12 Mins

ITR 3 is applicable to individuals and HUFs who have earned income from business or profession during the assessment year. You can file ITR 3 either by preparing online or through the excel utility available on the e-filing portal. This article is a complete guide to filing ITR 3 on the income tax e-filing portal.

Union Budget 2021 Update: The tax audit limit under section 44AB has been increased from Rs 5 crore to Rs 10 crore. The limit has been increased for taxpayers whose 95% of the business transactions are in a digital mode. Further, the taxpayers need to pay advance tax on dividend income only after a declaration of such dividends by the company. 

Who should file ITR 3 for the assessment year 2020-21?

  1. ITR 3 is applicable to any individual taxpayer or a HUF.  
  2. An individual taxpayer or a HUF who has earned income from a proprietary business or by carrying profession during the financial year. 
  3. The total income of such individual taxpayers or a HUF exceeds the maximum amount which is not chargeable to income tax. Such income is calculated before allowing deductions under Chapter VI-A of the Income-tax Act.

The amount not chargeable to income tax is different for each category of the taxpayer:

If the total income chargeable to tax does not exceed the basic exemption limit but any of the following conditions are satisfied, then the taxpayer needs to file ITR 3:

  1. The taxpayer holds the position of a  director in a Company
  2. Taxpayer holds an Investment in unlisted equity shares at any point of time during the financial year
  3. The taxpayer is a partner in a firm and has income from the firm
  4. Deposit of amount or aggregates of amount exceeds Rs 1 crore in one or more current accounts held by the taxpayer
  5. The taxpayer incurs an expense for travel to a foreign country for yourself or any other person. The total amount of expense exceeds Rs. 2 lakhs
  6. The taxpayer incurs an expense on the consumption of electricity of an amount exceeding Rs. 1 lakh. 
  7. You can also file income from salary or pension, house property, and other sources along with income from business and profession under ITR-3 
Category of TaxpayerAmount
Hindu Undivided Family (HUF) or an individual who is below the age of 60 years or Rs 2,50,000
An individual, being resident in India, who is of the age of 60 years or more but below the age of 80 yearsRs 3,00,000
An individual, being resident in India, who is of the age of 80 years or moreRs 5,00,000

Who cannot file ITR 3 for the AY2020-21?

An individual taxpayer and HUF who is eligible to file ITR 1 Sahaj, ITR 2, or ITR 4 Sugam cannot file ITR 3. In such a case the assessee needs to file ITR 1 Sahaj, ITR 2, or ITR 4 Sugam as applicable according to the conditions.

Structure of ITR 3 Form for AY 2020-21

PART A- GeneralPersonal Info., Filing Status, Audit InfoDetails of Personal Information and filing status
Nature Of BusinessNature Of BusinessNature of business or profession, if more than one trade name
Part A – BSPart A-BSBalance Sheet as on 31st Day of March 2020 (fill items 1 to 5 in a case where regular books of accounts are maintained, otherwise fill item 6)
Manufacturing AccountSchedule Manufacturing AccountManufacturing Account for the financial year 2019-20 (fill items 1 to 3 in a case where regular books of accounts are maintained, otherwise fill items 61 to 64 as applicable)
Trading AccountSchedule Trading AccountPart A-Trading Account -Trading Account for the financial year 2019-20 (fill items 4 to 12 in a case where regular books of accounts are maintained, otherwise fill items 61 to 64 as applicable)
Profit and LossPart A-P & LProfit and Loss Account for the previous year 2019-20(fill items 1 to 52 in a case where regular books of accounts are maintained, otherwise fill item 53)
Part A – OIPart A -OIOther Information (optional in a case not liable for audit under section 44AB)
Quantitative DetailsPart A-QDQuantitative details (optional in a case not liable for audit under section 44AB)
Schedule SSchedule SDetails of Salary
House PropertySchedule HPDetails of Income from House Property
BPSchedule BPComputation of income from business or profession
DPM – DOASchedule DPM, Schedule DOADepreciation on Plant and Machinery, Depreciation on other assets
DEP_DCGSchedule DEP, Schedule DCGSummary of depreciation on assets, Deemed Capital Gains on sale of depreciable assets
ESRSchedule ESRDeduction under section 35
CGSchedule CGDetails of income under the head Capital Gains
Schedule 112ASchedule 112ALTCG  on sale of listed equity shares, equity-oriented mutual funds, and business trust
Schedule 115AD(1)(iii) provisoNon Resident Indian- LTCG  on sale of listed equity shares, equity-oriented mutual funds, and business trust
OSSchedule OSIncome from other sources
CYLA – BFLASchedule CYLA, Schedule BFLADetails of Income after set-off of current years losses, Details of Income after Set off of Brought Forward Losses of earlier years
CFLSchedule CFLDetails of Losses to be carried forward to future Years
Unabsorbed DepreciationSchedule UDUnabsorbed depreciation and allowance under section 35(4)
ICDSSchedule ICDSEffect of Income Computation Disclosure Standards on profit
10AASchedule 10A, 10AA, 10B,10BDeduction under section 10A, Deduction under section 10AA
80GSchedule 80GDetails of donations entitled for deduction under section 80G
80DSchedule 80DDetails of health insurance for deduction under Section 80D
RASchedule 80RADetails of donations to research associations etc.
80Schedule80-IA,IB,ICDeductions under section 80-IA, Deductions under section 80-IB, Deductions under section 80-IC
VI-ASchedule VIADeductions under Chapter VI-A
SPI-SI-IFSchedule SPI, Schedule SI, Schedule IFThe income of specified persons (spouse, minor child, etc.) includable in the income of the assessee, Income chargeable to Income tax at special rates IB, Information regarding partnership firms in which you are a partner
AMTSchedule AMTComputation of Alternate Minimum Tax payable under section 115JC
AMTCSchedule AMTCComputation of tax credit under section 115JD
EISchedule EIDetails of Exempt Income (Income not to be included in Total Income)
PTISchedule PTIPass-Through Income details from business trust or investment fund as per section 115UA, 115UB
TPSASchedule TPSASchedule for Transfer Pricing Secondary Adjustment
FSISchedule FSIDetails of Income from outside India and tax relief
TR_FASchedule TR, Schedule FASummary of tax relief claimed for taxes paid outside India, Schedule FA Details of foreign assets
Sch 5ASchedule 5AInformation regarding apportionment of income between spouses governed by Portuguese Civil Code
ALSchedule ALAsset and Liability at the end of the year (other than those included in Part A – BS)
DISchedule DISchedule for Details of investment
GSTSchedule GSTInformation regarding turnover/ gross receipt reported for GST
Part B – TI TTIPart B-TI, Part B-TTIComputation of total income
ITTax PaymentsDetails of payments of Advance Tax and Self-Assessment Tax
TDSTax Payments(TDS1, TDS2, TDS3)Details of Tax Deducted at Source from SALARY, Details of Tax Collected at Source
VerificationVerificationVerification of the income tax return alternatives

How to file ITR 3 Form for AY 2020-21 Online?

You can opt for the ‘Prepare and Submit Online’ option. You can prepare your income tax return online and submit it at the e-filing portal.

Follow the below-mentioned instructions to prepare and file ITR 3:

  • Go to the Income Tax e-Filing portal, www.incometaxindiaefiling.gov.in
  • Login to the e-Filing portal by entering user ID (PAN), Password, Captcha code and click ‘Login’. If you are a new user then you will have to first register on the income tax e-filing portal and then follow the instructions.
  • Click on the ‘e-File’ menu and select the ‘Income Tax Return’ option from the drop-down menu.
  • Your PAN will be auto-populated on the ‘Income Tax Return’ Page. Select ‘Assessment Year’ for which you need to file the ITR and ‘ITR Form Number as ITR 3′.
  • Select ‘Filing Type’ as ‘Original’. In case you are filing a revised return against an already filed original return then select ‘Revised Return’
  • Select ‘Submission Mode’ as ‘Prepare and Submit Online’ and continue.
  • Fill in the details of your income, deductions, exemptions, and investments. Add the details of your tax payments through TDS/ TCS, advance tax, and self-assessment tax.
  • Fill every schedule carefully and save the draft to avoid any data loss. Click on the ‘Save Draft’ button periodically and save the ITR details as a draft. 
  • The saved draft is available for 30 days from the date of saving the details. However, once you file the ITR or there is no change in the XML schema of the ITR, the draft will not be available. 
  • Choose the Verification option under the ‘Taxes Paid and Verification’ schedule
  • You can verify the Income Tax Return through any of the following options:
  1. I would like to e-Verify
  2. I would like to e-Verify later within 120 days from the date of filing.
  3. I don’t want to e-Verify and would like to send a signed ITR-V through normal or speed post to “Centralized Processing Center, Income Tax Department, Bengaluru – 560500” within 120 days from the date of filing.
  • Click on the ‘Preview and Submit’ button to preview and verify all the details before finally submitting ITR 3.
  • Now, ‘Submit’ the ITR. 

You can follow the following steps to proceed to E-verification on your return:

  • On Choosing ‘I would like to E-Verify option, you can e-verify through the following options. All you need to do is enter the EVC/OTP when asked for.
  1. EVC generated through bank ATM or Generate EVC option under My Account
  2. Aadhaar OTP
  3. Prevalidated Bank Account
  4. Prevalidated Demat Account
  • The EVC/OTP should be entered within 60 seconds else, the Income Tax Return (ITR) will be auto-submitted. You can verify the ITR later through your ITR login account. Just login and click on the ‘My Account > e-Verify Return’ option. You can also verify by sending a signed ITR-V to CPC, Bengaluru.

How to file ITR 3 Form for AY 2020-21 With Excel Utility?

You can either prepare the ITR online on the e-filing portal or prepare offline using an excel utility. Under both the options you will be submitting the ITR on the e-filing portal. Both the options have their own benefits for a taxpayer. Many taxpayers believe in preparing in an excel utility, taking a print out and then reviewing the entire ITR. 

The income tax department releases the excel utility every year before the due date of filing ITR as per the updated Income Tax Act. 

You can follow this instruction to file ITR 3 using an excel utility:

  • Visit the Income Tax e-Filing portal Downloads
  • Select the assessment year from the dropdown menu
  • Download the Microsoft Excel’ file form ITR 3
  • A zip file will be downloaded to your computer.
  • Extract the downloaded utility from the ZIP file. 
  • Open the file and click on ‘enable content’
  • Now, click on ‘enable macros’. 
  • Always remember the following instruction regarding the excel utility:
  1. Green cells are for data entry
  2. Red fields are mandatory to fill
  3. Do not use cut, and paste i.e. no CTRL X and CTRL V. You can paste any data.
  • The form has navigation options such as previous, calculate tax, validate, print, and help.
  • Add the details under each schedule. Validate each schedule by clicking on ‘validate’ to ensure you have not made any mistakes.
  • After validation of all schedules and calculate the total tax.
  • Generate and Save the XML
  • Login to the e-Filing portal by entering user ID (PAN), Password, Captcha code and click ‘Login’.
  • Click on the ‘e-File’ menu and select the ‘Income Tax Return’ option.
  • Your PAN will be auto-populated on the ‘Income Tax Return’ Page 
  • Select ‘Assessment Year’,  ‘ITR form Number’ as ITR 3
  • Select ‘Filing Type’ as ‘Original’. In case you are filing a revised return against an already filed original return then select ‘Revised Return’
  • Select ‘Submission Mode’ as ‘Upload XML’
  • Choose the appropriate Verification option in the ‘Taxes Paid and Verification’ tab

Lastly, follow the following steps to complete submission and E-verification:

  • You can verify the Income Tax Return through any of the following options:
  1. I would like to e-Verify
  2. I would like to e-Verify later within 120 days from the date of filing.
  3. I don’t want to e-Verify and would like to send signed ITR-V through normal or speed post to “Centralized Processing Center, Income Tax Department, Bengaluru – 560 500” within 120 days from the date of filing.
  • Click ‘Continue’
  • Attach the ITR XML file.
  • DSC as verification option, Attach the signature file generated from the DSC management utility.
  • Aadhaar OTP as verification option, Enter the Aadhaar OTP received in the mobile number registered with UIDAI.
  • EVC through Bank account, Demat account or Bank ATM as verification option, Enter the EVC received in the mobile number registered with Bank or Demat Account respectively.
  • The other two verification options, the ITR will be submitted but the process of filing the ITRs is not complete until it is verified. The submitted ITR should be e-Verified later by using the ‘My Account > e-Verify Return’ option or the signed ITR-V should be sent to CPC, Bengaluru.
  • Submit the ITR.

Major Changes Made in ITR 3 for Assessment Year 2020-21

  • The taxpayer must disclose the below transactions made during the financial year:
  1. Deposit of amount or aggregates of amount exceeds Rs 1 crore in one or more current accounts held by the taxpayer
  2. The taxpayer incurs an expense for travel to a foreign country for yourself or any other person. The total amount of expense exceeds Rs. 2 lakhs
  3. The taxpayer incurs an expense on the consumption of electricity of an amount exceeding Rs. 1 lakh. 
  • An assessee who either holds the position of a director in a company or unlisted equity shares will have to declare the type of the company. The company in which he/ she holds the position of a director in a company or unlisted equity shares. 
  • Declare the details of the buyer on sale the land, building, or both. The details must be provided in the case of a long-term capital gain as well as a short-term capital gain. The details of the buyer are name, address, PAN or Aadhaar, and percentage share of ownership.
  • Introduction of a separate section for calculation of LTCG on the sale of shares of a unit of a business trust wherein STT is applicable.
  • Under the schedule ‘Income From Other Sources,’ the taxpayer must disclose any deduction against such income and details of other income.
  • An amendment of ‘Schedule VI-A’ to include deduction under section 80EEA and section 80EEB.
  • The details of tax on secondary adjustments to transfer price under section 92CE(2A).
  • The details of deduction against investments made during the period  1 April 2020 to 30 June 2020.
  • A taxpayer can add the details of more than one bank account while filing ITR. The income tax department will on its own select the bank account for the purpose of an income tax refund.