Detailed guide to file ITR Form 3 – applicable for AY 2017-18 (FY 2016-17)

 

The Income Tax Department has released ITR Form-3 which is relevant for Assessment Year 2017-18 (Financial Year 2016-17).

The last date to file the return of income is 31^st July 2017 when tax audit is not required to be done (In case of tax audit is required to be done, the due date is 30^th September).

Let us have a look on who is eligible to use this return form and what is the procedure to use this form.

 

Who can use this form?

This form can be used by those Individuals or HUFs who have income from proprietary business or profession.

 

How to file the return?

• Electronically: The return can be filed electronically by using either the digital signature or electronic verification code.
• Manually: If a person does not wish to file the return electronically he can file the return in physically by submitting the acknowledgment of return filed electronically. The acknowledgment has to be signed and posted to CPC Bengaluru.

 

Note: A person who is liable for tax audit has to compulsorily file his return electronically.

 

Content of the form and guide to fill each part

PART-A- General

You have to fill the basic details in this part including section under which return is filed. Also, a person is required to mention whether he is liable to maintain books of accounts as per section 44AA and whether he is liable for tax audit under section 44AAB. If a person is liable for tax audits, audit details like name and membership no of auditor, date of audit report etc. have to be mentioned.

 

Part A- Nature of business

Select the nature of business from the drop down menu and mention the trade name.

 

Part A- Balance sheet and profit and loss account

Balance sheet as on 31^st March 2017 and profit and loss for the financial year 2016-17  has to be filed in the format provided in the return in case you were required to maintain accounts of the business or profession during the year.

In case you were not required to maintain books of accounts then fill the information in “no accounts case’ section as bellows:

Part A- OI (other information) and QD (quantitative details)

It is optional to fill these details (OI and QD) if you were not liable for tax audit under section 44AB. When you were liable for tax audit, these details are compulsorily to be filled and the details that are mentioned here shall match with the same details in the tax audit report.

In Quantitative details stock details have to be given by a trading or a manufacturing concern. Purchases are to be shown exclusive of taxes. If it is not possible to segregate the tax amount then the tax amount may be included.

 

Schedule S: Salary

If you were employed by more than one employer during the year, provide the details for both the employments. You can use Form 16 to fill the salary details in the schedule.

 

Schedule HP: Income form house property

• When a person owns only one house property which is self-occupied and interest deduction is to be claimed then this schedule has to be used.
• If house is owned by more than one person, detail of co-owners has to be provided, being the name, PAN and % share in property of the co-owner. The total annual value of the property has to be provided. The share of assessee will be calculated automatically based on % if his share in property that is mentioned by him.
• If there is more than one house property, details of all properties need to be filled. Also note than not more than one house property can be shown as self-occupied.
• For self-occupied house, the limit of interest deduction is restricted to ₹ 2,00,000/-

 

Schedule BP: Income from business or profession

The computation of income under this head will start from the net profit shown in Part A- P&L. Any item of allowance of disallowance under the Income Tax Act is taken into consideration here. Profit from non-speculative business, speculative business and specified business under section 35AD will all be taken here. Set-off of business losses will be specified in item ‘E’ of the schedule. Losses from speculative business or specified business are not allowable to be set off with normal business profits.

 

Schedule-DPM, Schedule DOA, Schedule DEP and Schedule DCG

Schedule DPM shows the depreciation on plant and machinery while schedule DOA shows depreciation on other assets. Schedule DEP is a summary of depreciation charged on all assets. If any short term capital is deemed as calculated in the schedules DPM or DOA it has to be shown in schedule DCG (Deemed capital gains).

 

Schedule ESR (Deduction under section 35, 35CCC, 33CCD)

Any amount that is allowed under section 35 on scientific research has to be entered here. Remember that depreciation can’t be claimed on assets on which deduction is taken. Details of deduction under section 35CCC and 33CCD are also to be mentioned here.

 

Schedule CG: Capital Gains

• In Part ‘A’, details of short term capital gains has to be mentioned. In Part ‘B’ details of long term capital gains has to be mentioned. Capital gains from various assets have been segregated separately in the form. The cost of acquisition, cost of improvement and indexed cost have to be mentioned taking into account the indexation rates. For non-residents some specific columns are also there.
• Details of exemptions under section 54/54EC/54B etc. have to be provided based on which exemption is claimed.
• For non-residents who wish to claim benefit of DTAA, have to mention the details of DTAA like the name of the country, article of DTAA, tax residency certificate, amount of gains not taxable in India as per DTAA.
• Item E provides for set-off of current capital losses. Please note that short term capital loss can be set-off from short term as well as long term gains while long term losses can be set-off only from long term gains.
• Also, details of capital gains received within due dates of paying advance tax are to be mentioned. This is to calculate interest for late payment of advance tax on capital gains.

 

Schedule OS: Income from other sources

• The amount of dividend (other than exempt) and interest have to be mentioned in item 1a and 1b.
• In item 1c rent received from machinery, plant etc. has to be mentioned.
• In item 1d, other incomes being lottery income, cash credits, unexplained investments, undisclosed incomes have to be mentioned. These are chargeable at the highest rate of 30%.
• For deduction under section 57, details of expenses have to be mentioned.

 

Schedule CYLA: Set-off of current year losses

Here, the set-off of losses from various heads of income will be done as per the applicable provisions automatically. Example, the loss of business can be set-off from any income other than salary.

Any loss which could not be set-off entirely will be carried forward to next year as per the applicable provisions. Also, the current income remaining after set-off will be reflected under this schedule.

 

Schedule BFLA: Details of income after set-off of losses from previous years

After the losses of current year have been set-off, the losses of previous years which are brought forward to this year are set-off against the current year income as per the applicable provisions. In column 5, current year income after set-off of losses is reflected.

 

Schedule CFL: Carry forward of losses to future years

In this schedule, the summary of losses carried forward from earlier years, their set-off from the current year and any loss which is still left for carry is provided for each assessment year.

 

Schedule UD: Unabsorbed depreciation

In this Schedule, the details of brought forward unabsorbed depreciation and brought forward unabsorbed capital expenditure of scientific research under section 35 for each assessment year, depreciation and allowance for capital expenditure of scientific research under section 35  set-off against the current year’s income and the balance unabsorbed depreciation and unabsorbed capital expenditure of scientific research to be carried forward to the next assessment year are mentioned.

 

Schedule ICDS: Effect of Income Computation and Disclosure Standards on profits

Deviation from each ICDS that has an effect on profit is to be filled in column(iii) of the said Schedule.

 

Schedule AMT: Alternate Minimum Tax

The assessee is required to fill the details of computation of AMT payable under section 115JC (special provisions for payment of tax by certain persons other than a company). The tax liability under the section shall be 18.5 percent of the adjusted total income computed under the said section.

 

Schedule AMTC: AMT Credit

Credit for AMT paid in excess of normal tax liability, is allowed to be set-off against the normal tax liability of current assessment year. The amount of credit is restricted to normal tax liability for the current assessment year exceeding the AMT liability for the current assessment year.

 

Schedule SPI: Income of specified persons includible in your income

Details of income of specified persons being spouse, minor child etc. as per the clubbing provisions have to be provided (name and PAN of person, relationship, nature and amount of income). For the income of minor child, a deduction of ₹ 1,500 is available per child.

 

Schedule SI: Income chargeable to tax at special rates

Mention the income included in Schedule-CG and Schedule-OS which is chargeable to tax at special rates. Such income will be taken from the appropriate columns in schedule BFLA/CYLA or schedule OS as indicated.

 

Schedule IF: Information of firms in which you are partner

Mention the name of the firm, PAN of the firm, % of profit sharing, amount of profit share and capital balance as on 31^st March.

 

Schedule EI: Exempt income

In this schedule, incomes which are exempt from tax have to be mentioned. Example: dividend in excess of ₹ 10 lakhs.

 

Schedule PTI: Pass through income

Income received from business trust or investment fund has to be mentioned.

The name and PAN of trust or fund has to be mentioned along with the amount of income various heads. This allocation of income will be as per the form provided by the trust or fund. TDS, if deducted has to be filed.

 

Schedule FSI: Income from outside India and relief of tax

The income which is received from outside India (already included in total income) has to be mentioned. Country code has to be selected from the drop down menu. TIN of assessee in the other country has to be mentioned. In its absence, passport number has to be mentioned. Relief of tax will be calculated based on the tax paid outside India and tax payable on such income in India.

 

Schedule TR: Summary of tax relief for taxes paid outside India

Based on the previous schedule, summary of tax relief will be made here.

 

Schedule FA: Foreign assets and income from sources outside India

• To be filled by resident assessee.
• Mention the details of foreign bank accounts, financial interest in any entity, details of immovable property or other assets located outside India.
• Also include details of any account located outside India in which you have signing authority, details of trusts created outside India in which you are settlor, beneficiary or trustee.
• This schedule is to be filled in all cases where the resident assessee is a beneficial owner, beneficiary or legal owner.

 

Schedule AL: Schedule of assets and liabilities

• To be filled when total income exceeds ₹ 50 lakhs.
• Details of mentioned assets need to be disclosed at their cost. In case asset was gifted, the cost of asset in hands of previous owner shall be considered.

How to verify the return?

1. One can send the signed copy of ITR to CPC Bengaluru physically within 120 days of filing return.
2. Verification can also be done online by following ways-

• Aadhaar OPT
• Net banking
• EVC code
• Digital signature

3. Go to View Returns/ Forms- Click here to view returns pending for verification- e-verify
4. The options mentioned above will be displayed above and return can be verified.

 

Read points to take care while sending ITR-V to the income tax department.