Description

ITR-3 is the Income Tax Return form for individuals and Hindu Undivided Families (HUFs) who have income from business or profession. It is used when the taxpayer earns income from proprietorship, freelancing, consultancy, commission, brokerage, or has complex financial transactions.

Who Should File ITR-3?

You must file ITR-3 if your income includes:

• Business income (proprietorship)
• Professional income (CA, lawyer, doctor, architect, freelancers, consultants, etc.)
• Income from salary or pension
• Income from house property
• Capital gains
• Income from other sources (interest, dividends, etc.)
• Income from presumptive taxation but opting out of ITR-4
• Share in profit from partnership firm (exempt)

Also applicable if:

• You are a Director in a company
• You hold unlisted equity shares

Key Features of ITR-3

• Detailed reporting of balance sheet, profit & loss account
• Applicable for business owners and professionals
• Includes schedules for capital gains, depreciation, and assets/liabilities
• Mandatory if turnover exceeds limits and audit applies
• Supports normal taxation or presumptive income (44AD/44ADA/44AE)

Who Cannot File ITR-3?

• Individuals without business/professional income
• Taxpayers eligible for ITR-1 or ITR-2

ITR-4 Sugam is designed for resident individuals, HUFs, and Firms (except LLPs) opting for presumptive taxation under Sections 44AD, 44ADA, or 44AE. It is a simplified return for small businesses and professionals with uncomplicated income structures.

Who Should File ITR-4?

ITR-4 is applicable if:

• You run a small business with turnover up to ₹2 crore (44AD)
• You practice a profession with income up to ₹50 lakh (44ADA)
• You own goods vehicles and declare income under 44AE
• You have other income like:
  • Salary/pension
  • One house property
  • Interest income

Who Cannot File ITR-4?

ITR-4 is not applicable if:

• Total income exceeds ₹ 50 lakh
• You hold foreign assets or earn foreign income
• You are a company director or hold unlisted shares
• You have capital gains
• You have more than one house property
• You have regular business books (not presumptive)
• You are an LLP

Key Features of ITR-4

• Very easy filing, minimal details required
• Suitable for small traders, shop owners, self-employed persons
• No need to maintain detailed books of accounts
• Income is calculated at a presumptive fixed rate of turnover
• Can be filed quickly using pre-filled data on the portal