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Who is eligible for ITR-3?

Updated: Jun 20

As a part of the series on Income Tax Returns and everything that goes into them, I previously covered ITR-1 and ITR-2. Moving on to the third, let's take a quick look at some fundamental aspects of ITR-3 FORM on the pleasantly sunny and productive day that it is today.

An income Tax Return (ITR) is a document that contains details about a person's income and the corresponding taxes paid during the year and is submitted to the Income Tax Department of India. The ITR form that applies to you will depend on the type of income, the category of a taxpayer (Individuals, Association of Persons, Hindu Undivided Family, firms, companies, and Body of Individuals), and the income bracket. Choosing the wrong form can lead to having to redo the filing process.

Who can use ITR-3?

This Return Form is for individuals or Hindu Undivided Families who earn income under the head "profits or gains of business or profession" and are not eligible to file Form ITR-1 (Sahaj), ITR-2, or ITR-4 (Sugam).

The following are the conditions that need to be satisfied to use ITR Form 3 for filing an income tax return:

  1. When the taxpayer is a director of a company or business

  2. When the taxpayer's residential status is either a resident or non-resident of India

  3. When the taxpayer receives income from a pension

  4. When the taxpayer earns income from house property

  5. When the taxpayer has investments in unlisted equity shares

  6. When a taxpayer's income is taxable under the category of 'profits and gains of business or profession', which includes salary, interest, commission, bonus, or remuneration

Please note that if a person or a Hindu Undivided Family (HUF) earns income as a partner in a partnership firm involved in a trade or profession, they are not eligible to file an ITR-3. Instead, they should file an ITR-2 in this case. Also, those with income earned from foreign assets are not eligible for this form.

You can file this return form electronically through the e-filing web portal of the Income-tax Department ( or by sending a signed paper Form ITR-V to the CPC at the given address. The Form ITR-V should get sent within 120 days of e-filing the return, and the confirmation of receipt will be sent to the registered e-filing account. If an assessee is required to furnish an audit report, the return must be verified electronically with a digital signature. If a report of the audit is required under sections 10AA, 44AB, 44DA, 50B, 80-IA, 80-IB, 80-IC, 80-ID, 80JJAA, 80LA, 92E, 115JB, or 115JC, it should be filed electronically one month before the due date of filing the income tax return.

There are three methods available to complete the ITR-3 Income Tax Return Form:

1) Electronic filing of the return with a digital signature (mandatory for assessors requiring a tax audit).

2) Submitting the information in the ITR-3 form electronically along with a digital verification code.

3) Sending the data in the ITR-3 form electronically and mailing the ITR-V form, which serves as a return verification, to the income tax office. (Taxpayers who file ITR-3 forms using this method must fill out the ITR-V acknowledgment.)

Let's dive into the changes introduced to the forms other than ITR-1 in the union budget 2023:

  1. The forms other than ITR-1 now have a new schedule for reporting income earned from Virtual Digital Assets (VDAs) under the Capital Gains category.

  2. To fill this new schedule, taxpayers are required to provide information about the date of acquisition, date of transfer, cost of acquisition, and proceeds received from the sale of VDAs. Quarterly reporting of VDA income is mandatory.

  3. The forms have been updated to include additional questions related to the selection of the new tax regime.

  4. Taxpayers are required to indicate if they opted for the new regime in the previous assessment year, and select the assessment year in which they made the choice.

  5. Furthermore, another question got added asking whether taxpayers opted out of the New Regime in any of the previous years and providing details about both selections using the 10IE form.

It is understandable if you feel inundated with many questions on which return form applies to the nature of your income, business, or profession. I assure you TaxBuddy is the platform for you! I, with my team, will help you every step of the way, from filing to tax planning.

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