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What is ITR 3 Return?

ITR-3 is an income tax return form used in India by individuals and Hindu Undivided Families (HUFs) who earn income from profits and gains of business or profession, but not from a proprietary business. This form is suitable for partners in firms and covers various sources of income such as salary, house property, capital gains (both short-term and long-term), and other sources like interest income. It requires taxpayers to provide comprehensive details including gross income, deductions, tax computations, and if applicable, disclosures of foreign assets and income. ITR-3 is more intricate than simpler forms like ITR-1 and ITR-2 due to its focus on business and professional income, necessitating careful documentation and potentially audit requirements based on turnover thresholds.

Who Should File ITR-3 Form?

When submitting an income tax return, individuals or Hindu Undivided Families (HUFs) that satisfy the following ITR 3 applicability criteria can use the ITR Form 3:

• Directorship: The taxpayer runs a business or serves as a director of a company.
• Residential Status: The taxpayer may be either an Indian resident or a non-resident.
• Pension Income: The taxpayer's pension provides him or her with income.
• Revenue from House Property: The taxpayer receives revenue from their residence.
• Unlisted Equity Share Investments: The taxpayer owns unlisted equity shares.
• Income Classified as "Profits and Gains of Business or Profession": taxpayer's income is subject to taxation under this heading. This can comprise components of revenue like interest and pay.

Who is Not Eligible to File the ITR 3 Form?

ITR-3 forms cannot be filed by an individual or Hindu Undivided Family (HUF) who receives income from a partnership firm in which they are participants in a business or occupation. In these situations, they ought to file an ITR-2 instead.

Documents Needed for Filing ITR-3 Form

When filing your Income Tax Return (ITR) using Form ITR-3, you may need the following documents:

• Permanent Account Number, or PAN
• Form 16, if it applies (for people with salaries) Information about your investments
• The IFSC code and account number of the Aadhaar Card bank account are provided.
• Books of accounts (in the event that you are paid by a business or profession)

The ITR filing procedure will go more smoothly and effectively if these documents are available.