According to tax laws in India, filing for Income Tax Returns is of the same importance as that of payment of Income Tax. Every person with a specific amount of income has to file for Income Tax Returns within a specific period of time.
Filing of Income Tax Return can be described as a statement of income of an individual from various sources, tax liabilities of the individual, tax that has been paid by the individual and any refund to be obtained from the Government.
Benefits of filing for ITR
Let us have a look at the major benefits for filing Income Tax Returns.
- Claim Tax refunds easily
Many times taxpayers end up paying extra amount of taxes as Income Tax due to many reasons like extra deduction of TDS, payment of advance taxes, double taxation, etc. This extra amount of tax which has been paid can be obtained back by a taxpayer if he is filing for an Income Tax Return.
- Hassle free loan approval
Filing for Income Tax Return will help individuals in getting quick approval for two-wheeler loans or home loans etc. Usually, while you are applying for these loans the banks will ask for a copy of your Income Tax Receipt.
- Quick VISA processing
While VISA processing many embassies and consulates can ask for the details related to Income Tax Returns as proof of your financial stability. This will make your VISA processing faster.
- Income and Address proof
Copies of your Income tax return receipts are proof of your income and address. These can be used by you for various official purposes.
- Losses can be carried forward
By filing your Income Tax Returns on time, you can carry forward your losses to the upcoming years and set them off against the income of subsequent years.
- Avoid penalty
The Income Tax Department handles cases of failing to file Income Tax Returns on time very seriously. The Department can issue notices against the taxpayer or penalize the taxpayer for not completing this task on time. So, it is good to file up for Income Tax Returns within the stipulated time period.
Who should file for Income Tax Returns?
Below mentioned is a list of criteria and if an individual/company/firm satisfy any of these mentioned criteria, he needs to file for an Income Tax Return.
- If the age of an individual is below 60 years and his total gross income exceeds Rs. 2, 50,000 then the individual should file for Income Tax Return.
- If the age of an individual is above 60 years but below 80 years and the gross total income of the individual exceeds Rs. 3, 00,000 then the individual needs to file for Income Tax Returns.
- If an individual is a super senior citizen i.e. his age is above 80 years and his gross total income exceeds Rs. 5, 00,000 then the individual should file for an ITR.
- If an individual is an NRI but has a gross total income of Rs.2, 50,000 earned in India then he should file for an Income Tax Return.
- A company or a firm which has earned either profit or loss need to file for Income tax returns.
- If an individual has received any income due to sale of property which has been held under religious trust, charitable trust, educational institution, political party, etc. need to file for ITR.
- Suppose, you are a resident of India, but have an asset located outside India or act as a signing authority for any foreign account; then you ought to file for ITR.
The Income Tax Department has specified several forms i.e. ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 and ITR-7 using which ITR can be filed. The form that will be used depends on the Income head under which the income of the taxpayer falls.
Now, let us know in details about Form ITR-3.
ITR-3 form is applicable to taxpayer who is partner in a partnership firm and earning salary/ remuneration, interest and profits from firm.
Moreover, the ITR-3 is applicable for individuals and Hindu Undivided Families
- who wish to file Income-tax return of business income.
- who wish to file Income-tax return of professional income.
Who can file ITR-3:-
Following Individuals/HUFs can file ITR-3 form-
- a. Individual/HUF is partner in a partnership firm,
- Such Individual/HUF is having income from firm such as remuneration/ salary, interest on capital, share of profits from partnership firm.
- Income from salary.
- Income from house property.
- Income from capital gains.
- Income from other sources.
Remuneration and interest received by partner from firm is taxable as Business income. However, share of profits from firm is not taxable in the hands of partner.
Hence, if partner is receiving only exempt income i.e. share of profits from firm, then also he is required to file ITR-3 only.
Who cannot file ITR-3:-
If Individual/HUF is having income from his own business/profession, he cannot file ITR-3.
In such case, he is required to file ITR-4 or ITR-4S.
Checklist of documents required to fill ITR-3
Following documents are required to fill-up ITR-3:-
- If you have salary income, you will need Form 16 issued by your employer to enter salary details.
- 2. If you have earned interest on Fixed deposits or saving bank A/c. and TDS has been deducted on the same, you will need TDS certificates i.e. Form 16As issued by deductors to enter interest details.
- You will need Form 26AS to verify TDS on salary as well as TDS other than salary. Form 26AS could be downloaded from incometaxindiaefiling.gov.in.
- If you are living in rented premises, then you will need rent paid receipts for calculation of HRA (in case you forgot to submit the same to your employer within time).
- If you have any capital gain transaction in shares, you will need summary or Profit/loss statement of capital gain transactions of shares or securities during a year, if any for computation of capital gain.
- In case you have sold out any property, you will need sale & purchase deed or property for computation of capital gain.
- You will need your bank passbook, fixed deposit receipts (FDRs) to calculate amount of interest income.
- If you have received rent from your rented house property, then you will need rental receipts to calculate rental income.
- You will need books of accounts of partnership firm in which you are partner to calculate your share of profits, remuneration and interest on capital.
- In case you want to claim any loss incurred during current year, then you will need document exhibiting the loss.
- In case you wish to claim previous year's loss, you will need copy of ITR-V pertaining to previous year disclosing said loss.
- You will also need documents or proofs for claiming tax saving deductions U/s. 80C, 80D, 80G, 80GG such as life & health insurance receipts, donation receipts, rent receipts, receipts for tuition fees etc, if the same were not considered in your Form 16.
Remember, if audit is applicable to partnership firm in which you are partner, then due date for filing ITR-3 is 30th September of the Assessment Year
Whereas in other cases, the due date for filing ITR-3 is 31st July of the Assessment Year
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ITR-4 form is divided into following sections. Taxpayer needs to fill the applicable sections.
- Personal details:-
Taxpayer need to provide personal details like PAN (Permanent Account Number), Name, Address, Gender, Date of birth, Contact details, etc.
- Part B- TI (Computation of total income):-
Aggregate of all incomes like business income, salary, house property and other sources is treated as "Gross Total Income". Details related to incomes are required to be filled in respective income schedule. Thereafter total tax saving deductions are deducted from Gross Total Income to compute Total Income.
Taxpayer need to enter income and tax saving deduction details.
- Part B- TTI (Computation of tax):-
Here, tax liability will be computed as per incomes and taxpayer can claim taxes paid by him viz. TDS, advance tax, self assessment tax, etc.
Tax status is referred as Nil tax, tax payable or tax refundable.
Taxpayer needs to sign the return with description that information furnished by him is correct.
At the end, taxpayer is required to fill-up the schedules such as Salary details, house property details, other sources details, taxes paid details, tax saving deduction details, losses details, details of exempt incomes, incomes of specified person, etc.
- Tax payments-
Taxpayer needs to provide details of
> advance & self-assessment tax paid by you pertaining to current financial year.
> Details TDS from salary as mentioned in Form 16 issued by employer.
> Details of TDS other than salary such as TDS on interest from Fixed deposits as per Form 16A issued by tax deductors.
> Details of TCS (tax collected at source) as per Form 27D issued by tax collectors.
- Schedule S- Taxpayer needs to provide details of salary, allowances, perquisites, etc. as per your Form 16.
- Schedule HP- Taxpayer needs to provide details in case of
> Self-occupied property: Provide details of property and interest paid on housing loan, if any.
> Let-out property: Provide details of property such as address, rent received during year, municipal taxes paid and interest paid on housing loan, if any.
> Deemed-let out property: Provide details of property such as address, notional rent of similar property in that area, municipal taxes paid and interest paid on housing loan, if any.
- Schedule IF- If taxpayer is a partner in any partnership firm, then he needs to provide following details-
> Name of Partnership firm,
> PAN of firm,
> Whether Income-tax audit is applicable to firm,
> Whether section 92E i.e. audit for transfer pricing audit is applicable to firm,
> Taxpayer's share of percentage and amount in profits of firm,
> Taxpayer's capital balance in firm on 31st March of financial year.
- Schedule BP- If taxpayer has received any income from his partnership firm, following details are required to be provided:-
> PAN of partnership firm.
> Salary, remuneration, bonus, etc. received from firm.
> Interest received from firm.
> Aggregate of salary, remuneration and interest.
> Expenses spent to earn these incomes.
> Net income after deducting expenses from above incomes.
- Schedule CG-
> Shares & securities: Provide acquisition and sale details.
> Property: Provide acquisition and sale details. Also details of any improvement made to property. And details of purchase of any other other capital asset to claim exemption.
- Schedule OS-
Provide details of other incomes received by you during financial year such as FDR interest, saving bank interest, gifts, dividend from co-operative banks, casual incomes such as lottery winnings, etc.
You can claim expenses too if you have incurred it to earn such income.
- Schedule CYLA- If you have incurred any loss during financial year, you need to provide details of such loss like house property loss or capital loss.
- Schedule BFLA- This schedule will show you the income remained after set-off of losses pertaining to previous year/s'.
All the figures are auto-generated. No manual entry is required in this schedule
- Schedule CFL- If you wish to carry forward any loss to next financial year, you need to enter details of such loss here.
- Schedule VI-A- Details of tax saving deductions are to be entered here.
These deductions are given under various sections of Income Tax Act.
Some of the frequently used tax saving deductions are as follows-
> Sec. 80C- Life insurance, PPF, PF, NSC, tuition fees, specified mutual funds, etc.
> Sec. 80CCC & CCD- Investment in pension funds and schemes of Central Government.
> Sec. 80D- Health insurance & preventive medical check-up.
> Sec. 80E- Interest payment of higher education loan.
> Sec. 80G- Donation made to various funds and charitable institutions.
> Sec. 80TTA- Savings bank & post office A/c. interest.
- Schedule 80G- If you have contributed to any charitable trust or fund, you need to enter details here. Enter name of trust, full address, PAN of trust and amount of donation.
This schedule is bifurcated into 3 sections as-
> 100% deduction without qualifying limit- If the donation is made to specified funds of Government like Prime Minister National Relief Fund, Swatch Bharat Fund etc., then enter details here.
> 50% deduction with qualifying limit- If the donation is made to any registered charitable trusts such as tirupati balaji trust, any registered trust working for poor people, etc.
>100% deduction subject to qualifying limit- If the donation is made to some institutions of Government like Rajiv Gandhi memorial trust, Indira Gandhi memorial trust, etc., then enter details here.
- Schedule SPI (Specified Person's Income)-
If income of your spouse, minor son/ daughter, etc. are included in your income, then you need to mention details here. These provisions are known as "Clubbing of income".
Click here to know more about Clubbing provisions.
- Schedule SI (Special rate Income)-
Generally incomes are taxed as per slab rates. However, some incomes given in Income Tax Act are taxable at special rate.
E.g. Short term capital gain on listed shares is taxed at 15% will be mentioned here.
- Schedule EI- Enter incomes which are not taxable i.e. exempt.
Exempt incomes includes interest, dividend from listed companies, Agricultural income, etc.
- Schedule PTI- If you have invested in business trust or investment fund, income received from such trust or fund is to be entered here alongwith TDS, if any.
- Schedule FSI- If you have earned any income from foreign source, then you need to enter details of the same here.
- Schedule TR- This schedule is auto-calculated on the basis of data entered in foreign income schedule. You just need to mention the section for claiming relief as Sec. 90/90A/91 of Income Tax Act.
- Schedule FA- If you are having any foreign asset or any foreign income, this schedule will be applicable to you.
However, in case of Non-residents, this schedule is optional.
This schedule will be applicable to you if you are having-
> Foreign bank A/c.- Enter details like country, Bank name, A/c. holder's name, ownership status, peak balance during F.Y., etc.
> Financial interest in foreign entity- Enter details like country, Entity name, nature of interest and investment amount, etc.
> Immovable property outside India- Enter details like country, date of purchase, ownership status, investment amount, income earned from property, etc.
> Any capital asset like shares, etc. outside India- Enter details like country, date of purchase, ownership status, investment amount, etc.
> Foreign A/c. for which you are having signing authority- Enter details like country, Name of institution, Name of A/c. holder, A/c. No., Peak balance during F.Y., etc.
> Foreign trust in which you are trustee- Enter details like country, Name of trust, names of other trustees, names and address of settlers, etc.
> Foreign source income (not covered above)- Enter details like country, source of such income, amount of income, etc.
- Schedule 5A- This schedule is for Portugese Civil Code. If you are governed under this code, then you need to mention PAN of your spouse. As per code, 50% of your income and TDS thereon will be apportioned in the return of your spouse.
- Schedule AL- This schedule is applicable if total income of taxpayer exceeds Rs. 50 lakhs during a financial year.
Here, following details are required to be provided-
- Immovable assets like land, building.
- Movable assets like cash in hand, jewellery, vehicles, yacht, boats, aircrafts, etc.
- Liabilities (loans) in relation to above assets.
Changes in ITR-3 for Assessment Year 2019-20
- There have been changes made in the field for Residential Status. This field has now been divided into two categories i.e. – ‘Residential Status in India(for individuals)’ and ‘Residential Status in India(For HUF)’. The field ‘Residential Status in India(for individuals)’ has further 3 sub-categories i.e. ‘Resident’, ‘Resident but no ordinarily resident’ and ‘ Non-resident’. In case of non-residents, an individual will need to specify the jurisdiction of residence during the previous year.
- Suppose, the Income Tax Return is being filed by a representative assessee then additional information on the capacity of the representative assessee need to be provided.
- An individual taxpayer will have to give information on investments made in unlisted equity shares and any movement in these investments throughout the year.
- An individual taxpayer has to disclose about the Directorship if held in a firm during the previous year and also have to disclose whether the shares are listed or unlisted equity shares.
- If an individual taxpayer is a partner in a firm then he needs to disclose the details of name and the PAN of the firm.
- The partners of partnership firms as against ITR-2 need to file their Income Tax Returns by ITR-3.
- Individual taxpayer should disclose the details on the computation of presumptive income under Section 44AD, 44ADA,44AE, etc.
- The break-up of all exempted income and the deductions under Schedule S has to be provided.
- In Schedule HP i.e. details of income from house property , if the TDS credit is claimed the PAN of tenant need to be disclosed.
- In Schedule VIA, there has been introduction of deductions under Section 80TTB for senior citizens.
- In Schedule GST, information regarding turnover or Gross receipt reported for GST has to be disclosed
- In Schedule 80G, there has been a bifurcation of donation qualifying for deduction under Section 80G into cash mode and any other mode. Similarly, disclosures need to be made under Section RA for those donations which are made to research associations under Section 35.
Some important terms
You may come across some tax terms while filing your tax return that you should about-
- Income tax ward/ circle- Income tax ward/ circle is determined on the basis of PAN and jurisdiction.
- Revised return- After filing your return if you notice any mistake or addition to the return, then your may file a revised return by making necessary corrections. Original return will be replaced by Revised return.
- Defective return- If you file a return containing any defect, then return will be treated as defective. IT department will issue a notice to correct the defect within time specified in notice.
- Notice number- If you are filing a return in response to any notice, you need to mention the notice number mentioned in the notice.
- Advance tax- Tax paid in advance i.e. before the end of financial year are referred as Advance tax. Advance tax is required to be paid in quarterly instalments if total tax liability exceeds Rs. 10,000/-.
- Self-assessment tax- After filling all the income & deduction details in your return and considering all TDS and advance tax payments, if tax is payable, then the same shall be paid before filing of return. This tax is computed by taxpayer himself hence it is referred as Self-assessment tax.
- TCS (tax collection at source)- At the time of sale of some specific goods, tax is collected by purchase of goods. This tax is known as TCS (tax collection at source). You can claim this TCS in your return on the basis of Form 27D issued by purchase i.e. tax collector.
Why to choose myITreturn to file your Income-tax return
- No need to go to a Tax Expert. myITreturn asks you simple questions and by answering them you can easily file your return within minutes.
- You dont have to worry about choosing correct ITR form( ITR 1/2 etc). myITreturn will automatically choose the correct ITR form for you.
- Our helpdesk will assist you with any of your filing as well as post filing queries.
- Our team of tax experts can help and guide you with any of the tax related queries as well as complying with any of the Income-tax related letters and notices.
Hence, there have been some changes in the ITR-3 for the Assessment Year 2019-20 which a taxpayer should be aware of while filing for ITR. However, the tax expert service for filing ITR-3 which taxpayers can obtain at myITreturn.com will make it easier and error-free for the taxpayers to file for ITR using ITR-3.
- Is it mandatory to mention Aadhar Number in ITR-3?
Yes, it is mandatory to mention Aadhar Number in ITR-3 or the Aadhar Enrolment ID can be mentioned if the taxpayer has applied for Aadhar Number.
- LIC Agents can use which ITR form for filing Income Tax Returns?
A LIC agent can use ITR-3 for filing Income Tax Returns.