What is ITR 3 Form

The ITR-3 Form is an income tax return form used by individuals and Hindu Undivided Families (HUFs) who earn income from business or profession. It also covers income from salary, house property, capital gains, and other sources. This form is designed for taxpayers who actively run a business, work as freelancers, or practice a profession such as doctors, lawyers, architects, or consultants. Filing ITR-3 helps report yearly income, claim deductions, and calculate taxes correctly. This article explains everything you need to know about ITR-3—from who can file it to the structure, steps, and important changes for the current assessment year.

The ITR-3 Form is a detailed income tax return form used by individuals and HUFs who earn income from business or professional activities. It includes profits from your business, consultancy work, or professional services. The form also allows you to report salary income, rental income, capital gains, and interest income. ITR-3 is meant for taxpayers who need to maintain books of accounts and declare full financial details. It helps the Income Tax Department understand your actual earnings, expenses, and tax liability. Filing ITR-3 ensures your financial record is complete, transparent, and compliant with tax rules.

ITR-3 is meant for taxpayers who earn money through business or professional work. If you run a shop, have a consultancy, or work as a freelancer, this form may apply to you. Individuals and HUFs who maintain books of accounts and report business profits must file ITR-3. Salaried people who also have a professional side-income can file this form too.

You can file ITR-3 if you:

• Earn income from a business (sole proprietorship)
• Earn income from profession (doctor, lawyer, architect, CA, consultant)
• Have salary, rental income, or capital gains
• Earn interest or other income
• Are an individual or HUF

Not everyone can file ITR-3. This form is specifically for business and professional income, so people who do not earn such income must choose another ITR form. If you only earn a salary, pension, rental income, or interest income, you cannot file ITR-3.

You cannot file ITR-3 if:

• You do not have business or professional income
• You only have salary or pension income
• You own a business opting for presumptive schemes under ITR-4
• Your only income is from house property
• You only earn capital gains or interest income
• You represent a company, partnership firm, or LLP

The due date to file ITR-3 for individuals and HUFs who need to get their accounts audited is usually 31st October of the assessment year. For those not requiring an audit, the due date is 31st July. Filing on time helps avoid penalties, interest, and late fees.

For AY 2025-26, the ITR-3 Form includes updates like enhanced reporting for deductions, revised asset-liability limits, and new income categories. Some schedules have been updated to improve clarity. Taxpayers must ensure accurate reporting to avoid mismatches during processing.

A new rule allows taxpayers to report capital losses occurring during a share buyback done after 1 October 2024. This helps individuals record losses correctly and adjust them against future capital gains. Reporting such losses in ITR-3 gives transparency and helps reduce tax burden in later years.

Important Points:

• Losses from company share buybacks can now be reported
• Applies only to buybacks after 01.10.2024
• Losses can be carried forward for set-off
• Must be entered in the capital gains schedule
• Helps reduce future tax by adjusting gains and losses

For taxpayers filing ITR-3, the limit for reporting assets and liabilities has been increased. Now, individuals with total income above Rs. 1 crore must report all movable and immovable assets along with liabilities. This provides more transparency and strengthens financial reporting.

Key Points:

• Applies if income > Rs. 1 crore
• Must report assets such as property, vehicles, jewellery
• Must report liabilities like loans
• Helps maintain a clear financial picture
• Information recorded in the “AL” schedule

A new section, 44BBC, has been added for taxpayers running cruise businesses. This section provides a special way to calculate taxable income for cruise operators. Those working in this field must report income under this new section while filing ITR-3.

Key Points:

• Applies to cruise business operators
• Offers simplified tax calculation
• Helps reduce compliance time
• Income must be reported under the new section
• Part of presumptive taxation updates

ITR-3 now requires detailed reporting of deductions claimed under different sections like 80C, 80D, 10(13A) for HRA, and more. Taxpayers must give separate details of each deduction to avoid mismatches. Accurate reporting ensures the correct tax benefit is applied.

Key Points:

• Separate fields for 80C, 80D, HRA, and others
• Must report each claim individually
• Reduces chances of errors
• Helps Income Tax Department validate data easily

• Ensures accurate tax relief for taxpayers

The TDS schedule now asks taxpayers to enter TDS details with correct section codes. This ensures proper credit of the TDS deducted throughout the year. Using the right codes helps avoid delays or mismatches while processing your tax return.

Key Points:

• Must enter TDS with correct section code
• Ensures accurate credit of tax deducted
• Covers salary, rent, professional fees, and more
• Reduces errors during assessment
• Helps faster ITR processing

Filing ITR-3 may look detailed, but with a step-by-step approach, it becomes easy to complete. Here is a simple guide to help you file your ITR-3 online.

1. Log In to the Income Tax Portal

Start by visiting the e-filing portal and logging in using your PAN and password. After logging in, go to the “File Income Tax Return” section.

2. Choose the Assessment Year

Select the correct assessment year you want to file for. Choose the option “Online mode” and proceed.

3. Pick the Correct ITR Form

Select ITR-3 from the list of forms. The portal will show who can file the form and confirm your eligibility.

4. Enter Personal Information

Provide your name, PAN, address, contact details, and filing status. Make sure the details match with Aadhaar and previous filings.

5. Add Business or Professional Details

This is the main part of ITR-3. You must enter:

• Nature of business or profession
• Business code
• Turnover for the year
• Profit and loss details
• Balance sheet information
  If you maintain books of accounts, fill in all fields carefully.

6. Report Salary Income (If Any)

If you also earn salary, enter details from your Form 16. Include allowances, deductions, and total taxable salary.

7. Add Income from House Property

Report rent received, municipal taxes paid, and interest on home loans (if any). The form calculates the taxable income.

8. Report Capital Gains

If you sold shares, property, or mutual funds, enter your gains or losses here. Use correct dates and purchase values.

9. Add Other Income

Enter interest income, gifts, winnings, or any other income received during the year.

10. Claim Deductions

Go to the deductions section to claim benefits under 80C, 80D, 80G, 80TTA, and others. Enter correct amounts.

11. Add Taxes Paid

The portal will show TDS, advance tax, or self-assessment tax paid. Verify this with Form 26AS and AIS.

12. Preview Your Return

Before submitting, check all schedules. Ensure figures match with bank statements, books of accounts, and Form 26AS.

13. Submit the Return

Click “Submit” to file your ITR-3.

14. Verify Your ITR

You must complete e-verification using Aadhaar OTP, bank account EVC, or DSC. Your ITR filing is only complete after verification.

ITR-3 is a detailed form with multiple schedules. Each part captures different types of income, deductions, taxes, and financial details. Understanding the structure helps you fill the form smoothly.

Main Parts of ITR-3:

• Part A – General Information: Personal details, filing status, nature of business.
• Part A-BS: Balance sheet details for business or profession.
• Part A-P&L: Profit and loss details.
• Schedule IF: Information about partnership firms if you are a partner.
• Schedule HP: Income from house property.
• Schedule BP: Income from business or profession.
• Schedule CG: Capital gains.
• Schedule OS: Income from other sources.
• Schedule CYLA / BFLA: Loss adjustment.
• Schedule 80G / 80GGA: Donation details.
• Schedule TDS / TCS: Tax deducted or collected at source.
• Schedule AL: Asset and liability reporting.
• Part B – TI: Total income computation.
• Part B – TTI: Total tax payable.

These sections ensure that every part of your income and financial data is correctly reported for accurate tax calculation.

Filing ITR-3 is simple if you follow a structured approach. You need your documents, income details, tax proofs, and correct schedules. The process can be completed fully online.

Steps to File ITR-3:

• Log in to the e-filing portal
• Select the assessment year
• Choose ITR-3
• Fill personal details
• Enter professional or business income
• Add salary, house property, and other incomes
• Upload balance sheet and P&L details
• Enter deductions
• Match taxes paid with Form 26AS
• Review and submit
• Complete e-verification

Following these steps ensures your return is filed correctly and on time.

The verification section of ITR-3 confirms that all information you entered is true and correct. You must provide your name, father’s name, PAN, place, and date. After filling in these details, choose how you will verify your ITR. Most people use Aadhaar-based OTP or bank account EVC for quick verification. Once verified, your ITR is officially submitted. If you choose manual verification, you must send the signed ITR-V to CPC Bengaluru within the specified time.

Business codes in ITR forms help the Income Tax Department understand the exact type of business or profession you are involved in. These codes must be selected correctly when filing ITR-3 because they tell the department what kind of work you do and how your income is earned. Each business activity—like retail, manufacturing, consultancy, healthcare, construction, IT services, or freelancing—has a unique code. Choosing the right code ensures your income is classified correctly and your return is processed smoothly. If you pick the wrong code, it may lead to confusion or mismatches during assessment.

Below is a simple table with commonly used business and profession codes:

When filing ITR-3, choose the code that best describes your main business activity. If you have multiple businesses, select the code for the activity that earns the highest income. This helps the tax system classify your work correctly.

The ITR-3 Form is an important return for individuals and HUFs who earn income from business or professional activities. It helps you report all your earnings clearly, including salary, house property, capital gains, and other sources. Filing this form on time ensures compliance with tax rules and keeps your financial record accurate and transparent. Although the form has many sections, understanding its structure makes the process easier. With proper documents, correct business codes, and careful reporting, filing ITR-3 becomes smooth and stress-free. Complete your return early to avoid penalties and enjoy a worry-free tax season.