Who Should File ITR-3? A Complete Guide for AY 2025-26
- Nimisha Panda
- Aug 29
- 7 min read
The ITR-3 form is for individuals and Hindu Undivided Families (HUFs) who have income from a business or a profession. If you run a proprietary business or work as a professional and do not opt for the presumptive taxation scheme, this guide will clarify everything. Choosing the right ITR form can be confusing, but this guide makes it simple by explaining who is eligible, who is not, the required documents, and how ITR-3 compares to other forms.
Table of Contents
What is ITR-3 Form?
The ITR-3 form is a detailed income tax return form from the Income Tax Department for individuals and Hindu Undivided Families (HUFs) with income from "Profits and Gains from Business or Profession" (PGBP). This form is comprehensive, allowing a person to report income from all five major sources. It is often called a master form because it accommodates every possible type of income an individual or HUF can earn.
These five heads of income include:
Income from Salary/Pension
Income from House Property
Income from Profits and Gains from Business or Profession (PGBP)
Income from Capital Gains
Income from Other Sources
Who is Eligible to File ITR-3 for AY 2025-26?
According to guidelines from the Income Tax Department, you should file ITR-3 if you have income from a business or profession and are not using the simplified presumptive tax scheme. The ITR-3 eligibility is quite specific to ensure taxpayers report their diverse income streams correctly.
Here’s a simple checklist of who can file ITR-3:
✅ Individuals or HUFs: This form is specifically for individuals and Hindu Undivided Families, not for companies or LLPs.
✅ Income from Business/Profession: Anyone earning income from a business they own or a profession they practice must use this form. This includes freelancers, consultants, doctors, lawyers, traders, and manufacturers.
✅ Partners in a Firm: An individual who is a partner in a firm and receives salary, bonus, commission, or interest can also file ITR-3.
✅ Multiple Income Sources: A person must file ITR-3 if they have business income in addition to other incomes like salary, rental income from single or multiple properties, capital gains from selling assets like shares or property, and income from other sources like dividends or interest.
✅ Holding Unlisted Shares: If you held unlisted equity shares at any point during the financial year, ITR-3 is the correct form to file.
✅ Director in a Company: Individuals who are directors in a company are also eligible to file using the ITR-3 form.
Who is NOT Eligible to File ITR-3?
To avoid common filing mistakes, it is crucial to understand who cannot use the ITR-3 form. Choosing the wrong form can lead to your return being considered defective by the tax department.
Here is a list of those who are not eligible to file ITR-3:
❌ Salaried Individuals with No Business Income: If your income comes only from your salary and perhaps some other sources like bank interest or dividends, you should file ITR-1 or ITR-2 instead.
❌ Businesses Opting for Presumptive Taxation: If your business turnover is within the set limits and you choose the presumptive taxation scheme under Sections 44AD, 44ADA, or 44AE, you must file the simpler ITR-4 (Sugam) form.
❌ Entities like Companies, LLPs, AOP/BOI: These legal entities have their own separate forms for filing tax returns, such as ITR-5 for firms and LLPs, and ITR-6 for companies.
ITR-3 vs. ITR-4: What is the Key Difference?
A major point of confusion for many taxpayers is the difference between ITR-3 and ITR-4. The key difference between ITR-3 and ITR-4 lies in the method of reporting business income. ITR-3 is for those who maintain detailed books of accounts, while ITR-4 is a simpler form for those who opt for the presumptive scheme, where income is declared as a fixed percentage of turnover.
Here is a simple comparison table to make it clearer:
Feature | ITR-3 | ITR-4 (Sugam) |
Primary User | Individuals/HUFs with business/profession income maintaining full books of accounts. | Individuals/HUFs/Firms opting for the presumptive taxation scheme. |
Books of Account | Mandatory to maintain and report a Profit & Loss statement and a Balance Sheet. | Not required, as income is calculated on a presumptive basis. |
Capital Gains | Can be fully reported. | Cannot be reported, except for minor long-term gains up to ₹1.25 lakhs in specific cases. |
Turnover Limit | No specific turnover limit, but a tax audit is required above certain thresholds. | Turnover up to ₹2 Crore for businesses (or ₹3 Crore if digital receipts are high). |
Complexity | More detailed and complex due to extensive reporting requirements. | Simplified and much easier to file. |
If you qualify for the presumptive scheme, you can learn more about ITR-4 (Sugam).
Structure of the ITR-3 Form: A Simple Breakdown
The ITR-3 form can seem intimidating due to its length and number of schedules. This structure of the ITR-3 form is designed to capture detailed financial information comprehensively. Here’s a simple breakdown of its key parts.
Part A - General Information
This part of the ITR-3 format captures your basic details. You need to provide your Name, Address, PAN, Aadhaar number, and the nature of your business.
Schedules
Schedules in ITR-3 are the core of the form where detailed calculations of your income and deductions are provided.
Schedule S: Details of your income from Salary or Pension.
Schedule HP: Details of any Income from House Property.
Schedule BP: Details of your Business or Profession income, which requires information from your Profit & Loss account and Balance Sheet.
Schedule CG: Detailed calculation of your short-term and long-term Capital Gains.
Schedule OS: Details of your Income from Other Sources, such as bank interest, dividends, etc.
Part B - TTI & Tax Liability
This final part presents a summary of your total taxable income (TTI) and the final tax calculation. It shows the total tax you owe after all deductions and taxes already paid.
Feeling overwhelmed? Taxbuddy can handle the complexities of all ITR-3 schedules for you.
Documents Required to File ITR-3
To properly complete your ITR-3 filing requirements, you need to gather several documents beforehand. Having a checklist of documents for ITR-3 can make the filing process smoother and ensure you don’t miss any critical information.
Basic Documents
PAN Card
Aadhaar Card
Bank Account Details (for all active accounts)
For Business/Profession
Books of Account: This includes the Profit & Loss Statement and Balance Sheet for the financial year.
Bank Statements: All bank statements related to your business accounts.
GST Details: If you are registered under GST, you will need your GSTIN.
Tax Audit Report: This is required if your turnover exceeds the specified limits.
For Other Income Sources
Form 16: If you also earn a salary, your employer provides this form.
Rental Agreements: For income from house property, you need rental agreements and records of municipal taxes paid.
Brokerage Statements: For capital gains from stocks or mutual funds, you need statements from your broker (e.g., P&L from Zerodha, Groww).
Bank Passbook/Statements: These are needed to report interest income accurately.
For Tax Deductions
Investment Proofs: Receipts or passbooks for investments under Section 80C, 80D, 80G, etc. (e.g., PPF, life insurance, health insurance, donation receipts).
If you need help organizing these documents, consider seeking expert assistance with your ITR filing.
Common Mistakes to Avoid When Filing ITR-3
Filing ITR-3 requires care, as small errors can lead to notices from the tax department. Here are some common ITR-3 filing mistakes our experts often see.
Choosing the Wrong Form: A frequent error is confusing ITR-3 with ITR-4, especially when a person is eligible for the presumptive tax scheme but doesn't opt for it.
Incorrect Turnover Reporting: Failing to correctly report the total turnover from all business activities is a significant mistake, particularly for traders in Futures & Options (F&O).
Ignoring Balance Sheet Reconciliation: It's vital to ensure that the assets and liabilities reported in the balance sheet are correctly matched and tallied.
Forgetting to Report All Bank Accounts: You must report details of all bank accounts you have held during the financial year, not just the primary one.
Missing the Filing Deadline: Not filing within the due dates can lead to penalties and loss of certain tax benefits.
Conclusion
The ITR-3 form is specifically designed for individuals and HUFs who earn income from a business or profession and are required to maintain proper books of account. It accommodates various income sources, including salary, house property, and capital gains, making it a comprehensive return. Choosing the correct form and filing it on time is crucial to stay compliant with tax laws.
Choosing the right ITR form and filing it correctly is crucial. Don't risk a defective return. Let Taxbuddy's experts handle your ITR-3 filing with 100% accuracy. Get Started Today
FAQs
Q1. What is the due date for filing ITR-3 for AY 2025-26?
For individuals and HUFs whose accounts do not require an audit, the due date for filing ITR-3 has been extended to September 15, 2025. For taxpayers who require a tax audit, the due date is October 31, 2025.
Q2. Can a salaried person file ITR-3?
Yes, a salaried person must file ITR-3 if they also earn income from a side business or profession, such as freelancing or trading.
Q3. Do I need a digital signature to file ITR-3?
It is mandatory to file ITR-3 with a Digital Signature Certificate (DSC) if your business accounts need to be audited under Section 44AB. Otherwise, you can e-verify your return using options like Aadhaar OTP.
Q4. Can I file ITR-3 if I have income from intraday trading or F&O?
Yes, income or loss from intraday trading and Futures & Options (F&O) is treated as business income, making ITR-3 the correct form to use for reporting it.
Q5. What happens if I file the wrong ITR form?
If you file the wrong ITR form, the Income Tax Department may treat it as a defective return and issue a notice under Section 139(9). You will then be required to file a corrected or revised return within a specified period to avoid penalties.
Q6. Can I claim capital gains in ITR-3?
Absolutely. ITR-3 has a specific 'Schedule CG' where you can report both short-term and long-term capital gains in detail.
Q7. Is ITR-3 for residents or non-residents?
ITR-3 can be filed by both resident and non-resident individuals, as well as resident but not ordinarily resident (RNOR) individuals, provided they meet the other eligibility criteria.
