In a significant move towards streamlining income tax return filings, the Central Board of Direct Taxes (CBDT) has notified the new ITR-3 form for Assessment Year 2025-26 through Notification No. 41/2025 dated April 30, 2025. This amendment to the Income-tax Rules, 1962, introduces a revised format for taxpayers earning income from business or profession, including Hindu Undivided Families (HUFs) and individuals.
The changes are applicable from April 1, 2025, and are expected to impact professionals and businessmen who file their returns under the Income-tax Act, 1961, particularly those not eligible to file ITR-1, 2, or 4.
Key Highlights of the New ITR-3 Form
- Expanded Disclosure Requirements: The revised ITR-3 requires detailed disclosures on business and professional income, including gross receipts, profit & loss account data, and balance sheet items.
- Choice of New Tax Regime (Section 115BAC): Taxpayers must specify whether they are opting in or out of the new tax regime, and provide details such as Form 10-IEA filing date and acknowledgment number.
- Foreign Asset and Residency Status: Detailed information is sought regarding the taxpayer’s residential status, foreign assets, and income from outside India. Non-residents must disclose their tax residency jurisdiction and whether they have a Significant Economic Presence (SEP) in India.
- Directorship and Shareholding Disclosure: Individuals who were directors in a company or held unlisted equity shares at any time during the financial year must furnish the names of the companies, PAN, and other details, including cost of acquisition and sale proceeds.
- Audit and Financial Statements: Taxpayers subject to audit under Sections 44AB, 92E, or any other law must provide comprehensive audit information, including:
- Auditor details
- Date of audit report
- UDIN number
- Nature of business or profession
- Presumptive Income Sections (44AD/44ADA/44AE): For those declaring income under presumptive taxation, separate fields are included to calculate presumptive income as per applicable sections.
- Comprehensive Financial Data: The form requires extensive data related to:
- Manufacturing and trading account
- Profit and loss account
- Other income such as interest, dividend, and capital gains
- Schedule of deductions under Chapter VI-A
- Reporting of Specific Transactions: Taxpayers must report if they:
- Deposited more than Rs 1 crore in a current account
- Spent over Rs 2 lakh on foreign travel
- Paid electricity bills exceeding Rs 1 lakh
Also Read: CBDT Notifies ITR Forms 1 and 4 for AY 2025-26
Compliance and Ease of Filing
The updated ITR-3 form reflects the government’s commitment to enhancing transparency and accountability in tax filings. While the form may appear more detailed, it aligns with global best practices in income disclosure and tax compliance.
Taxpayers and professionals are advised to review the new form carefully and ensure proper documentation is maintained, especially regarding the new tax regime selections, audit requirements, and foreign income disclosures.
For those filing ITR-3, it is recommended to use the Income Tax e-filing portal and consult with a chartered accountant for compliance with the updated norms.
Official copy of the notification has also been attached