ITR 3 (Business Income & Other Income)

Description

ITR 3 (Business Income & Other Income)

ITR-3, also known as the Income Tax Return Form 3, is a document used by individuals and Hindu Undivided Families (HUFs) who have income from business or profession and also have income from other sources excluding income from salaries, lottery winnings, horse races, etc. In other words, it is meant for individuals and HUFs having income from business or profession but not eligible to file ITR-1 or ITR-2. Here’s a detailed overview of ITR-3 focusing on business income and other income:

1. Basic Information:

The ITR-3 form begins with basic information such as the taxpayer’s name, PAN (Permanent Account Number), address, email, and mobile number. It also requires details of filing status like whether it’s original or revised return and the applicable assessment year.

2. Business/Profession Details:

This section requires the taxpayer to provide details of their business or profession. It includes information such as the nature of business or profession, business code, and turnover/gross receipts. Taxpayers are also required to specify whether the accounts are maintained on a cash basis or mercantile basis.

3. Income from Business/Profession:

Here, the taxpayer is required to provide a detailed computation of income from their business or profession. This includes income from various sources such as trading, manufacturing, consultancy, etc. Income is computed after deducting expenses incurred for carrying out the business or profession. These expenses may include rent, salaries, utilities, depreciation, etc.

4. Depreciation:

If the taxpayer owns any assets used in their business or profession, they need to provide details of depreciation claimed on these assets. Depreciation is a tax deduction that allows the taxpayer to recover the cost of assets over their useful life.

5. Income from Other Sources:

Apart from income from business or profession, taxpayers may have income from other sources such as interest income, rental income, capital gains from the sale of assets, etc. This section requires the taxpayer to provide details of such income.

6. Tax Payments and Advance Tax:

Taxpayers need to provide details of tax payments made during the year such as advance tax, self-assessment tax, etc. This includes details such as tax deducted at source (TDS), advance tax paid, and self-assessment tax paid.

7. Tax Computation and Liability:

Based on the income details provided, the tax liability is computed in this section. It takes into account deductions, exemptions, and applicable tax rates. Taxpayers need to ensure that their tax computation is accurate to avoid any penalties or interest charges.

8. Verification and Signature:

Finally, the taxpayer needs to sign and verify the ITR-3 form. This signifies that the information provided is true and correct to the best of their knowledge.

Overall, ITR-3 is a comprehensive form designed for individuals and HUFs with income from business or profession along with income from other sources. It allows taxpayers to report their income, claim deductions, and compute their tax liability in a systematic manner, ensuring compliance with the income tax laws of the country.