ITR-3 Return Filing – For
Business Professionals & Partners of Firms

ITR-3 is the income tax return form applicable to individuals and Hindu UndividedFamilies (HUFs) who earn income from business or profession, or are partners in a firm. Unlike salaried taxpayers or those with only capital gains, this form allows reporting of both business/professional income and other sources. It is essential for those maintaining books of accounts or falling under audit provisions. Filing ITR-3 ensures tax compliance, access to deductions, and smooth financial documentation for future requirements such as loan approvals or visa applications.

Income Tax Return-3

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Application For Income Tax Return

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ITR-3 Amendment Registration

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 Process of ITR-3 Amendment Registration 2025

STEP 1

  • Fill out the online form with your details.
  • Make the required payment to proceed.
  • Get Call for Further Information, Documents & Advice

STEP 2

  • Submit documents and information if requested.
  • Team will review and validate documents and information.

STEP 3

  • Creation of login credential.
  • Respond to any follow-up from the team.

STEP 4

  • Filing of an Application using the Credentials
  • Government Processing Time

STEP 5

  • Resolution of Queries if any, Raised via Authorities
  • Issuance of ITR-3 Registration on email.

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

ITR-3 is an Income Tax Return form primarily designed for individuals and Hindu Undivided Families (HUFs) who earn income from a proprietary business or profession, or who are partners in a partnership firm (not receiving salary from the firm but sharing profits). This form captures detailed financial information such as balance sheets, profit and loss accounts, and capital gains, along with general income sources like salary, house property, or other income. Unlike simpler ITR forms, ITR-3 is structured to reflect a more complex income profile, especially for taxpayers involved in entrepreneurial or consulting activities. It includes provisions for income computation under sections 44AD, 44ADA, or 44AE, and audit requirements where applicable.

What is ITR-3

What is ITR-3?

ITR-3 is an Income Tax Return form primarily designed for individuals and Hindu Undivided Families (HUFs) who earn income from a proprietary business or profession, or who are partners in a partnership firm (not receiving salary from the firm but sharing profits). This form captures detailed financial information such as balance sheets, profit and loss accounts, and capital gains, along with general income sources like salary, house property, or other income. It includes provisions for income computation under sections 44AD, 44ADA, or 44AE, and audit requirements where applicable.

What is ITR-3?

ITR-3 is an Income Tax Return form primarily designed for individuals and Hindu Undivided Families (HUFs) who earn income from a proprietary business or profession, or who are partners in a partnership firm (not receiving salary from the firm but sharing profits). This form captures detailed financial information such as balance sheets, profit and loss accounts, and capital gains, along with general income sources like salary, house property, or other income. It includes provisions for income computation under sections 44AD, 44ADA, or 44AE, and audit requirements where applicable.

Who Should File ITR-3?

You should file ITR-3 if you fall under any of the following categories:

  • Individuals or HUFs earning income from business or profession, either as a sole proprietor or consultant.
  • Partners in a firm (excluding LLPs taxed as companies) drawing a share of profit (not salary).
  • Taxpayers having income from capital gains, foreign assets, multiple house properties, or other sources.
  • Individuals whose books of accounts are audited under the Income Tax Act or GST laws.

This form is applicable to professionals such as doctors, architects, chartered accountants, freelancers, small business owners, consultants, and firm partners with business-level income.

Who Should File ITR-3

Who Should File ITR-3?

You should file ITR-3 if you fall under any of the following categories:

  • Individuals or HUFs earning income from business or profession, either as a sole proprietor or consultant.
  • Partners in a firm (excluding LLPs taxed as companies) drawing a share of profit (not salary).
  • Taxpayers having income from capital gains, foreign assets, multiple house properties, or other sources.
  • Individuals whose books of accounts are audited under the Income Tax Act or GST laws.

This form is applicable to professionals such as doctors, architects, chartered accountants, freelancers, small business owners, consultants, and firm partners with business-level income.

When is ITR-3 Not Applicable

When is ITR-3 Not Applicable?

ITR-3 is not suitable in the following scenarios:

  • If you are a company or a Limited Liability Partnership (LLP); you must file ITR-6 or ITR-5 instead.
  • If you earn only from salary, one house property, and other sources (without business income), you should file ITR-1 or ITR-2 depending on your case.
  • If you're an individual or HUF who opts for the presumptive taxation scheme under section 44AD or 44ADA and have no other complex income, ITR-4 would be more appropriate.
  • Salaried partners in a firm (receiving remuneration and not profit share) are advised to file ITR-2.

When is ITR-3 Not Applicable?

ITR-3 is not suitable in the following scenarios:

  • If you are a company or a Limited Liability Partnership (LLP); you must file ITR-6 or ITR-5 instead.
  • If you earn only from salary, one house property, and other sources (without business income), you should file ITR-1 or ITR-2 depending on your case.
  • If you're an individual or HUF who opts for the presumptive taxation scheme under section 44AD or 44ADA and have no other complex income, ITR-4 would be more appropriate.
  • Salaried partners in a firm (receiving remuneration and not profit share) are advised to file ITR-2.

Eligibility Criteria for Filing ITR-3

ITR-3 must be filed by individuals or Hindu Undivided Families (HUFs) who have income from business or profession or who are partners in a firm. This form is designed to capture comprehensive financial and business-related information, making it suitable for taxpayers with more complex income profiles. Here's a detailed breakdown of who is eligible to file ITR-3:

Income from Proprietary Business or Profession

If you are running a sole proprietorship or engaged in professional services such as medical practice, legal advisory, consulting, accountancy, architecture, etc., and earn income through these activities, you must file ITR-3. This applies whether or not your income exceeds the basic exemption limit.

Partner in a Firm (Not Receiving Salary)

Partners in a partnership firm (excluding LLPs taxed as companies) receiving a share of profit (exempt under Section 10(2A)) or interest/remuneration are required to file ITR-3. This form helps declare income such as 1. share of profit from the firm 2. interest on capital 3. remuneration or commission (if applicable).

Income from Multiple Sources

ITR-3 can be used by individuals or HUFs who have income from various sources in addition to business or profession, including 1. capital gains, 2. more than one house property, 3. other sources like interest income dividends winnings from lotteries, and 4 foreign income or assets requiring FATCA reporting.

Audited Accounts

If your business or professional income crosses specified thresholds requiring a tax audit under Section 44AB, or you're mandated to maintain books of accounts, then ITR-3 is the correct form to use.

Not Opting for Presumptive Taxation

If you’re eligible for presumptive taxation schemes (44AD, 44ADA, 44AE) but choose not to opt for them and instead wish to declare actual profits and losses, ITR-3 becomes applicable.

Important Note: ITR-3 is not applicable to companies, LLPs, or individuals filing under the presumptive taxation schemes using ITR-4. It also doesn’t apply to salaried individuals with no business or professional income.

Documents Required for ITR-3 Filing

Filing ITR-3 involves reporting business or professional income, along with other income heads. To ensure accurate filing and avoid discrepancies, keep the following documents ready:

1. PAN & Aadhaar Card

Mandatory for identity verification and e-verification. Ensure that both are linked and updated.

2. Bank Account Details

Provide account numbers and IFSC of all active bank accounts. Choose one account for refunds.

3. Form 16 (If Applicable)

If you also earn salary income, Form 16 from your employer is needed to report salary and TDS.

4. Form 26AS, AIS & TIS

These reports reflect all tax deducted, high-value transactions, and other tax credits available to you.

5. Financial Statements

Include profit & loss account, balance sheet, and other relevant books of accounts for business or profession.

6. Tax Audit Reports (If Applicable)

If turnover crosses limits prescribed under Section 44AB, submit audit reports in Form 3CB/3CD.

7. Capital Gains Statements

Include sale/purchase details of shares, mutual funds, or property with calculation of capital gains.

8. Interest Income Proof

Certificates for interest earned from FDs, RDs, savings accounts, or post office schemes.

9. Investment & Deduction Proofs

For claiming deductions under Sections 80C, 80D, 80G etc., include relevant receipts and payment proofs.

10. Partnership Details (If Applicable)

Partners must report profit share, remuneration, and interest on capital—supported by firm’s financials and partnership deed.

11. Foreign Income/Assets Details

If applicable, disclose foreign holdings and income under Schedule FA as per compliance requirements.

12. Loan and Liability Records

Details of any loans (business or personal), repayments, and interest paid should be documented.

Step-by-Step Process to File ITR-3

Filing ITR-3 involves multiple steps due to its focus on business and professional income. Follow this structured process to ensure error-free and compliant return submission:

1

Step 1: Gather Required Documents

Start by collecting all essential documents such as PAN, Aadhaar, bank details, income proofs, business financials, capital gains statements, and deduction proofs. Having everything in place streamlines the filing process.

2

Step 2 – Login to the Income Tax Portal

Visit the official Income Tax e-Filing portal (https://www.incometax.gov.in) and log in using your PAN (User ID), password, and captcha. Ensure your profile is fully updated before starting the return.

3

Step 3 – Select ITR-3 and Enter Details

Navigate to “File Income Tax Return” → Select the relevant Assessment Year → Choose “Online” mode → Select “ITR-3” as your form type. Begin entering your personal, income, and tax details step by step.

4

Step 4 – Report Business/Professional Income

In the applicable schedules, provide your gross receipts, expenses, depreciation (if any), and net profit or loss. If eligible under presumptive taxation (Section 44ADA/44AE), declare accordingly. Also disclose balance sheet and profit & loss details if maintained.

5

Step 5 – Claim Deductions & Validate

Input deductions under Chapter VI-A (e.g., 80C, 80D, 80G) and validate your total tax liability. Cross-check data with Form 26AS, AIS, and pre-filled information to avoid mismatch.

6

Step 6 – Submit and E-Verify the Return

Once satisfied with all entries, proceed to submit the return. E-verify it using Aadhaar OTP, net banking, or other methods. Timely e-verification is mandatory to complete the filing process.

Income Sources Covered Under ITR-3

ITR-3 is designed for individuals and Hindu Undivided Families (HUFs) who earn income from proprietary businesses or professions. It also accommodates other sources of income, making it a comprehensive return form for those engaged in business or partnership roles. Below are the types of income that must be reported under ITR-3:

Income from Business or Profession

This is the primary category covered by ITR-3. It includes:
● Income from proprietary business or professional practice,whether service-based (like consulting, freelancing, legal, or medical practice) or product-based (trading, manufacturing, etc.).
● Income earned underpresumptive taxation schemes like Section 44ADA, 44AE, or 44BB (if not opted for ITR-4).
● You need to disclose details such as gross receipts, profit & loss statement, and balance sheet, depending on turnover and audit applicability.

Proper classification ensures accurate tax computation and eligibility exemptions.

House Property and Salary Income

Even if you’re filing ITR-3 primarily for business or professional income, other heads of income can be reported, including:
● Rental income from house property, whether self-occupied or let-out.
● Salary income, including allowances, perquisites, and bonus, if you're a salaried partner in a firm or hold other employment in addition to business income.

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

ITR-3 also allows declaration of:

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

Each of these income types must be reported in detail, along with supporting documentation and applicable tax calculations.

Tax Deductions in ITR-3

Taxpayers filing ITR-3 can significantly reduce their taxable income by claiming eligible deductions. These include both personal deductions (like investments and expenses under Chapter VI-A) and business-related deductions (such as depreciation, operational expenses, and professional outlays). Proper disclosure and documentation are essential for smooth claim processing.

Section 80C to 80U Overview

These are personal deductions allowed under Chapter VI-A of the Income Tax Act:

  • ● Section 80C: Up to ₹1.5 lakh can be claimed for investments like LIC premiums, ELSS, PPF, 5-year FD, etc.
  • ● Section 80D: Premiums paid for medical insurance for self, family, and parents.
  • ● Section 80G: Donations to eligible charitable organizations.
  • ● Section 80TTA/80TTB: Interest on savings accounts (for individuals and senior citizens).
  • ● Section 80U: Deductions for individuals with disabilities.

These deductions are optional and must be manually selected while filing.

deduction illustration

Depreciation and Business Expenses

Under ITR-3, professionals and business owners can also claim business-related deductions:

  • ● Depreciation on fixed assets like computers, office furniture, vehicles, and machinery as per Income Tax rules.
  • ● Expenses incurred for business operations like rent, internet bills, employee salaries, professional fees, advertising, fuel, travel, etc.
  • ● These must be genuine and supported by bills/invoices. Also, expenses of a personal nature cannot be claimed.

Proper recordkeeping and compliance with Section 44AB (Tax Audit) requirements (if applicable) is crucial when claiming these deductions.

Home Loan, Donations, and Others

Additional deductions include:

  • ● Home Loan Interest (Section 24(b)): Deduction up to ₹2 lakh per annum on interest paid for a self-occupied house.
  • ● Principal repayment can be claimed under Section 80C if it’s a first-time purchase.
  • ● Donations (80G): Depending on the entity, either 50% or 100% of the donation amount can be claimed.
  • ● Other deductions like Section 80E (education loan) and 80EEA (additional home loan interest) are also applicable if the conditions are met.

Maintenance of Books & Audit Requirements

For taxpayers filing ITR-3—especially professionals and business owners—complying with statutory requirements regarding bookkeeping and audits is crucial. The Income Tax Act mandates specific norms under Section 44AA for maintaining books of accounts and Section 44AB for conducting tax audits based on income thresholds. Since presumptive taxation is not applicable under ITR-3, full compliance is mandatory.

Books of Accounts

Books of Accounts (As per Sec 44AA)

Section 44AA outlines the type of books that must be maintained by certain professionals and businesses:

  • ● Professionals (e.g., doctors, lawyers, accountants, architects) must maintain books if their gross receipts exceed ₹2.5 lakh in any of the preceding 3 years.
  • ● Businesses must maintain books if their income exceeds ₹2.5 lakh or turnover exceeds ₹25 lakh in any of the preceding 3 years.
  • ● Books may include: cash book, journal, ledger, inventory records, and bills/receipts of expenses and income.

Maintaining accurate and complete records ensures proper income reporting and helps in case of scrutiny or assessment by tax authorities.

Tax Audit Requirement

Tax Audit Requirement (Sec 44AB)

Under Section 44AB, a tax audit is mandatory for:

  • ● Businesses with turnover exceeding ₹1 crore (₹10 crore if digital transactions exceed 95% of total).
  • ● Professionals with gross receipts exceeding ₹50 lakh in a financial year.
  • ● Taxpayers who opt out of presumptive taxation under Section 44AD/44ADA and report lower profits than prescribed while exceeding the threshold.

The audit must be conducted by a Chartered Accountant, and the audit report must be submitted in Form 3CA/3CB along with Form 3CD by the specified due date.

Presumptive Taxation

Presumptive Taxation – Not Applicable

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

  • ● Section 44AD for small businesses.
  • ● Section 44ADA for professionals.
  • ● Section 44AE for goods vehicle operators.

Taxpayers opting for presumptive schemes must file ITR-4, not ITR-3. Therefore, individuals using ITR-3 must maintain proper books and report actual profits and losses from their business or profession.

Common Mistakes to Avoid

Filing ITR-3 requires accurate reporting and compliance with income tax provisions. Even experienced professionals and business owners can make avoidable errors that may lead to notices, penalties, or delayed refunds. Here are the most frequent mistakes you must steer clear of:

Wrong ITR Form Selection
  • Many taxpayers wrongly select ITR-1 or ITR-4 despite having business income or partnership firm involvement, which makes them ineligible. ITR-3 must be used if:
  • ● You are a proprietor of a business or profession, or
  • ● You are a partner in a firm (not receiving salary only).
  • Using the wrong form can render your return defective and may require a revised submission.
Missing Audit Requirement
  • If your income exceeds specified thresholds, a tax audit under Section 44AB becomes mandatory. Failing to:
  • ● Get the audit conducted, or
  • ● Upload the audit report before the due date,
  • can result in penalties up to 0.5% of turnover, subject to a maximum of ₹1.5 lakh. Always verify if your case falls under the audit category.
Incorrect Business Expense Claims
  • While filing ITR-3, many claim non-allowable expenses or lack proper documentation. Common issues include:
  • ● Personal expenses claimed as business costs.
  • ● Missing bills or vouchers for claimed deductions.
  • ● Inadequate breakup of depreciation and capital assets.
  • These can invite scrutiny or disallowance during assessment.
Not Reporting All Income Sources
  • ITR-3 is a comprehensive return and must include all taxable income, such as:
  • ● House property income,
  • ● Capital gains,
  • ● Interest, dividends,
  • ● Foreign income/assets (if applicable).
  • Omitting any source, even unintentionally, can attract penalty under Section 270A for under-reporting of income.
Forgetting E-Verification
  • Filing the return online is not enough. You must e-verify the ITR within 30 days of submission via:
  • ● Aadhaar OTP
  • ● Net banking
  • ● EVC via bank or demat account
  • ● Sending a signed ITR-V to CPC, Bengaluru
  • Failure to e-verify results in your return being treated as invalid.

How Udyog Suvidha Kendra Helps with ITR-3 Registration

1

Expert Filing Assistance

Get guided support from our tax professionals to accurately file your ITR-3. We ensure compliance, proper income classification, and timely filing to avoid penalties or rejections.

2

Documentation & Audit Support

We help you organize the right documents, maintain records, and comply with Section 44AA and 44AB requirements. Our team also supports you through audit procedures if applicable.

3

Post-Filing Services

From tracking refund status to handling IT notices, we assist you beyond just filing. Our experts manage e-verification, corrections, and help with any queries raised by the IT department.

ITR-3 Registration FAQs

Who should file ITR-3?
Individuals and Hindu Undivided Families (HUFs) earning income from business or profession under a proprietorship or being a partner in a firm (not LLP) should file ITR-3. It also includes income from salary, house property, capital gains, or other sources.
Yes, salaried individuals can file ITR-3 only if they also earn income from business, profession, or are partners in a firm. Otherwise, they should use ITR-1 or ITR-2 depending on other income sources.
Key documents include PAN, Aadhaar, Form 16, profit & loss account, balance sheet, bank statements, TDS certificates, tax audit reports (if applicable), and details of business expenses, deductions, and other income sources.
Audit is mandatory if total business turnover exceeds ₹1 crore (or ₹10 crore for digital transactions) or professional receipts exceed ₹50 lakhs. This falls under Section 44AB of the Income Tax Act.
For individuals not requiring audit, the due date is July 31 of the assessment year. For those requiring audit, it is extended to October 31. Timely filing avoids penalties and interest.
Filing after the due date attracts late fees up to ₹5,000 under Section 234F, along with interest on tax payable under Sections 234A, 234B, and 234C. Refund processing may also be delayed.
Yes, if your income is straightforward and audit is not required, you can file ITR-3 yourself using the Income Tax portal. However, for business income and audit cases, professional guidance is recommended.
Yes, e-verification is mandatory to complete the filing process. You can verify using Aadhaar OTP, net banking, bank account, or by sending a signed ITR-V form physically to CPC, Bengaluru.
Yes, individual partners (excluding LLPs) earning a share of profit or remuneration from the firm must file ITR-3. They can also declare salary, capital gains, or other income in the same form.
No, if you're declaring income under presumptive taxation schemes (Sections 44AD, 44ADA, or 44AE), then you should file ITR-4, not ITR-3. ITR-3 is for regular books of account-based reporting.
Short-term and long-term capital gains must be reported with full details like sale value, acquisition cost, date of purchase/sale, and indexation. Proper schedules in the form must be filled to avoid errors.
Deductions under Section 80C to 80U are allowed. Business expense deductions like depreciation, rent, utilities, and staff salaries can also be claimed under appropriate sections if related to your profession or business.
Yes, if you made errors or missed information, you can revise your ITR-3 before the end of the assessment year or before the completion of assessment, whichever is earlier.
Yes, if you're filing ITR-3 for business or professional income, you must submit your balance sheet and profit & loss account unless you're opting for presumptive taxation (which requires ITR-4 instead).
We offer end-to-end assistance including accurate data entry, document support, business income classification, audit compliance, deduction claims, and e-verification. Our experts ensure timely filing and help avoid penalties or scrutiny.