ITR-3

1. Assessment Year for which this Return Form is applicable

This Return Form is applicable for assessment year2021-22only, i.e., it relates to income earned in Financial Year2020-21.

2. Who is eligible to use this Return Form?

This Return Form is to be used by an individual or a Hindu Undivided Family who is having income under the head “profits or gains of business or profession” and who is not eligible to file Form ITR-1 (Sahaj), ITR-2 or ITR-4 (Sugam).

3. Manner of filing this Return Form

This Return Form can be filed with the Income-tax Department electronically on the e- filing web portal of Income-tax Department (www.incometaxindiaefiling.gov.in) [www.incometax.gov.in from 7-June-2021.

In case an assessee is required to furnish a report of audit under sections 10AA, 44AB, 44DA, 50B, 80 -IA, 80-IB, 80-IC, 80-ID, 80JJAA, 80LA, 92E, 115JB or 115JC, he shall file such report electronically one month before the due date of filingof return of income.

4. Key changes (as compared to ITR for AY 2020-21)

• Option to avail benefit u/s 115BAC is provided in ITR. If new tax regime is opted, loss under the head House Property is not allowed to be set off and the following deductions/allowances cannot be claimed
1. Certain allowances u/s section 10 (LTA, HRA, allowances granted to meet expenses in performance of duties of office, Allowances granted to meet personal expenses in performance of duties of office, Allowance received by MP/MLA/MLC, Standard deduction in case of Minor child)
2. Deductions u/s16 (Standard Deduction, Entertainment allowance and Professional tax)
3. Interest payable on borrowed capital for self-occupied property
4. Standard Deduction in case of family pension
5. Chapter VIA Deduction (life insurance, health insurance premium, pension funds, provident fund, donation etc. except Contribution made by employer to notified pension scheme u/s 80CCD (2))
6. Deduction u/s 10AA in respect of newly established Units in Special Economic Zones
7. Additional depreciation u/s 32(1)(iia)
8. Deduction u/s 32AD, 33AB,3ABA, 35AD,35CCC
9. Deduction under sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of sub- section (1) or sub-section (2AA) of section 35
• Option of Filing ITR in response to notice u/s 153A and 153C is removed from ITR as requirement to file ITR under these sections is omitted.
• In AY 2020-21 , the threshold limit for a person carrying on business was increased from one crore rupees to five crore rupees in cases where the cash receipts or payments by a business don’t exceed 5% of the such receipts or such payments, however in AY 2021-22 , the limit of five crore rupees is increased to ten crore rupees
• Loss (negative value) under “No books of account” at sl.no.65 in Sch P&L is restricted.
• In schedule BP, Income/ receipts credited to profit and loss account considered under head “other sources” has been bifurcated into 2 parts as
• “Dividend income” and
• “Other than dividend income”
• In Schedule DPM, the column "3a.Amount as adjusted on account of opting for taxation section 115BAC" and "3b. Adjusted Written down value on the first day of previous year (3) + (3a)" has been added . Hence corresponding mapping changes are made in schedule DPM
• CBDT vide notification dated 20th September 2019 increased depreciation to 45% on motor cars, motor buses etc wrt assets purchased on or after the 23rd day of August, 2019 but before the 1st day of April, 2020 and is put to use before the 1st day of April, 2020. Therefore, no additions will be allowed in 45% block from the AY 2021-22 w.r.t to such assets.
• In Schedule CG, the allowable difference between full value of consideration u/s. 50 C and value of property as per stamp authority has been increased from 1.05 times to 1.10 times
• In schedule OS,
  The existing drop related to “Dividend income” is bifurcated into 2 parts i.e “Dividend income [other than (ii)]” and “Dividend income u/s 2(22)(e)” and respective changes are done in sl.no.2e _DTAA field and in sl.no.10(i)_Quarterly breakup of Dividend income. Dividend will now be taxable from Rs.1/- as the section 115BBDA is omitted. Accordingly, Interest expenditure u/s 57(1) to earn Dividend can be claimed at sl.no.3. The existing drop down at Sl. No. 2d “115AD(1)(i)- Income received by an FII in respect of securities (other than units referred to in section115AB)" bifurcated into 2 drop downs as under:-
• 115AD(1)(i)-Income being Dividend received by an FII in respect of securities (other than units referred to in section115AB) @20%
• 115AD(1)(i)-Income being other than dividend income received by an FII in respect of securities (other than units referred to in section115AB) @20%

Further new drop downs are inserted in sl. No. 2d and Sl. No. 2e wrt “Interest referred to in section 194LC(1)” and Distributed income being Dividend referred to in section 194LBA

Section 115BBDA is removed from AY 2021-22 onwards hence corresponding drop downs are removed from sl. No. 2c, 2d and 2e of schedule OS and respective changes are done in sl.no.10(i)_Quarterly breakup of Dividend income. In existing Sl. No. 10 “Information about accrual/receipt of income from Other Sources”

• Field “Dividend Income u/s 115BBDA” is changed to “Dividend income” due to finance Act changes
• New line item is inserted to capture the quarter wise break up of “Dividend income which is taxable at DTAA Rates”. This information will be used to calculate interest u/s 234C.
• In Schedule CFL, the bifurcation of PTI loss and other than PTI loss has been removed from “HP loss”, “Short term capital loss” and “Long term capital Loss”
• In Schedule CFL, the column "5b. Amount as adjusted on account of opting for taxation under section 115BAC" and "5c. Brought forward Business loss available for set off during the year" has been added . Hence corresponding mapping changes are made in schedule CFL
• In Schedule UD, “Amount as adjusted on account of opting for taxation under section 115BAD” field has been added as an adjustment for 115BAC and so only balance loss can set off against income in Schedule BFLA.
• In schedule 80IB , the deductions claimed in following sections are removed due to sunset clause and corresponding mapping changes are made in schedule VI-A
1. Deduction in respect of industrial undertaking located in industrially backward states specified in Eighth Schedule [Section 80-IB(4)]
2. Deduction in respect of industrial undertaking located in industrially backward districts [Section 80-IB(5)]
3. Deduction in the case of an undertaking operating a cold chain facility [Section 80-IB(11)]
• In Schedule EI, field for “Dividend Income” is removed from exempt income as for AY 2021-22 onwards dividend income will be taxable in the hands of shareholders . similarly corresponding Changes are also made in schedule OS , schedule Pass Through Income (PTI) to remove reference of section 115O
• In schedule TPSA , dropdown for the financial year (FY 2019-20 or FY 2020-21) for which option u/s 92CE(2A) is exercised in AY 2021-22 is inserted
• Schedule DI (Details of Investment) has been removed as it was relevant only for AY 20-21
• Sl.No. 8 “Gross tax payable (higher of 1d and 7)” of Schedule Part B TTI has been bifurcated in below two fields
• Sl.No. 8a – “Tax on income without including income on perquisites referred in section 17(2)(vi) received from employer, being an eligible start-up referred to in section 80-IAC ( Schedule Salary)”
• Sl.No. 8b – “Tax deferred - relatable to income on perquisites referred in section 17(2)(vi) received from employer, being an eligible start-up referred to in section 80-IAC”
  Tax on ESOP received from eligible start-up will be deferred and is payable by the assessee within fourteen days—
1. after the expiry of forty-eight months from the end of the relevant assessment year; or
2. from the date of the sale of such specified security or sweat equity share by the assessee; or
3. from the date of the assessee ceasing to be the employee of the employer who allotted or transferred him such specified security or sweat equity share,
   whichever is the earliest.
• Now, assessee needs to disclose surcharge before “Marginal Relief” and after “Marginal relief” in Schedule Part BTTI.
• In Schedule TDS, earlier TDS credit is allowed only if corresponding income is being offered for tax this year , however exception is being added for TDS u/s 194N. Also the label is amended to include form 16D for the claim of TDS
• Annexure 2 is inserted in instructions w.r.t. ITR fields which should be tallied with corresponding amount mentioned in Tax Audit report i.e Form 3CA-3CD/3CB-3CD, if applicable.
• Upload level validations table is modified w.r.t. mapping changes and new rules.

5. Obligation to file return

Every individual or HUF whose total income before allowing deductions under Chapter VI-A of the Income-tax Act, exceeds the maximum amount which is not chargeable to income tax is obligated to furnish his return of income. The claim of deduction(s) under Chapter VI-A is to be mentioned in Part C of thisReturn Form. The maximum amount which is not chargeable to income-tax for Assessment Year 2021-22, in case of different categories, is as under:

If a person whose total income before allowing deductions under Chapter VI-A of the Income- tax Act or deduction for capital gains (section 54 to 54GB), does not exceeds the maximum amount which is not chargeable to income-tax but fulfils one or more conditions mentioned below is obligated to furnish his return of income. In case of any doubt, please refer to relevant provisions of the Income-tax Act.

1. Deposit of amount or aggregates of amount exceeding Rs 1 crore in one or more current accounts.
2. Incurred expenditure of an amount or aggregate of amount exceeding Rs. 2 lakhs for travel to a foreign country for yourself or any other person.
3. Incurred expenditure of amount or aggregate of amount exceeding Rs. 1 lakh on consumption of electricity.
1. 6. Obligation to file form 10-IE (for person opting for new tax regime u/s 115BAC)Any individual or HUF opting for new tax regime u/s 115BAC has to mandatorily file Form 10-IE.
2. Form 10IE once filed cannot be withdrawn during the year.
3. After filing Form 10IE, original return or revised return is required to be filed mandatorily to avail the benefit of new tax slab u/s 115BAC and Acknowledgement no. & Date of filing Form 10IE will be mandatory fields in ITR-3.
4. If Form 10IE is filed within due date, benefit of 115BAC can be claimed even if return is filed after due date.

ITR-4

1. Who is eligible to use this Return Form

This Return Form is to be used by an individual or HUF, who is resident other than not ordinarily resident, or a Firm (other than LLP) which is a resident, whose total income for the assessment year 2020-21 does not exceed Rs.50 lakh and who has income under the following heads:-

1. Income from business where such income is computed on presumptive basis under Section 44AD (i.e. Gross Turnover upto Rs. 2 crore) or Section 44AE (income from goods carriage upto ten vehicles); or
2. Income from Profession where such income is computed on presumptive basis under Section 44ADA (i.e. Gross receipt upto Rs. 50 lakh); or
3. Income from Salary/ Pension; or
4. Income from One House Property; or
5. Interest income and / or income from family pension taxable under Other Sources.

Note 1: The income computed on presumptive basis under sections 44AD or 44AE or 44ADA shall be presumed to have been computed after giving full effect to every loss, allowance, depreciation or deduction under the Income-tax Act. However, person having loss after giving effect to proviso to sub-section 3 of Section 44AE shall file ITR5

Note 2: Further, in a case where the income of another person like spouse, minor child, etc. is to be clubbed with the income of the assessee, this Return Form can be used only if the income being clubbed falls into the above income categories.

2. Who is not eligible to use this Return Form

1. This Return Form should not be used by a person who –
1. is a Director in a company;
2. has held any unlisted equity shares at any time during the previous year;
3. has any asset (including financial interest in any entity) located outside India;
4. has signing authority in any account located outside India; orhas income from any source outside India.
5. has deferred tax on ESOP received from employer being an eligible start-up.
2. This return form also cannot be used by a person who has any income of the following nature during the previous year:-
1. Profits and gains from business and professions which is not required to be computed u/s 44AD, 44ADA or 44AE, such as income from speculative business, agency business, commission or brokerage income etc.;
2. Capital gains;
3. Income from more than one house property;
4. Income under the head other sources which is of following nature:-
1. winnings from lottery;
2. activity of owning and maintaining race horses;
3. income taxable at special rates under section 115BBE;
5. Income to be apportioned in accordance with provisions of section 5A; or
6. Agricultural income in excess of ₹5,000.
3. Further, this return form also cannot be used by a person who has any claims of loss/deductions/relief/tax credit etc. of the following nature:-
1. any brought forward loss or loss to be carried forward under any head of income;
2. loss under the head ‘Income from other sources’;
3. any claim of relief under section 90, 90A or section 91;
4. any claim of deduction under section 57, other than deduction under clause (iia) thereof (relating to family pension); or
5. any claim of credit of tax deducted at source in the hands of any other person.

3. SUGAM form is not mandatory

Form ITR-4 (Sugam) is a simplified return form to be used by an assessee, at his option, if he is eligible to declare profits and gains from business and profession on presumptive basis under section 44AD, 44ADA or 44AE. However, in case the assessee keeps and maintains all books of accounts and other documents referred to in section 44AA, and also gets his accounts audited and obtains an audit report as per section 44AB, filling up the Form ITR-4 (Sugam) is not mandatory. In such a case, other regular return forms viz. ITR-3 or ITR-5, as applicable, should be used and not this Form.

4. Annexure-less Return Form

No document (including TDS Certificate) should be attached to this Return Form. All such documents enclosed with this Return Form will be detached and returned to the person filing the return

5. Key changes (as compared to ITR for AY 2020-21)

1. Option to avail benefit of new tax regime u/s 115BAC is provided in ITR-4. Form-10IE filing is mandatory to avail benefit of new tax regime and should be filed within due date mentioned as per section 139(1).
2. Resident Individual having Income-Tax deferred on ESOP is restricted to file ITR-4.
3. Quarterly breakup of dividend income to be provided.
4. Schedule DI is removed.

6. Obligation to file return

Every individual or HUF whose total income before allowing deductions under Chapter VI-A of the Income-tax Act, exceeds the maximum amount which is not chargeable to income tax is obligated to furnish his return of income. The claim of deduction(s) under Chapter VI-A is to be mentioned in Part C of this Return Form. The maximum amount which is not chargeable to income tax for Assessment Year 2021-22, in case of different categories, is as

In case of firms, every firm is required to furnish the return of income in this ITR Form, where profits or gains from business or profession are computed on presumptive basis under section 44AD, section 44ADA or section 44AE.

If a person whose total income before allowing deductions under Chapter VI-A of the Income-tax Act or deduction for capital gains (section 54 to 54GB), does not exceeds the maximum amount which is not chargeable to income-tax but fulfils one or more conditions mentioned below is obligated to furnish his return of income. In case of any doubt, please refer to relevant provisions of the Income-tax Act.

1. Deposit of amount or aggregates of amount exceeding Rs 1 crore in one or more current accounts;
2. Incurred expenditure of an amount or aggregate of amount exceeding Rs. 2 lakhs for travel to a foreign country for yourself or any other person;
3. Incurred expenditure of amount or aggregate of amount exceeding Rs. 1 lakh on consumption of electricity.

7. Obligation to file form 10-IE

1. Any individual or HUF opting for new tax regime u/s 115BAC has to mandatorily file Form 10-IE before due date of filing of return u/s 139(1).
2. Form 10-IE once filed cannot be withdrawn during the year.
3. After filing Form 10-IE, original return or revised return is required to be filed mandatorily to avail the benefit of new tax slab u/s 115BAC and Acknowledgement no. & Date of filing Form 10IE are mandatory fields in ITR-4.
4. If Form 10-IE is filed within due date then even if return is filed after due date, benefit of 115BAC will be allowed.