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ITR filing process: How to fill ITR-3 form for business income tax return filing; check in-depth details

Income Tax Return (ITR) Filing for Small Business: Considering MSMEs, as per the government’s definition, are businesses with annual turnover ranging from up to Rs 5 crore to Rs 250 crore, below is the structure of the ITR-3 form to be filled online from the income tax portal using your digital signature.

ITR Filing Process Online: Filing the income tax return is among the most important chores for a business in a year. Typically, income from a profession or a business under a proprietorship set up, wherein the taxpayer is a proprietor (both audit and non-audit cases) have to file the ITR-3 form. In contrast, partnership firms or individuals with a total income of up to Rs 50 lakh in a year and who have opted under the presumptive taxation scheme have to file the ITR-4 form. 

Since MSMEs, as per the government’s definition, are businesses with annual turnover ranging from up to Rs 5 crore to Rs 250 crore, below is the structure of the ITR-3 form to be filled online from the income tax portal using your digital signature.

Considering the form is divided into three parts viz., Part A, Schedules, and Part B, this article dives deep into what Part A and Schedules contain:

Part A begins with ‘General Information’. The first section is of personal information such as name, address, PAN, etc., followed by filing status such as employer category, tax status, residential status, and nature of business. 

Then comes Part A’s second section ‘Balance Sheet’ seeking details around ‘sources of funds’ in the company such as loans, proprietor’s capital, reserves, etc., followed by ‘application of funds’ such as fixed assets, investments, current assets, loans and advances, liabilities and provisions, etc. 

The third section of Part A is the ‘Manufacturing Account’ requiring details around inventory, purchases, wages and expenses, factory overheads, closing stock, etc. 

The fourth section is ‘Trading Account’ which seeks information related to revenue from operations, opening and closing stock of finished goods, direct expenses, duties and taxes (paid or payable) in respect of goods and services purchased, turnover from intraday trading, etc. 

The form continues with its second part ‘Schedules’ which basically seek details about assets held outside India, unlisted equity shares held during the year, etc. Schedules begin with: 

Schedule S — seeks information about income from salary 

Schedule HP – details around income from house property are required 

Schedule BP – retrieves details of income from business or profession 

Schedule DPM – details around depreciation on plant and machinery other than assets on which full capital expenditure is allowed as deduction 

Schedule DOA – this seeks details on depreciation on other assets other than assets on which full capital expenditure is allowable as deduction 

Schedule DEP – this is essentially a summary of depreciation on assets other than assets on which full capital expenditure is allowable as deduction 

Schedule DCG – this calculates capital gains on the depreciable assets’ sales 

Schedule ESR – information on deduction under Section 35, that is, expenditure on scientific research is required 

Schedule CG – this calculates income under the capital gains 

Schedule 112A – here details of capital gains wherein Section 112A is applicable is needed 

Schedule 115AD(1)(b)(iii) proviso – here non-residents are required to share details of capital gains wherein Section 112A is applicable 

Schedule VDA – this discusses income from the transfer of virtual digital assets 

Schedule OS – details of income from other sources are required 

Schedule CYLA – it is a statement of income after setting off losses in the current financial year 

Schedule BFLA – this provides details of income after setting off brought forward losses of earlier FYs 

Schedule CFL – this shares details of Losses to be carried forward to future years 

Schedule UD – this indicates unabsorbed depreciation and allowance under section 35(4) 

Schedule ICDS – this seeks details about the effect of income computation disclosure standards (ICDS) on profits 

Schedule 10AA – this shows deduction under section 10AA 

Schedule 80G – it indicates details of donations entitled for deduction under section 80G 

Schedule 80GGA – this shows details of donations for scientific research or rural development but applicable in the case of a partner of firm deriving only profit from the firm 

Schedule RA – this shows details of donations to research associations etc. 

Schedule 80-IA — this shows total deductions under section 80-IA 

Schedule 80-IB – this indicates deductions under section 80-IB 

Schedule 80-IC or 80-IE – Similarly, here deductions under section 80-IC or 80-IE are shown 

Schedule VI-A – this reflects deductions under Chapter VI-A 

Schedule AMT – here, business needs to provide computation of Alternate Minimum Tax payable under section 115JC 

Schedule AMTC – here, computation of tax credit under section 115JD is needed 

Schedule SPI — under this schedule, details around income of specified persons (spouse, minor child etc.) admissible in income of the assessee as per section 64 is required 

Schedule SI — here, income chargeable to tax at special rates is shown 

Schedule IF – here, information regarding partnership firms in which you are a partner is required 

Schedule EI – here, details of exempt income (income not to be included in total income or not chargeable to tax) is required 

Schedule PTI – here, pass through income details from business trust or investment fund as per section 115UA, 115UB is required 

Schedule TPSA — this section seeks details of tax on secondary adjustments as per section 92CE(2A) as per the schedule provided in the e-filing utility 

Schedule FSI – this seeks details of income from outside India and tax relief (available only in case of resident) 

Schedule TR – this schedule is the summary of tax relief claimed for taxes paid outside India (available only in case of resident) 

Schedule FA – this requires details of foreign assets and income from any source outside India 

Schedule 5A – here, information regarding the apportionment of income between spouses governed by the Portuguese Civil Code is required 

Schedule AL – the details around assets and liabilities at the end of the year (other than those included in Part A- BS) is required in case the total income exceeds Rs 50 lakh 

Schedule GST – here, information regarding the turnover or gross receipt reported for GST is needed 

Schedule : Tax deferred on ESOP – this schedule seeks information related to tax deferred – relatable to income on perquisites referred in section 17(2)(vi) received from the employer, being an eligible company referred to in section 80-IAC 

The fifth section of Part A is ‘Profit and Loss Account’. The business has to share its gross profit transferred from trading account, other income such as rent/commission/dividend income/interest income/profit on the sale of fixed assets, etc., power and fuel, repairs to building, compensation to employees, insurance, entertainment, hospitality, sales promotion, advertisement, etc., to compute net profit.

The sixth section is about ‘Other Information’ mandatory only if the company is liable for audit under Section 44AB of the Income Tax Act. This checks on the method of accounting employed, method of valuation of closing stock employed in the previous year, credit outstanding in the accounts in respect of service tax and GST etc., any profit chargeable to tax under section 41, expenditure disallowed under section 14A, etc. 

The seventh and last section of Part A is ‘Quantitative Details’ again mandatory if the company is liable for audit under section 44AB. In case the company is a trading unit, details around opening stock, purchase and sales during the previous year, closing stock, and shortage/excess, if any. In case the enterprise is a manufacturing concern, the enterprise has to share details around raw materials and finished products such as purchases, sales, and consumption, etc.