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ITR-3 Business
Return Application

For Proprietors, Professionals & Partners. Comprehensive filing for business income, audits, and capital gains. Simplify your compliance today.

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Income Tax Return Guide

Introduction to ITR-3 (Income Tax Return – Form 3)

ITR-3 is designed for individuals and Hindu Undivided Families (HUFs) earning income from a proprietary business or profession, or as partners in a partnership firm. It captures detailed financial statements, capital gains, and other income sources for taxpayers with complex business profiles.

ITR-3 Business Professional Reviewing Documents

✓ What is ITR-3?

ITR-3 applies to individuals and HUFs with income from business or profession, including partners earning profit share from firms. It requires disclosure of balance sheets, profit & loss accounts, capital gains, and other income such as salary or house property.

The form supports income computation under Sections 44AD, 44ADA, and 44AE, along with audit applicability wherever required.

✓ Who Should File ITR-3?

  • • Individuals or HUFs earning income from business or profession
  • • Partners in firms earning profit share (not salary)
  • • Taxpayers with capital gains, foreign assets, or multiple house properties
  • • Individuals whose accounts are audited under Income Tax or GST laws

Common filers include doctors, architects, chartered accountants, consultants, freelancers, and small business owners.

Professionals Discussing ITR-3 Eligibility
Tax Consultation for ITR-3

✓ When is ITR-3 Not Applicable?

  • • Companies and LLPs (they must file ITR-6 or ITR-5)
  • • Individuals earning only salary and simple income (ITR-1 or ITR-2)
  • • Presumptive taxpayers under 44AD / 44ADA with simple income (ITR-4)
  • • Salaried partners receiving remuneration instead of profit share

Who Should File ITR-3?

Check if your income sources align with ITR-3 criteria.

Business Owners

Proprietors running manufacturing, trading, or service businesses (Non-Presumptive).

Professionals

Doctors, CAs, Lawyers, Architects, and other professionals maintaining books of accounts.

Firm Partners

Partners receiving salary, interest, bonus, or commission from partnership firms.

Audited Accounts

Turnover exceeding ₹1 Cr (Business) or ₹50 Lakhs (Profession), requiring tax audit.

Multiple Income Sources

Combination of business income with salary, house property, capital gains, or others.

Foreign Income / Assets

Residents having foreign income or assets along with business or professional income.

When is ITR-3 NOT Applicable?

Corporates/LLP

Companies or LLPs (Use ITR-5/ITR-6).

Presumptive Tax

Opting for 44AD/44ADA (Use ITR-4).

No Business Income

Only Salary/HP/Other Sources (Use ITR-1/2).

Simple Return

Salaried Partner with no profit share (Use ITR-2).

Required Documents for Filing

Ensure comprehensive documentation for business & audit purposes.

Financial Statements

Balance Sheet & P&L A/c for the financial year.

Audit Reports

Form 3CA/3CB & 3CD if liable for Tax Audit.

Bank Statements

Statements of all business & personal accounts.

Form 26AS & AIS/TIS

Proof of TDS deducted and high-value transactions.

GST Returns

Copy of GSTR-1, GSTR-3B for turnover reconciliation.

Capital Gains details

Purchase/Sale deeds for property, share statements.

Investment Proofs

LIC, PPF, Tuition Fee receipts for 80C deductions.

Loan Statements

Interest certificates for Business or Home Loans.

Challans

Advance Tax or Self-Assessment Tax payment proofs.

Audit & Compliance

Books of Accounts (Sec 44AA)

When Mandatory?

Business income exceeds ₹2.5 Lakhs or turnover exceeds ₹25 Lakhs. Professionals if gross receipts exceed ₹1.5 Lakhs.

Records to Maintain

Cash Book, Journal, Ledger, Inventory records, and copies of bills and receipts.

Tax Audit (Sec 44AB)

Audit Thresholds

Business turnover exceeds ₹1 Cr (₹10 Cr if 95% transactions are digital). Professionals if receipts exceed ₹50 Lakhs.

Requirement

Audit by a Chartered Accountant with reports in Form 3CA/3CB and 3CD. Penalties apply for non-compliance.

ITR-3 INCOME STRUCTURE

Income Sources Covered Under ITR-3

ITR-3 is designed for individuals and Hindu Undivided Families (HUFs) earning income from proprietary businesses or professions. It also accommodates multiple additional income heads, making it a comprehensive return form for business owners and partners.

Income from Business or Profession

This is the primary category covered by ITR-3. It includes:

  • • Income from proprietary business or professional practice, including service-based activities such as consulting, freelancing, legal, medical practice, or product-based businesses like trading and manufacturing.
  • • Income earned under presumptive taxation schemes such as Sections 44ADA, 44AE, or 44BB (where ITR-4 is not applicable).
  • • Disclosure of gross receipts, profit & loss account, and balance sheet, depending on turnover and audit applicability.

Proper classification ensures accurate tax computation and eligibility for exemptions.

House Property and Salary Income

Even when filing ITR-3 primarily for business or professional income, additional income heads can also be reported, including:

  • • Rental income from house property, whether self-occupied or let-out.
  • • Salary income, including allowances, perquisites, and bonuses, if you are a salaried partner or hold employment alongside your business.

These incomes are declared under their respective schedules within the ITR-3 form.

Capital Gains & Other Income Sources

ITR-3 also allows declaration of:

  • • Short-term and long-term capital gains from the sale of stocks, mutual funds, property, or other capital assets.
  • • Income from other sources such as interest on savings accounts, fixed deposits, dividends, lottery winnings, etc.

Each income type must be reported in detail with supporting documentation and applicable tax calculations.

Tax Saving Opportunities under ITR-3

Taxpayers filing ITR-3 can significantly reduce taxable income by claiming eligible personal and business deductions. Proper disclosure, classification, and documentation are essential for smooth processing.

Section 80C

Deduction up to ₹1.5 lakh for investments such as LIC premiums, ELSS mutual funds, PPF, 5-year fixed deposits, tuition fees, and principal repayment of home loans (eligible cases).

Section 80D

Medical insurance premiums paid for self, spouse, children, and parents. Higher limits apply for senior citizens. Preventive health check-ups are also allowed.

Business Expenses & Depreciation

Deduction for genuine business expenses such as office rent, salaries, professional fees, internet, travel, fuel, advertising, and depreciation on assets like laptops, furniture, vehicles, and machinery.

Home Loan & Other Deductions

Section 24(b) allows deduction up to ₹2 lakh on home loan interest. Additional benefits may apply under Sections 80G (donations), 80E (education loan), 80TTA/80TTB (interest), and 80U (disability).

Important: All deductions must be supported by valid documentation. Personal expenses cannot be claimed as business deductions, and audit applicability under Section 44AB must be evaluated where relevant.

Step-by-Step ITR-3 Filing Process

A structured, compliance-first approach designed for business and professional taxpayers.

1

Gather & Prepare Financial Data

Collate balance sheet, profit & loss statements, bank records, capital gains data, and deduction proofs. Proper preparation ensures accurate computation and smooth filing.

2

Login to Income Tax Portal

Access incometax.gov.in using PAN credentials and ensure profile, contact, and bank details are updated before proceeding.

3

Select ITR-3 Form

Choose the correct Assessment Year, select Online Mode, and proceed with Form ITR-3 for business or professional income.

4

Fill Business & Income Details

Enter profit & loss figures, balance sheet details, capital gains, foreign assets (if any), deductions, and tax payments under applicable schedules.

5

Upload Audit Report (If Applicable)

If liable to tax audit, ensure Form 3CD and audit report are uploaded by your CA before the prescribed due date.

✓

Verify & Submit Return

Review tax computation, submit the return, and complete mandatory e-verification via Aadhaar OTP, net banking, or DSC to finalize filing.

Filing Deadlines

Non-Audit Cases

31st July

For individuals/businesses not liable for tax audit.

Audit Cases

31st October

For businesses/professionals liable for audit under Sec 44AB.

Note: Late filing attracts penalty of ₹5,000 u/s 234F + Interest u/s 234A/B/C.

Common Mistakes

Avoid these errors for a smooth assessment.

Wrong Form

Filing ITR-1 or ITR-4 when ITR-3 applies (non-presumptive).

Missing Audit

Failure to upload audit report when turnover exceeds limits.

Expense Disallowance

Claiming personal expenses as business costs without proof.

Income Omission

Not reporting Interest, Dividend or Foreign Income.

TDS Mismatch

TDS credits claimed not matching Form 26AS.

Maintenance of Books & Audit Requirements

For taxpayers filing ITR-3, strict compliance with bookkeeping and audit provisions is mandatory. Sections 44AA and 44AB of the Income Tax Act prescribe clear rules for maintaining books of accounts and conducting tax audits. Since presumptive taxation is not applicable, full disclosure is required.

Books of Accounts Section 44AA Compliance

✓ Books of Accounts (Section 44AA)

Section 44AA specifies who must maintain books of accounts and the nature of records required:

  • • Professionals such as doctors, lawyers, CAs, architects must maintain books if gross receipts exceed ₹2.5 lakh in any of the last 3 years.
  • • Businesses must maintain books if income exceeds ₹2.5 lakh or turnover exceeds ₹25 lakh in any of the last 3 years.
  • • Records include cash book, journal, ledger, inventory, bills, and receipts.

Proper bookkeeping ensures accurate reporting and safeguards you during scrutiny or assessment proceedings.

✓ Tax Audit Requirement (Section 44AB)

Under Section 44AB, a tax audit becomes mandatory in the following cases:

  • • Business turnover exceeding ₹1 crore (or ₹10 crore where digital receipts exceed 95%).
  • • Professionals with gross receipts exceeding ₹50 lakh in a financial year.
  • • Taxpayers opting out of presumptive taxation and declaring lower profits beyond threshold limits.

The audit must be conducted by a Chartered Accountant and filed using Form 3CA / 3CB along with Form 3CD within the prescribed due date.

Tax Audit Discussion Section 44AB
Financial Analysis Actuals vs Presumptive

✓ Presumptive Taxation – Not Applicable

ITR-3 does not support presumptive taxation schemes such as:

  • • Section 44AD (Small Businesses)
  • • Section 44ADA (Professionals)
  • • Section 44AE (Goods Carriage Operators)

Taxpayers opting for presumptive taxation must file ITR-4. ITR-3 filers are required to maintain proper books and report actual profits and losses.

How Udyog Suvidha Kendra Helps with ITR-3 Registration

Filing ITR-3 involves complex disclosures, audits, and strict compliance. Our experts ensure accurate filing, end-to-end support, and post-submission assistance so you remain stress-free and compliant.

1

Expert Filing Assistance

Our tax professionals guide you through accurate ITR-3 filing, ensuring correct income classification, capital gains reporting, and full statutory compliance to avoid penalties or rejections.

2

Documentation & Audit Support

We assist in maintaining books of accounts, organizing documents, and complying with Sections 44AA and 44AB. If audit is applicable, our experts coordinate end-to-end with Chartered Accountants.

3

Post-Filing Services

Our support continues after filing — including e-verification, refund tracking, rectifications, and handling Income Tax notices or department queries on your behalf.

Frequently Asked Questions

IT Return 3 in Different States

Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh Goa Gujarat Haryana Himachal Pradesh Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Odisha Punjab Rajasthan Sikkim Tamil Nadu Telangana Tripura Uttar Pradesh Uttarakhand West Bengal Delhi Chandigarh Ladakh Lakshadweep Puducherry Jammu & Kashmir Andaman & Nicobar Dadra & Nagar Haveli

IT Return 3 in Major Cities

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