How to File ITR 3 Online for AY 2025-26

What is ITR 3?

ITR 3 is the income tax return form for individuals and Hindu Undivided Families who earn income from business or profession. It covers both speculative and non-speculative business income, professional earnings and income from other heads such as salary, house property and capital gains.

Unlike ITR 1 and ITR 2 which are for simpler cases, ITR 3 is designed for taxpayers with more complex financial profiles. It ensures detailed reporting of profits, professional receipts, and compliance with tax audit provisions if applicable.

Also Read: How to File Income Tax Return 2025: Complete Step-by-Step Guide

Who Should File ITR 3?

You must file ITR 3 if any of the following apply:
- You are an individual proprietor running a business
- You are a professional such as a doctor, architect or consultant
- You are a partner in a partnership firm earning income other than salary
- Your total income includes speculative income like intraday trading or non-speculative income from futures and options
- Your total income includes capital gains, foreign income, or more than one house property
- Your total income exceeds ₹50 lakh and is not eligible for ITR 1 or ITR 2

You cannot use ITR 3 if you are eligible for presumptive taxation under ITR 4 (unless you opt out of that scheme).

Key Changes in ITR 3 for AY 2025-26

The Income Tax Department has introduced certain changes in ITR 3 for AY 2025-26:
- Segregated reporting of capital gains before and after 23 July 2024
- Increased threshold for asset and liability reporting to ₹1 crore
- New tax regime filing updates through Form 10-IEA
- Presumptive taxation rules introduced for cruise operators

Documents Required for Filing ITR 3 Online

Keep the following documents ready before you file ITR 3:
- Form 26AS and Annual Information Statement (AIS)
- Bank account statements and investment proofs
- Profit and Loss account and Balance Sheet
- Capital gains statements and property sale deeds
- Deduction proofs such as under Sections 80C, 80D and 80G
- Audit reports if applicable

Step-by-Step Guide to File ITR 3 Online for AY 2025-26

Register or Login on the Income Tax Portal

Visit incometax.gov.in and log in using your PAN as user ID. Register if you are a new user.

Select Assessment Year and ITR 3 Form

Choose AY 2025-26 and select ITR 3 form under File Income Tax Return.

Enter Personal and Business Details

Fill Part A with personal details, filing status, residential status, and business or professional details. Enter audit information if required.

Report Income and Fill Schedules

- Schedule BP for business or professional income
- Schedule CG for capital gains
- Schedule AL for assets and liabilities if income is above ₹1 crore
- Enter deductions under Chapter VI-A and TDS details

Validate and Submit the Return

Run validation checks to ensure accuracy. If audit applies, use a Digital Signature Certificate. Upload JSON if you are filing through the offline utility.

Verify the ITR

E-verify through Aadhaar OTP, net banking, electronic verification code or DSC. Alternatively, send signed ITR-V to CPC Bengaluru.

Also Read: ITR Form 16: How to file ITR using Form 16

Audit and Compliance Requirements with ITR 3

Audit is mandatory under Section 44AB if:
- Business turnover exceeds ₹1 crore (₹10 crore if 95% transactions are digital)
- Professional receipts exceed ₹50 lakh

The audit report must be filed before the due date of return filing. Non-compliance can lead to penalties under the Income Tax Act. For speculative business income such as intraday trading, turnover is computed differently, so accurate reporting is crucial.

Common Errors to Avoid While Filing ITR 3 for AY 2025-26

Avoid these mistakes:
- Incorrect TDS section codes or mismatch with Form 26AS
- Reporting capital gains without bifurcating pre and post 23 July 2024
- Missing details of deductions under Chapter VI-A
- Choosing wrong tax regime or errors in Form 10-IEA
- Not reporting income from cryptocurrencies or digital assets
- Forgetting to e-verify return or technical upload errors

Speculative Income Reporting in ITR 3

Speculative income refers to intraday trading where transactions are made without delivery. It is reported separately from non-speculative income like futures and options trading.

In ITR 3, speculative income is declared under Schedule BP. Losses from speculative business can only be set off against speculative gains and can be carried forward for up to four years. Such cases may attract tax audit requirements depending on turnover thresholds.

Due Dates and Penalties for ITR 3 Filing AY 2025-26

- Non-audit taxpayers must be now filed by September 15
- Audit cases must file by 31 October 2025
- Penalties apply for late filing under Section 234F, interest under Sections 234A, 234B and 234C
- Late filing may result in loss of carry-forward benefits for losses

FAQs

Q.1. Who needs to file ITR 3 for AY 2025-26?

A. Individuals or HUFs with business or professional income, partners in firms or those with speculative income must file ITR 3.

Q.2. Can I include salary and business income in ITR 3?

A. Yes, ITR 3 allows reporting of both salary and business or professional income.

Q.3. What are the options to verify my ITR 3 return?

A. You can verify using Aadhaar OTP, net banking, electronic verification code, DSC or by sending ITR-V to CPC Bengaluru.

Q.4. What if I miss the due date for filing ITR 3?

A. You may face late filing fees under Section 234F, interest on taxes and loss of carry-forward benefits.

Q.5. How do I report capital gains from share buybacks?

A. From AY 2025-26, income from share buybacks must be reported as dividend income.

Q.6. What documents are mandatory while filing ITR 3 online?

A. Form 26AS, AIS, bank statements, P&L account, balance sheet, capital gains proofs and deduction proofs are required.

Disclaimer:

The contents of this article are for information purposes only and not a financial advisory. The information is subject to update, revision, and amendment and may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Godrej Capital or its Affiliates to any requirements. Godrej Capital or its Affiliates shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any decisions, financial or otherwise based on the contents and information mentioned. For more information, please visit www.godrejcapital.com.