Income Tax Return (ITR) Form 3 is a comprehensive form for individuals and Hindu Undivided Families (HUFs) in India who have income from “Profits and Gains of Business or Profession.” It’s essentially the “master form” for individuals with business or professional income, as it allows them to report all types of income.
Who is Eligible to File ITR-3?
ITR-3 is applicable to individuals and HUFs who have income from
Profits and Gains of Business or Profession
This is the primary criterion. This includes income from a proprietary business or if you are carrying on a profession (e.g., doctor, lawyer, accountant, consultant, freelancer, etc.).
Important Distinction
If you are opting for the presumptive taxation scheme under Section 44AD, 44ADA, or 44AE, and your total income is up to ₹50 lakh, you are generally eligible to file ITR-4 (Sugam). However, if your turnover exceeds the limits for presumptive taxation (e.g., business turnover exceeding ₹3 crore for digital transactions or ₹2 crore for cash transactions under 44AD, or professional receipts exceeding ₹75 lakh for digital transactions or ₹50 lakh for cash transactions under 44ADA for FY 2024-25), or if you opt out of the presumptive scheme within the lock-in period, you must file ITR-3 and maintain books of accounts.
Salary/Pension
If you are a salaried individual but also have business or professional income.
House Property
Income from one or more house properties.
Capital Gains
From the sale of any capital assets (shares, mutual funds, property, etc.). This is a common reason for salaried individuals with stock market activity to move from ITR-1/2 to ITR-3 if they also have business income.
Other Sources
Including interest income, dividends, winnings from lottery, crossword puzzles, horse races, etc.
Director in a Company
If you were a director in any company at any time during the previous year.
Holding Unlisted Equity Shares
If you have held any unlisted equity shares at any time during the previous year.
Foreign Income or Foreign Assets
If you have any income from sources outside India, or hold any assets located outside India, or have signing authority in any account located outside India.
- Agricultural Income exceeding ₹5,000.
Clubbing of Income
If the income of another person (like a spouse or minor child) is to be clubbed with your income, and that income falls into any of the above categories.
Who Cannot File ITR-3?
- Any person other than an Individual or a HUF (e.g., Companies, LLPs, Firms, Trusts, etc., who typically file ITR-5, ITR-6, ITR-7).
- Individuals or HUFs who do not have income from “Profits and Gains of Business or Profession” (they would file ITR-1, ITR-2, or ITR-4 depending on their income sources and limits).
Key Changes for FY 2024-25 (AY 2025-26) for ITR-3
The ITR forms, including ITR-3, for AY 2025-26 have seen several updates to reflect the Finance Act, 2024, and to enhance reporting.
Default Tax Regime
The new tax regime is now the default. You must explicitly opt for the old tax regime if you wish to claim deductions under Chapter VI-A (like 80C, 80D, etc.).
Capital Gains Split
Capital gains must now be split and reported based on whether the transfer occurred before or after July 23, 2024. This requires careful tracking of transaction dates.
Capital Losses on Share Buybacks
New fields have been added for reporting capital losses on share buybacks from October 1, 2024, particularly if the corresponding dividend income is reported under “Income from Other Sources.”
Increased Asset & Liability Reporting Threshold
The threshold for mandatory reporting of assets and liabilities (Schedule AL) has been increased from ₹50 lakh to ₹1 crore of total income.
New Presumptive Taxation Section
Section 44BBC, pertaining to income from the cruise shipping business (for non-resident cruise operators), is now included for disclosure under income from business or profession.
Enhanced Reporting for Deductions
More detailed information may be required for claiming certain deductions (e.g., Section 80C, Section 10(13A) for HRA).
Quantitative Details (Part A – QD)
This schedule requires reporting of opening stock, purchases, sales, and closing stock for various categories of goods (trading, manufacturing).
Important Due Dates for FY 2024-25 (AY 2025-26)
The due dates for filing ITR-3 depend on whether a tax audit is applicable to your business or profession.
For Individuals/HUFs having Business/Professional Income NOT requiring a Tax Audit
- The due date for filing ITR-3 for FY 2024-25 (AY 2025-26) has been extended to September 15, 2025. (Originally July 31, 2025).
- This applies if your turnover/gross receipts are within the limits for not requiring a tax audit (e.g., turnover not exceeding ₹1 crore, or ₹10 crore if cash transactions are up to 5%, or professional receipts not exceeding ₹50 lakh, or ₹75 lakh if cash receipts are up to 5% from FY 2024-25).
For Individuals/HUFs having Business/Professional Income REQUIRING a Tax Audit (under Section 44AB)
Due date for filing Tax Audit Report (Form 3CB-3CD): September 30, 2025.
- Due date for filing ITR-3: October 31, 2025.
- Tax Audit Applicability (Summary):
- Business: Turnover/gross receipts exceed ₹1 crore (or ₹10 crore if cash transactions are less than 5%). Also applicable if you opt out of presumptive taxation (44AD) for 5 years and your income exceeds the basic exemption limit.
- Profession: Gross receipts exceed ₹50 lakh (or ₹75 lakh if cash receipts are less than 5%). Also applicable if you opt out of presumptive taxation (44ADA) and your income exceeds the basic exemption limit.
Due date for filing ITR-3
November 30, 2025.
Belated or Revised Return for FY 2024-25
December 31, 2025 (with applicable penalty and loss carry-forward restrictions).
Updated Return (ITR-U)
You can file an updated return up to March 31, 2029 (48 months from the end of the Assessment Year 2025-26).
Documents Required for ITR-3 Filing
While no documents are attached to the ITR, you need to refer to them to accurately fill the form.
Personal & General
- PAN Card and Aadhaar Card (linked).
- Bank account details for refund (ensure pre-validation).
- Annual Information Statement (AIS) and Taxpayer Information Summary (TIS): Crucial for cross-verifying all reported financial transactions.
Income-Related
- Form 16: From employer(s) if salaried.
- Bank Statements/Passbooks: For interest income, foreign income, etc.
- Capital Gains Statements: From brokers, mutual fund houses for all equity, mutual fund, property, and other capital asset transactions (detailed records of acquisition cost, sale price, dates, expenses, STT paid).
- Dividend Income Statements: From companies/mutual funds.
- Rental Agreements/Receipts: If you have income from house property.
- Winnings from Lottery/Gambling: Details of such income.
Business/Profession Related (Most Important for ITR-3)
- Books of Accounts: General Ledger, Cash Book, Bank Book, Sales Register, Purchase Register.
- Trial Balance: For the financial year 2024-25.
- Profit & Loss Account: For the financial year.
- Balance Sheet: As of March 31, 2025.
- Tax Audit Report (Form 3CB-3CD): If your business/profession is subject to tax audit. This report will contain many details needed for ITR-3 schedules.
- Bank Statements of Business Accounts.
- GST Returns (GSTR-3B, GSTR-1, GSTR-2B): For reconciliation of turnover and expenses.
- Details of Debtors and Creditors.
- Fixed Asset Register.
- Loan agreements and interest certificates.
- TDS Certificates (Form 16A/16C/16D): For TDS deducted on professional fees, rent, etc.
- TCS Certificates (Form 27D): If any tax was collected at source.
Deductions & Tax Paid
- Investment Proofs: For Chapter VI-A deductions (80C, 80D, 80E, 80G, etc.), if opting for the Old Tax Regime.
- Home Loan Interest Certificate: For deduction under Section 24.
- Receipts for expenses under other sections.
- Advance Tax Challans (Challan 280): Proof of advance tax paid.
- Self-Assessment Tax Challans (Challan 280): Proof of self-assessment tax paid.
- Foreign Tax Paid Proof: If claiming Foreign Tax Credit.
Step-by-Step Process to File ITR-3 Online
ITR-3 is a complex form, and it is highly recommended to use the Offline Utility (JSON-based) for filling it, especially for those with detailed business/professional schedules. The online mode is also available, but the utility provides a better experience for extensive data entry.
Method 1: Using the Offline Utility (Recommended for ITR-3)
Download Utility
Go to the Income Tax e-filing portal (www.incometax.gov.in) > “Downloads” > “Income Tax Returns” > Select “Assessment Year 2025-26” > Download the “ITR-3 JSON Utility.”
Import Pre-filled Data
Open the utility. You can import pre-filled data by entering your PAN, Assessment Year, and Captcha, then clicking “Fetch Data.” This will pull details like personal information, salary, TDS, etc.
Fill in Details
Navigate through the various schedules and fill in all applicable details based on your gathered documents.
- Schedule BP (Business/Profession): This is the core of ITR-3. You’ll need to enter your profit and loss account details (revenue from operations, expenses, net profit) and balance sheet details (assets, liabilities). If a tax audit is applicable, details from Form 3CD will be required.
- Schedule P&L/BS: Detailed Profit & Loss Account and Balance Sheet.
- Quantitative Details (Part A-QD): Provide stock details.
- Schedule CG (Capital Gains): Enter all capital gains/losses meticulously, considering the new split based on transaction dates.
- Schedule OS (Other Sources): Report all other income.
- Schedule FA (Foreign Assets): For foreign income/assets.
- Schedule DI (Details of Investments): For investments.
- Schedule 80G/80GGA/80GGC: For donations.
- Schedule VI-A (Deductions): Claim relevant deductions (if opting for Old Tax Regime).
- Schedule TDS/TCS: Verify and adjust TDS/TCS details from Form 26AS.
- Schedule AL (Assets and Liabilities): If your total income exceeds ₹1 crore.
- Audit Information: If tax audit is applicable, fill in the relevant details here.
Validate
The utility has built-in validation checks. Run them to identify any errors or missing information.
Generate JSON File
Once validated, generate the JSON file.
Upload JSON
Log in to the e-filing portal. Go to “e-File” > “Income Tax Returns” > “File Income Tax Return” > Select Assessment Year, Online Mode, Individual/HUF, ITR-3 > “Upload JSON.”
E-Verify
After successful upload, e-verify your return within 30 days using Aadhaar OTP, Net Banking, EVC, or DSC. DSC is mandatory if a tax audit is applicable.
Method 2: Online Filing (for less complex cases)
Login
Go to the Income Tax e-filing portal (www.incometax.gov.in) and log in.
File ITR
Go to ‘e-File’ > ‘Income Tax Returns’ > ‘File Income Tax Return’.
Select Details
Choose Assessment Year 2025-26, online filing mode, Individual/HUF, and ITR-3.
Pre-fill Data & Schedules
Your basic details will be pre-filled. The portal will prompt you to select the schedules applicable to you (e.g., Salary, House Property, Business & Profession, Capital Gains, Other Sources, Deductions, etc.). Select all relevant ones.
Fill in Details
Systematically fill in information in each selected schedule. The online form is guided, but requires accurate data entry from your documents.
Review and Compute Tax
Review all entered data carefully. The portal will compute your total income and tax liability.
Pay Tax (if applicable)
If there’s tax payable, pay it online.
Preview and Submit
Thoroughly preview the entire return. If everything is correct, submit it.
E-Verify
E-verify your return within 30 days using one of the available methods. For those requiring a tax audit, a Digital Signature Certificate (DSC) is mandatory for verification.
Consequences of Non-Filing or Inaccurate Filing
Penalty
Late filing penalty under Section 234F:
- ₹5,000 if total income exceeds ₹5 lakh.
- ₹1,000 if total income is up to ₹5 lakh.
Interest
Interest under Section 234A, 234B, and 234C on unpaid tax.
Loss of Carry-Forward
Business losses and capital losses cannot be carried forward to future years if the return is filed after the due date.
Scrutiny & Notices
Inaccurate or incomplete filing can lead to scrutiny, notices from the Income Tax Department, and potential re-assessment.
Penalty for Non-Audit/Inaccurate Audit Report
If a tax audit was required but not done, or the report is inaccurate, penalties can be substantial (lower of 0.5% of turnover/gross receipts or ₹1.5 lakh).
Given the complexity of ITR-3, especially with business/professional income, capital gains, and potential audit requirements, it is highly recommended to seek Our tax experts for accurate and compliant filing.