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ITR 3 Form – FY 2020-21 / AY 2021-22

The ITR 3 is applicable for individuals and HUF who have income from profits and gains from Businesses or professions. Income Tax Return (ITR) 3 Form – FY 2020-21 / AY 2021-22.

 

Assessment Year for ITR 3 Form FY 2020-21

This Return Form is applicable for the assessment year 2021‐22 only, i.e., it relates to income earned in Financial Year 2020‐21.

 

Who is Eligible to File ITR-3 for FY 2020-21/ AY 2021-22?

This Return Form is to be used by an individual or a Hindu Undivided Family who is having income under the head “profits or gains of business or profession” and who is not eligible to file Form ITR‐1 (Sahaj), ITR‐2, or ITR‐4 (Sugam).

 

Checklist of information/documents for filing ITR-3

• Aadhaar card copy.
• Form 16 is issued by an employer in case salary income is earned.
• Month-wise salary slip where form 16 has not been issued by the employer if salary income is earned.
• Rent receipts in case of rental income and rental agreement.
• Bank statement for the financial year for interest on a savings account.
• Form 16A or Interest Statement issued by Banks for Fixed Deposit Interest Income.
• In capital gains, tax profit and loss or capital gain statement issued by the Share broker.
• Chapter VIA Investment details for claiming deduction as follows:
• Receipt of children’s school tuition fees.
• Life insurance premium receipt.
• Stamp-duty and registration charges.
• Principal repayment on your home loan.
• Equity Linked Savings Scheme/Mutual funds investment.
• Mediclaim payment receipt etc.
• Profit and loss statement and Balance sheet for the previous year
• Details of Chartered Accountant conducting Tax audit in case the person is covered under section 44AB.
• Copies of books of accounts must be maintained as per section 44AB, i.e., Cashbook, Journal book, Sales and Purchase register in case of Business, and Receipt book in case of the profession.

Fundamental changes (as compared to ITR for AY 2020‐21)

• Option to avail benefit u/s 115BAC is provided in ITR.
• Option of Filing ITR in response to notice u/s 153A and 153C is removed from ITR as a requirement to file ITR under these sections is omitted.
• In AY 2020‐21, the threshold limit for a person carrying on Business was increased from one crore rupees to five crore rupees in cases where the cash receipts or payments by a company don’t exceed 5% of such permits or such fees; however, in AY 2021‐22, the limit of five crore rupees is increased to ten crore rupees.
• Loss (negative value) under “No books of account” at sl.no.65 in Sch P&L is restricted.
• In schedule, BP, Income/ receipts credited to profit and loss account considered under the head “other sources” has been bifurcated into two parts as o “Dividend income” and o “Other than dividend income.”
• In Schedule DPM, the column “3a. Amount as adjusted on account of opting for taxation section 115BAC” and “3b. Adjusted Written down value on the first day of the previous year (3) + (3a)” has been added. Hence corresponding mapping changes are made in the schedule DPM
• CBDT vide notification dated September 20, 2019, increased depreciation to 45% on motor cars, motor buses, etc. wrt assets purchased on or after the 23rd day of August 2019 but before the 1st day of April 2020 and is put to use before the 1st day of April 2020. Therefore, no additions will be allowed in the 45% block from the AY 2021‐22 w.r.t to such assets.
• In Schedule CG, the allowable difference between the total value of consideration u/s. 50 C and value of the property as per stamp authority has been increased from 1.05 times to 1.10 times
• In Schedule CFL, the bifurcation of PTI loss and other than PTI loss has been removed from “HP loss,” “Short term capital loss,” and “Long term capital Loss.”
• In Schedule CFL, the column “5b. Amount as adjusted on account of opting for taxation under section 115BAC” and “5c. Brought forward Business loss available for set off during the year” has been added. Hence corresponding mapping changes are made in schedule CFL
• In Schedule UD, the “Amount, as adjusted on account of opting for taxation under section 115BAD” field has been added as an adjustment for 115BAC, and so only balance loss can be set off against income in schedule BFLA.
• In Schedule EI, the field for “Dividend Income” is removed from exempt income as for AY 2021‐22 onwards; dividend income will be taxable in the hands of shareholders. similarly, corresponding Changes are also made in schedule OS, schedule Pass-Through Income (PTI) to remove reference of section 115O
• In schedule TPSA, dropdown for the financial year (FY 2019‐20 or FY 2020‐21) for which option u/s 92CE(2A) is exercised in AY 2021‐22 is inserted.
• Schedule DI (Details of Investment) has been removed as it was relevant only for AY 20‐21
• Now, the assessee needs to disclose surcharge before “Marginal Relief” and after “Marginal relief” in Schedule Part BTTI.
• In Schedule TDS, earlier TDS credit is allowed only if corresponding income is offered for tax this year; however, an exception is added for TDS u/s 194N. Also, the label is amended to include form 16D for the claim of TDS
• Annexure 2 is inserted in instructions w.r.t. ITR fields which should be tallied with the corresponding amount mentioned in the Tax Audit report, i.e., Form 3CA‐3CD/3CB‐3CD, if applicable.
• Upload level validations table is modified w.r.t. mapping changes and new rules.

 

 

Obligation to file a return

Every individual or HUF whose total income, before allowing deductions under Chapter VI‐A of the Income‐tax Act, exceeds the maximum amount which is not chargeable to income tax is obligated to furnish his return of income. The deduction claim (s) under Chapter VI‐A is mentioned in Part C of this Return Form.

 

What is the period covered during FY 2020-21 / AY 20201-22?

FY 2020-21 is the financial year 2020-21 starting from April 1, 2020, ending on March 31, 2021. AY 2021-22 is the assessment year 2021-22, relevant to the financial year 2020-21 (also called the previous year 2020-21).

 

Who should not file ITR-3?

This Return Form should not be used by an individual whose total income for 2016-17 includes Business or professional income under any proprietorship.

 

Who should mandatorily file Income Tax returns?

Any Individual whose total income before allowing deductions under chapter VI-A of the Income Tax exceeds the basic exemption limit should mandatorily file the income tax return.

The basic exemption limit for FY 2020-21 / AY 2021-22 is as follows:

• The individual below 60 years of age is Rs 2.50 Lakhs
• Resident senior citizens who are 60 years and above but below the age of 80 years is Rs 3.00 Lakhs
• Resident super senior citizens who are above 80 years of age is Rs 5.00 Lakhs
• The Finance Act (No 2) of 2019 has inserted Seventh Proviso to Section 139(1) of the Income Tax Act to make it mandatory to file an income tax return once the expenditure/transaction amount exceeds the prescribed threshold.
• The total Deposit in the current account is Rs. 1 crore or more
• Foreign Travel expenditure of Rs 2 Lakh or more
• Amount spent for more than Rs 1 Lakh on the consumption of electricity.
• Any other conditions prescribed.

 

FAQ’S

I am an individual who has income from Business and have opted for presumptive taxation. ITR 3 is applicable for me?

If you opt for presumptive taxation of Business or profession, ITR 3 is not applicable for you. ITR 4 will be suitable for you.

 

ITR-3 is applicable for all assessee having a business income?

No, ITR-3 will be applicable for Individuals or HUF having Business and professional income not chargeable under presumptive taxation.

 

How to fill out the verification document?

While filling up the data in the income tax return, a taxpayer should also fill up the verification. Please note that any person making a false statement in recovery or any of the accompanying schedules shall be liable to be prosecuted under section 277 of the Income-tax Act, 1961 and on conviction be punishable under that section with rigorous imprisonment and with fine.

 

Can we file ITR 3 without a tax audit?

Yes, you can file ITR 3 without an audit.

 

Can I file ITR 3 online?

A taxpayer has to file ITR-3 online compulsorily. The ITR-3 can be filed Online/Electronically: By furnishing the return electronically under digital signature. By transmitting the data electronically and then submitting the verification of the recovery in form ITR-V. Income Tax Return (ITR) 3 Form – FY 2020-21 / AY 2021-22.