Filing income tax returns can be daunting, especially if you need to familiarise yourself with the available forms. The Income Tax Act of 1961 offers seven forms for individuals and businesses to choose from when filing their tax returns.
ITR-3 holds a significant place out of these seven forms as it is specifically designed for individuals and HUF members with a proprietorship or business (crypto business) as a source of income.
Do you fall into this category? If yes, understanding the form, its eligibility criteria, and major changes can be very helpful. Therefore, this blog will examine ITR-3 in more detail and discuss everything you need to know about it.
What Is The ITR 3 Form?
The ITR 3 Form is a return form used by individual taxpayers and HiAndu Undivided Families (HUFs) members to file their income tax returns. If you have a proprietorship or a business as one of your income sources, including a crypto business, you can file an ITR with this form.
Who Should File ITR 3?
Understanding the eligibility criteria for ITR 3 is crucial as it helps determine if you need to file this form for your returns.
- Individuals who derive income from proprietary business ventures
- Professionals whose income is generated from their respective fields
- Individuals receive interest, salary, bonus, commission, or remuneration from a partnership firm.
- Those earning from house property, pension, or salary and categorising their income under ‘income from other sources’ are also eligible to file returns using ITR 3.
- Non-resident individuals possessing income-generating assets situated outside India.
- If you earn income from large-scale crypto mining, staking, or farming, you must disclose your income in ITR-3 form
Significant Changes Made In ITR 3 For AY 2024-25
The ITR 3 form saw some major iterations for FY 2022A-23. These changes will also apply to FY 2023-24 forms. The said changes are as follows:
Reporting Income From Cryptocurrencies/Virtual Digital Assets
The Income Tax Act underwent an amendment, effective April 1, 2022, incorporating income from cryptocurrencies and virtual digital assets (VDAs). Consequently, gains from crypto transactions now attract TDS charges under Section 194S.
ITR 3 now includes a provision for disclosing all VDAs held to compute taxable income. Taxpayers must categorise this as ‘income from business or capital gains’ and keep necessary documents handy for accurate filing. Reviewing Forms 26AS and AIS also plays a vital role in ensuring proper tax deductions under section 194S.
Mandatory Disclosure Of Donation Reference Number For Section 80G Donations
Taxpayers must now mention their Donation Reference Number (DRN) or Acknowledgment Reference Number (ARN) for donations. This facilitates a 50% deduction upon meeting specified criteria, such as donations to registered charitable institutions. The DRN or ARN is a unique identifier found on receipts obtained from beneficiaries via Form 10B.
Reporting Requirements For Intraday Trading In The New Income Tax
Updated forms necessitate taxpayers to disclose turnover from Intraday Trading and Income transferred to the Profit and Loss account from such trading. This requirement is now listed under the Trading Account Head.
SEBI Registration Number Disclosure For Foreign Institutional Investors
Foreign Institutional Investors (FIIs) and Foreign Portfolio Investors (FPIs) must now disclose their SEBI registration numbers. This additional requirement underscores the importance of compliance and transparency in the financial market.
Want to e-file the ITR-3 form? Read this detailed guide today!
Conclusion
We hope that you have understood the intricacies of the ITR-3 form. After reading this blog, taxpayers can ensure compliance with tax regulations and avoid penalties. Remember, if you earn income from large-scale crypto mining, staking, or farming, you must disclose your income in ITR-3 form.
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Frequently Asked Questions
Who Cannot File ITR-3 Forms?
Individuals and Hindu Undivided Families (HUFs) who do not earn income from business, profession, or partnership firms are not qualified to file the ITR-3 Form.
Are All Business Professionals Eligible To Fill out ITR-3 Forms?
No, ITR-3 is not for every business professional. It will be usable for individuals or Hindu Undivided Families (HUF) with a profession or business income not chargeable under presumptive taxation.
What Is Penalty For Delayed ITR-3 Filing?
If you do not file your ITR-3 within the due date for Assessment Year 2024-25, you may be penalised INR 1,000 if your income is below INR 5,00,000 and INR 5,000 if your income is more than INR 5,00,000.
However, you can still file a belated return by 31st December if you still need to complete the due date. Please note that interest at the rate of 1% per month will be charged on the due amount of tax for late filing.
What Is The Due Date For Filing The ITR-3 Form?
Filing your ITR-3 on time is crucial to avoid penalties or legal consequences. It’s worth noting that for non-audit cases, the due date is July 31, while for audited accounts, it is October 31.
