IT Department Enables Online Filing For ITR-3; New Form Reflects Key Budget Changes

The Income Tax Department has announced that taxpayers can now file Income Tax Return (ITR) Form 3 online through the official e-filing portal.

Individuals and Hindu Undivided Families (HUFs) use this form if they earn income from business or profession, share trading, or investments in unlisted shares.

Who Should Use ITR-3?

ITR-3 is mandatory for those with:

• Business or professional income
• Income from futures and options or share trading
• Investments in unlisted equity shares
• Directorship in companies
• Other sources of income including salary, house property, capital gains, or foreign assets

It is specifically for those not eligible to file Forms ITR-1 (Sahaj), ITR-2, or ITR-4 (Sugam).

Key Updates in the New ITR-3:

• Form 10-IEA Declaration: Taxpayers must confirm if they filed Form 10-IEA in AY 2024–25 and specify whether they’re opting in or out of the new tax regime for the current year.
• Capital Gains Segregation: Due to the revision in capital gains tax rules, Schedule CG now requires separate reporting for gains before and after July 23, 2024.
• Revised Tax Rates:

1. Long-Term Capital Gains (LTCG) tax on both financial and non-financial assets is now 12.5%, up from 10% for equities.
2. Short-Term Capital Gains (STCG) tax on select assets like equities is now 20%, up from 15%.
3. Listed financial assets held over a year will be treated as long-term.

• Indexation Benefits: Resident taxpayers must report separate cost details for land or building transfers before July 23, 2024, to claim indexation.
• Asset Disclosure Threshold Raised: Taxpayers with total income exceeding Rs 1 crore (up from Rs 50 lakh) must disclose assets and liabilities at the end of the financial year, unless already included in Part A – Balance Sheet.
• New Reporting for Capital Losses: A specific row is added in Schedule CG to disclose capital losses from buyback of shares by companies under Section 68 of the Companies Act, 2013.

These updates reflect the recent Union Budget announcements and aim to streamline compliance for professionals, traders, and high-net-worth individuals.