The ITR filing window for Assessment Year 2025–26 is now open, and if you are an Individual or HUF with income from business, freelancing, consulting, or partnership profit share—ITR-3 is the form you must use.

ITR-3 is more complex than ITR-1 or ITR-2. It’s designed for Individuals and Hindu Undivided Family (HUFs) who earn income under the head “Profits and Gains of Business or Profession,” whether through normal business or computed as per presumptive taxation [Sec. 44AD/44ADA/44AE – if not eligible to file ITR-4 (Sugam)]. You can also report capital gains, house property income, and foreign assets.

ITR – 3 is also required to be filed by a person whose income is chargeable to tax under the head “Profits and gains of business or profession” is in the nature of interest, salary, bonus, commission or remuneration, by whatever name called, due to, or received by him from a partnership firm.

From 23rd July 2024, changes notified by CBDT (based on Finance (No. 2) Act, 2024) require accurate reporting of GST-linked turnover, ESOPs, and new capital gain tax slabs—making compliance more critical than ever.

This guide covers every aspect of ITR-3 in simple language, with examples, sections, and step-by-step filing instructions.

Who Can File ITR-3?

You must file ITR-3 if:

Condition	Legal Section
You are an Individual/HUF	Sec. 2(31)
You earn business or professional income	Sec. 28, Sec. 44AA
You are a freelancer, YouTuber, trader, consultant	Sec. 44ADA, Sec. 44AD
You are a partner in a firm (receiving profit share)	Sec. 10(2A)
You earn capital gains or dividend income	Sec. 45, Sec. 56
You hold foreign assets/income	Rule 114H, Black Money Act

Who Cannot File ITR-3?

Ineligibility Reason	Use Instead
Income under presumptive scheme (but only for small business with no other income)	ITR-4 (Sugam)
Company or LLP	ITR-5 or ITR-6
Only Salary + Capital Gains, No Business	ITR-2
Agricultural income only	ITR-1 or ITR-2 based on other income

ITR-1 vs ITR-2 vs ITR-3 – Key Comparison

Feature	ITR-1 (Sahaj)	ITR-2	ITR-3
Salary Income	Yes	Yes	Yes
Multiple House Properties	No	Yes	Yes
Capital Gains	No	Yes	Yes
Foreign Assets	No	Yes	Yes
Business Income	No	No	Yes
Presumptive Tax (44AD/ADA/AE)	No	No	Yes
Profit from Partnership Firm	No	No	Yes
Balance Sheet Required	No	No	Yes
Audit Report Needed (if applicable)	No	No	Yes

Old vs New Tax Regime – Applicability in ITR-3

Criteria	Old Regime	New Regime (Default from FY 2023–24)
Legal Reference	Not under 115BAC	Sec. 115BAC(1A)
Tax Slabs	₹2.5L–₹5L: 5%, ₹5–₹10L: 20%, ₹10L+: 30%	₹3L–₹6L: 5%, ₹6–₹9L: 10%, ₹9–₹12L: 15%, ₹12–₹15L: 20%, ₹15L+: 30%
Chapter VI-A Deductions	Allowed (80C, 80D, etc.)	Not Allowed (except 80CCD(2))
HRA, LTA, Home Loan Interest	Allowed	Not Allowed
Rebate u/s 87A	Up to ₹5L	Up to ₹7L
Who Should Opt	High deductions or housing loans	Simpler incomes, low deductions
Switching Option	Every year (before Sec. 139(1) filing)	Auto-default if not changed

Presumptive Taxation – Section 44AD, 44ADA, and 44AE

If your turnover is within specified limits, you can opt for presumptive taxation. This simplifies your tax filing—no books of account, no audit (unless opted out).

Section	Applicable To	Turnover/Receipts Limit	Deemed Income %	Conditions
44AD	Small businesses (not professional)	₹2 crore	6% (digital) or 8% (cash) of Turnover	Indian resident individual/HUF/Firm
44ADA	Professionals (e.g., CA, doctors)	₹75 lakh	50% of gross receipts	Individual only
44AE	Transporters	Up to 10 vehicles	₹1,000–₹7,500/vehicle/month	Ownership proof required

Important: Once you opt out of 44AD, you cannot re-enter for 5 years (Sec. 44AD(4)).

Capital Gains – Before vs. After 23 July 2024

Type of Capital Asset	Before 23 July 2024	On or After 23 July 2024	Legal Reference
STCG – Listed Equity/MFs	15% (with STT)	20% flat	Sec. 111A (amended)
LTCG – Listed Equity/MFs	10% > ₹1 lakh	12.5% > ₹1.25 lakh (no indexation)	Sec. 112A (amended)
LTCG – Property, Gold	20% (with indexation)	12.5% (no indexation) or 20%	Sec. 112 (option)
CGAS Exemptions	Allowed	Still allowed, with stricter rules	Sec. 54, 54F, 54EC

Note: Separate entries required for gains before and after 23 July 2024. Use Schedule CG and 112A

Key Schedules in ITR-3 – What to Fill and When?

Schedule	Use When…	Legal Reference
Schedule S	You have salary/pension income	Sec. 17, Sec. 10(14)
Schedule HP	You own one or more house properties	Sec. 22 to 27
Schedule BP	You have income from business/profession	Sec. 28, 44AD, 44ADA
Schedule CG	You sold shares, land, gold, mutual funds	Sec. 45, 111A, 112, 112A
Schedule 112A	You have LTCG from equity shares or units	Sec. 112A
Schedule AL	Income > ₹50 lakh (Assets & Liabilities)	Rule 12(2), Sec. 139(1)
Schedule FA	You have foreign assets	Rule 114H, Black Money Act
Schedule FSI	You earned income outside India	Sec. 90, Sec. 91
Schedule TDS/TCS	Tax deducted/collected at source	Sec. 194A, 206C, etc.
Schedule VI-A	You claim deductions (Old Regime)	Chapter VI-A

How to File ITR-3 – Step-by-Step Process (AY 2025–26)?

Login to incometax.gov.in
Go to e-File > Income Tax Return > AY 2025–26
Select ITR-3 from the dropdown
Choose your Tax Regime (Old vs. New under Section 115BAC)
Fill required parts:
- Part A: General Info
- Schedules: BP, HP, CG, 112A, FA, AL, OS, TDS, VI-A
Verify TDS and pre-filled data with Form 26AS, AIS, and TIS
Validate through offline utility (JSON V1.3) if needed
Pay Self-Assessment Tax via Challan 280 if payable
Preview and Submit the ITR
E-verify using Aadhaar OTP, Net Banking, or DSC

Note: Return is not valid until e-verified within 30 days.

Common Mistakes to Avoid in ITR-3

Mistake	Consequence
Using ITR-1 or ITR-2 despite business income	Defective return under Sec. 139(9)
Not reporting foreign assets	₹10 lakh penalty under Black Money Act
Mixing old and new regime deductions	Return becomes invalid
Not splitting capital gains (before/after 23 July)	Incorrect tax rate calculation
Mismatch with AIS/TIS	CPC notices or refund delays
Missing audit report (if required)	₹1.5 lakh penalty (Sec. 271B)

Example Case – Who Must File ITR-3?

Name: Mr. X, 36 years old

Salary: ₹10 lakh
Freelancing income: ₹8 lakh
FD Interest: ₹50,000
Mutual Fund LTCG (sold on 18 July 2024): ₹1.4 lakh
Equity LTCG (sold on 24 July 2024): ₹1.8 lakh
Foreign mutual fund holding
Professional receipts under Sec. 44ADA

ITR-3 is mandatory due to:

Business income (freelancing)
Capital gains before and after 23 July
Foreign holdings

Due Dates and Extension for AY 2025–26

Deadlines remain unchanged unless further notified

Return Type	Due Date	Legal Section
Non-audit Cases	31 July 2025	Sec. 139(1)
Audit Cases (Sec. 44AB)	31 October 2025	Sec. 139(1), 44AB
Transfer Pricing Cases (Sec. 92E)	30 November 2025	Sec. 92E
Revised Return	31 December 2025	Sec. 139(5)

As per the latest CBDT update, the due date for non-audit cases has been extended to 15 September 2025 (from 31 July 2025) under Section 139(1).

Late Fees & Penalties – As per Section 234F & 271B

Scenario	Penalty
Return filed after due date but before 31 December 2025	₹5,000
Return filed after 31 December 2025	₹10,000
Total income ≤ ₹5 lakh	₹1,000 (max)
Failure to get books audited (if applicable)	₹1.5 lakh or 0.5% of turnover (Sec. 271B)
Failure to disclose foreign assets/income	₹10 lakh (minimum) under Black Money Act

Important Legal References

Provision	Description
Section 28	Profits and Gains from Business or Profession
Section 44AD/44ADA/44AE	Presumptive Taxation for Small Businesses, Professionals, and Transporters
Section 112/112A/111A	Capital Gains on different assets
Section 54, 54F, 54EC	Exemptions from LTCG
Section 139(1), 139(5)	Return filing due dates and revision rights
Section 271B	Penalty for failure to audit books
Section 10(2A)	Exempt share of profit from partnership firm
Black Money Act, Rule 114H	Disclosure of foreign assets/income
Section 115BAC	New Tax Regime provisions

Documents Checklist for ITR-3 Filing

Document Type	Why Needed
PAN, Aadhaar	Mandatory for filing
Bank Account Details	For refund credit and validation
Form 26AS, AIS, TIS	To reconcile income and tax deducted
Form 16/16A	TDS on salary and other income sources
Profit & Loss Account + Balance Sheet	Mandatory for business income (non-presumptive)
Audit Report (Form 3CA/3CB, 3CD)	If turnover exceeds limits under Sec. 44AB
Capital Gain Statements	For share/MF/property sales
Foreign Bank/Asset Details	For Schedule FA/FSI disclosures
Challan 280	For any self-assessment tax paid

Conclusion – Filing ITR-3 with Accuracy and Confidence

Filing ITR-3 requires a structured approach, especially when your income includes business profits, foreign assets, or complex capital gains. With the July 2024 changes, the reporting requirements have become more detailed—but also more transparent and digitally verifiable.

By selecting the right tax regime, maintaining accurate books (or opting for presumptive taxation where eligible), and reporting foreign assets and capital gains correctly, taxpayers can avoid scrutiny and enjoy faster refunds. Tools like Form 26AS, AIS, and the pre-filled utility make it easier than ever to comply.

Whether you’re a freelancer, consultant, professional, or a partner in a firm—ITR-3 gives you the platform to file comprehensively and responsibly.

Don’t wait for the last minute. File early. File accurately. File smart.

By understanding what’s required, leveraging available deductions, and reporting everything accurately, you can file with confidence—and avoid unwanted notices.

Disclaimer: This article is based on the Finance Act, 2024 and notifications up to July 2025. Please consult a tax expert for complex cases involving audits, foreign income, or capital gains.