Income Tax Return: An Overview  

 

What is Income Tax Return?
 

An Income tax return (ITR) is a form used to file information about your income and tax to the Income Tax Department. The tax liability of a taxpayer is calculated based on his or her income. In case the return shows that excess tax has been paid during a year, then the individual will be eligible to receive an income tax refund from the Income Tax Department.

As per the income tax laws, the return must be filed every year by an individual or business that earns any income during a financial year. The income could be in the form of a salary, business profits, income from house property or earned through dividends, capital gains, interests or other sources.

Tax returns have to be filed by an individual or a business before a specified date. If a taxpayer fails to abide by the deadline, he or she has to pay a penalty. 

ITR-3 Form

ITR-3 is a form that is applicable for resident individuals and Hindu Undivided Families (HUFs). In order to file income tax returns with an ITR-3 form, an assessee must earn his/her income from a proprietorship business or a profession. Therefore, if you generate an income through a proprietary business or a profession pertaining to accountancy, architecture, medical, engineering, etc., you can file ITR-3 for income tax returns.

Who is eligible for ITR-3?

An ITR-3 form is applicable to any individual or Hindu Undivided Family (HUF) whose total income for a given assessment year includes the following:

Income from a profession or business carried under a proprietorship firm, wherein the taxpayer is a proprietor (both audit and non-audit cases)
Income earned from one or multiple house properties
Rewards earned by winning a lottery, horse racing, and other activities falling under ‘Income from Other Sources
Income assets by way of assets in a country outside India
Income generated from short or long-term capital gains
Now that you know about ITR-3 eligibility, let’s delve into how to file ITR-3.

What are the changes made in ITR-3 for AY 2023-24?

The assessment year 2023-24 brought about a number of key changes in ITR-3. Here is a list of the major changes in this form:

An assessee must disclose the following information when filing returns:

Amount of cash deposits in excess of ₹1 crore in the current account with any bank
Expenditure incurred by the individual on foreign travel exceeding ₹2,00,000
If the taxpayer incurs more than ₹1,00,000 on electricity charges
If an individual earns short or long-term capital gains by selling a building and/or land, he/she must furnish some details of this sale. These details include a taxpayer’s PAN or Aadhaar information, residential address, and percentage share of ownership.
Introduction of a separate schedule 112 A. It shall calculate long-term capital gains on the sale units of a business liable to STT or equity shares. 
If a taxpayer holds the position of a company’s director or has unlisted equity investments, the ‘Type of Company’ must be disclosed. 
An individual must provide details of tax deduction claims for expenditures, payments, or investments made between 1st April 2022 to 30th June 2023.
 

Documents Required

PAN
Aadhaar
Bank account details
Form 16 if applicable
Investments details
Books of accounts

Penalty for Late Filing Income Tax Return
 

Taxpayers who do not file their income tax return on time are subject to penalties and charged interest on the late payment of income tax. Also, the penalty for late filing income tax returns on time has been increased recently. The penalty for late filing income tax return is now as follows:

Late Filing between 1st August and 31st December - Rs.5000    
Late Filing After 31st December - Rs.10,000    
Penalty if taxable income is less than Rs.5 lakhs - Rs.1000