The ITR-3 form is one of the income tax return forms that can be used by individuals and Hindu Undivided Families (HUFs) who have income from profits and gains of business or profession. The ITR-3 form covers income from salary, house property, capital gains, other sources, foreign income and assets, etc. The ITR-3 form for the assessment year 2023-24, which corresponds to the financial year 2022-23, has been notified by the Central Board of Direct Taxes (CBDT) on March 31, 2023. The due date for filing the ITR-3 form for the assessment year 2023-24 is September 30, 2023.

Who Cannot Use the ITR-3 Form? 

Individuals or Hindu Undivided Families (HUFs) earning income as partners in a partnership firm engaged in business or a profession are not eligible to file ITR-3. In such cases, they should file ITR-2.

When Should ITR-3 be Submitted? 

ITR-3 should be filed when the assessee earns income falling into the following categories:

1. Income derived from a Proprietary Business.
2. Income generated by practising a profession.
3. Income from House property. Additionally, ITR-3 is required for individuals whose income is taxable under the “profits and gains of business or profession,” which may include interest, salary, bonus, commission, or remuneration.

What is the Deadline for Submitting the ITR-3 Form? 

The filing deadline for income tax returns varies based on the assessment year (AY). For AY 2023-24, it is:

• July 31, 2023, for Non-audit Cases
• October 31, 2023, for Audit Cases

For AY 2022-23, the deadlines were:

• July 31, 2022, for Non-audit Cases
• October 31, 2022, for Audit Cases (Revised to November 7, 2022 – Read Circular)

What Are the Different Methods of Submitting ITR-3 Form? 

There are three methods for filing the Income Tax Return ITR-3 Form:

1. By electronically filing the return under a digital signature. (Applicable to assesses requiring a tax audit)
2. By transmitting the data in ITR-3 form electronically with an electronic verification code.
3. Send the data in ITR-3 form electronically and submit the return verification in Return Form ITR-V to the Income Tax office via mail. (Taxpayers using this method for ITR-3 must complete the acknowledgement in ITR-V.)

How to Complete the Acknowledgement in ITR-V?

Once all the essential information has been provided, the assessee should print two copies of Form ITR-V (verification). One copy of ITR-V, bearing the proper signature of the assessee, should be sent by post to Post Bag No. 1, Electronic City Office, Bengaluru–560100 (Karnataka). The other copy can be retained by the assessee for their records.

Step-by-Step Process to File ITR 3 Online for AY 2023-24

The ITR 3 form is one of the income tax return forms that can be used by individuals and Hindu Undivided Families (HUFs) who have income from profits and gains of business or profession. The ITR 3 form covers income from salary, house property, capital gains, other sources, foreign income and assets, etc. The ITR 3 form for the assessment year 2023-24, which corresponds to the financial year 2022-23, has been notified by the Central Board of Direct Taxes (CBDT) on March 31, 2023. The due date for filing the ITR 3 form for the assessment year 2023-24 is September 30, 2023.

The taxpayers can file their ITR 3 form online through [the e-filing portal] of the Income Tax Department or any authorized e-return intermediary. The taxpayers can also use offline utilities or third-party software to prepare and file returns. The step-by-step process to file ITR 3 online for AY 2023-24 is as follows:

• Step 1: Register or log in to [the e-filing portal] using your PAN and password. If you are a new user, you must register by providing your PAN, name, date of birth, mobile number, email ID, etc.
• Step 2: Download the ITR 3 utility from [the downloads section] of the portal. You can choose Excel or Java utility based on your preference and system compatibility. You must enable macros in Excel and install Java Runtime Environment (JRE) in Java before using the utility.
• Step 3: Fill the ITR 3 utility with the relevant details such as personal information, income details, deductions, taxes paid, etc. You must choose the appropriate section and schedule based on your income source and nature. You must indicate whether you are opting for the new tax regime under section 115BAC. You have to Report your dividend income, interest income, TDS details on cash withdrawal, exempt income, details of specified persons, details of unlisted equity shares, details of Virtual Digital Assets, etc., under the respective fields. Before proceeding to the next sheet, you must validate each sheet and resolve any errors or warnings.
• Step 4: Generate and save the XML file from the utility after filling in all the required details. You can also preview your return before generating the XML file.
• Step 5: Upload the XML file on [the e-filing portal] by selecting the relevant assessment year, ITR form and submission mode. You can choose either Aadhaar OTP EVC or digital signature as the verification mode. If you choose Aadhaar OTP or EVC, you will receive a six-digit code on your registered mobile number or email ID that you have to enter on the portal. If you choose digital signature, you have to attach your digital signature certificate (DSC) with the XML file.
• Step 6: Submit your return and download the acknowledgement receipt (ITR-V) from [the portal]. You must verify your return within 120 days of filing by sending a signed copy of ITR-V to CPC Bangalore by ordinary or speed post or by using Aadhaar OTP EVC or DSC on [the portal]. You will receive a confirmation email and SMS once your return is verified.

By following these steps, you can file your ITR 3 online for AY 2023-24 easily and conveniently. You should ensure that you have all the relevant documents and information before filing your return and verify your return using Aadhaar OTP, EVC or digital signature. You should also check your Form 26AS to verify your TDS and other tax credits. By filing your return correctly and timely, you can avoid penalties and interest and claim your refunds faster.

Changes and updates in ITR-3 form

The ITR-3 form for the assessment year 2023-24 has some changes and updates compared to the previous year’s form. Some of the major changes and updates are as follows:

• Option to choose the new tax regime under section 115BAC

The Finance Act 2020 introduced a new tax regime under section 115BAC, which offers lower tax rates but with fewer deductions and exemptions. The taxpayers can choose between the old and the new tax regime while filing their return. The ITR-3 form for the assessment year 2023-24 has a field to indicate whether the taxpayer is opting for the new tax regime. The option can be exercised only until the due date of return filing under section 139(1). The taxpayers who opt for the new tax regime must fill out Form 10-IE and submit it online before filing their return.

• Disclosure of dividend income

The Finance Act 2020 abolished the dividend distribution tax (DDT) and made dividends taxable for the shareholders at their applicable slab rates. The ITR-3 form for the assessment year 2023-24 has separate fields to report dividend income from domestic companies, mutual funds, foreign companies, etc. The dividend income has to be reported under Schedule OS (Other Sources) and Schedule FSI (Foreign Source Income). The taxpayers have to report the gross amount of dividends received before the deduction of TDS under section 194 or section 195.

• Disclosure of interest income from Indian and foreign sources

The ITR-3 form for the assessment year 2023-24 has separate fields to report interest income from Indian and foreign sources. The interest income from Indian sources has to be reported under Schedule OS (Other Sources) and Schedule HP (House Property). In contrast, the interest income from foreign sources has to be reported under Schedule FSI (Foreign Source Income). The taxpayers have to report the gross interest amount received before the TDS deduction under section 194A or section 195.

• Disclosure of TDS details on cash withdrawal

The Finance Act 2019 introduced a provision to deduct tax at source (TDS) at 2% on cash withdrawals exceeding Rs. 1 crore in a financial year from one or more accounts maintained with a bank, cooperative bank or post office. The ITR-3 form for the assessment year 2023-24 has a field to report the TDS details on cash withdrawal under Schedule TDS2. The taxpayers must report the amount of cash withdrawal and TDS deducted by each deductor.

• Disclosure of exempt income

The ITR-3 form for the assessment year 2023-24 has a field to report exempt income, such as agricultural income, interest on PPF, etc., under Schedule EI (Exempt Income). The taxpayers have to report the amount and nature of exempt income separately.

• Disclosure of details of specified persons

The ITR-3 form for the assessment year 2023-24 has a field to report details of specified persons, such as spouse, minor child, etc., whose income is clubbed with that of the taxpayer under Schedule SPI (Income of Specified Persons). The taxpayers must report the name, PAN, relationship and amount of income of each specified person.

• Disclosure of details of unlisted equity shares

The ITR-3 form for the assessment year 2023-24 has a field to report details of unlisted equity shares held by the taxpayer at any time during the previous year under Schedule FA (Foreign Assets). The taxpayers have to report the name and PAN of the company, the number and cost of acquisition of shares, and the fair market value of shares as of March 31, 2023.

• Disclosure of details of virtual digital assets

The Finance Act 2021 introduced a provision to tax income from transferring virtual digital assets, such as cryptocurrency, tokens, etc., at normal rates. The ITR-3 form for the assessment year 2023-24 has a field to report details of virtual digital assets held by the taxpayer at any time during the previous year under Schedule VDA (Virtual Digital Assets). The taxpayers must report the name and type of virtual digital asset, number and acquisition cost, number and sale consideration, and income or loss from the transfer.

These are some of the changes and updates in the ITR-3 form for the current financial year that taxpayers should be aware of while filing their returns. The taxpayers can file their returns online through the e-filing portal of the Income Tax Department or any authorized e-return intermediary. The taxpayers can also use offline utilities or third-party software to prepare and file returns. 

The taxpayers should also check their Form 26AS to verify their TDS and other tax credits. Form 26AS is an annual consolidated tax statement that shows the details of tax deducted or collected at source, advance tax, self-assessment tax, etc., credited to the taxpayer’s PAN. The taxpayers can view and download their Form 26AS from the e-filing portal of the Income Tax Department or through the net banking facility of their bank. The taxpayers should match the details of Form 26AS with their income and TDS certificates to ensure no discrepancy or mismatch. 

If there is any discrepancy or mismatch, the taxpayers should contact the deductor or collector and get it rectified before filing their return. By checking their Form 26AS, taxpayers can avoid any demand notice or penalty from the Income Tax Department and claim their rightful refunds faster.

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