ITR-3
ITR-3 is the return for an individual or a Hindu undivided family who has income from business or profession. Company Suggestion files it for a proprietor and for a partner. A presumptive case that stays inside the limits uses ITR-4 instead.
Who files ITR-3?
Rule 12 gives ITR-3 to an individual or HUF who has profits and gains of business or profession. The usual filers are these.
- A proprietor who keeps books, or whose turnover is above the presumptive limit.
- A professional whose receipts are above the section 44ADA limit, or who does not use that scheme.
- A partner. Interest and remuneration from the firm are taxed as business income. The share of profit is exempt under section 10(2A).
- A person with speculative income, or income from a futures and options trade that is business income.
The firm itself does not use ITR-3. A partnership firm and an LLP file ITR-5.
When is ITR-4 enough instead?
ITR-4 is the presumptive return. It is available when income is computed under section 44AD, 44ADA, or 44AE, total income is up to ₹50 lakh, and the other bars in that form are absent. A person who declares profit below the presumptive rate, and whose income exceeds the exemption, needs a tax audit and files ITR-3.
Section 44AB still applies on the turnover test: above ₹1 crore, or above ₹10 crore only when cash receipts and cash payments are each within 5 per cent. Professional receipts above ₹50 lakh are also audited. The audit report is uploaded before ITR-3.
Which papers does ITR-3 need?
The return follows the books.
- The profit and loss account and the balance sheet
- Form 26AS, the Annual Information Statement, and the GST turnover where the person is registered
- The tax-audit report, where section 44AB applies
- For a partner, the firm’s capital account and the amount of interest and remuneration
- Capital-gain statements and house-property papers, where those heads exist
What are the filing steps?
Company Suggestion files ITR-3 in four steps.
- The books are closed and the audit, if section 44AB applies, is signed.
- Business income is computed, and the partner’s exempt share is disclosed separately.
- ITR-3 is uploaded by 31 July, or by 31 October where an audit or a partner’s firm audit applies.
- The return is e-verified within 30 days.
Frequently asked questions
4 questions cover the rules that decide this registration.
Does a proprietor file ITR-3?
Yes. A proprietor is an individual with business income, so the return is ITR-3, unless the case fits the presumptive form ITR-4.
Which return does a partner file?
ITR-3. Interest, salary, bonus, and commission from the firm are business income. The partner’s share of profit is exempt under section 10(2A), and it is still disclosed.
Can ITR-3 also include salary and capital gains?
Yes. Once there is business or professional income, the other heads are reported in the same ITR-3. They are not split into ITR-1 or ITR-2.
When does a proprietor need a tax audit?
Section 44AB applies when business turnover exceeds ₹1 crore, or ₹10 crore if cash receipts and cash payments are each within 5 per cent. For a profession it applies when gross receipts exceed ₹50 lakh.