSI	Income from outside India and tax relief
TR	Tax relief claimed for taxes paid outside India (available only in case of resident)
FA	Foreign Assets and Income from any source outside India
5A	Apportionment of income between spouses governed by Portuguese Civil Code
GST	Lastly, TURNOVER/GROSS RECEIPT FOR GST

How to file ITR 3? 

You can submit the ITR 3 for business owners and professionals in two modes. So, let’s take a look at the two modes:

• Online Mode: by furnishing all information and computing taxes electronically through the tax e-filing portal; and 
• Offline mode: you can furnish your statements in the paper format and submit it by transferring data electronically to the portal. 

What is the deadline to submit ITR 3? 

It is very important to file income tax returns before the deadline. Besides, the due date for filing income tax returns through ITR 3 is:

• 31st July for non – audit cases; and 
• Then, 31st October for audit cases. 

Conclusion

The ITR 3 form is one of the simpler forms related to furnishing a statement of income and expenses. If you fail to furnish your ITR 3 before the deadline, you can still file your updated income tax returns (ITR U). However, this is not possible in all cases. Hence, it is very important that you file the appropriate ITR for your income sources. So, get help in filing ITR online with Legalwiz.in experts. So don’t forget, we are just one click away!