ITR-3 Updated: Relief for professionals and freelancers, new ITR-3 form will make tax filing easier
The Income Tax Department has made some major changes in the ITR-3 form, so that tax filing can be made easier and middle-income people do not have to give more information than necessary.
ITR-3 Form AY 2025-26: If you are an individual or part of a Hindu Undivided Family (HUF) and have income from business or profession, then there is good news for you! The Income Tax Department has released the new ITR-3 form for the assessment year 2025-26. Many changes have been made in this form, which will make tax filing easier and reduce paperwork, especially for middle-income people. Let’s know what is new and what it means for you.
Who will fill ITR-3 form?
The ITR-3 form is for those who:
- Earn income from business or profession (such as freelancers, doctors, lawyers, consultants).
- Are part of a Hindu Undivided Family (HUF).
- Are not eligible to fill simpler forms like ITR-1 or ITR-4.
What’s new in ITR-3?
The limit for disclosing assets and liabilities has increased. Earlier, if your annual income was more than Rs 50 lakh, you had to give details of your assets (such as property, bank balance) and liabilities (such as loans). Now this limit has been increased to Rs 1 crore.
Is it important for you?
If your income is less than 1 crore, then now you do not need to give these details. This will provide a lot of relief to middle-income business owners and professionals, as there will be less paperwork.
Capital gains have to be declared separately
If you have sold property or any long-term capital asset (such as shares), then now you have to show the income before and after 23 July 2024 separately.
Why? Because new rules have come in Budget 2024:
- 12.5% long-term capital gains tax (LTCG) on sales after 23 July 2024 without indexation.
- Or old rule: 20% tax, but benefit of indexation (increase in cost according to inflation).
- If you bought property before 23 July 2024, then you can choose whichever of the two is beneficial for you.
Claiming deductions has become easier
The new form adds dropdown menus for deductions such as Section 80C, 80GG. This will make it easier and clearer to claim deductions to save tax.
TDS details will have to be given section-wise
Now the information of Tax Deducted at Source (TDS) will have to be given separately for each section. This will make things easier for both the taxpayer and the tax department to understand things.
Why are these changes necessary?
According to Sandeep Sehgal, tax expert at AKM Global Partner-Tax, “These changes make tax filing easier for business owners and professionals. Dropdown menus and section-wise TDS reporting will increase transparency and reduce errors.”
These changes are part of the effort to make tax filing user-friendly and align it with new tax rules (such as LTCG).
Impact of Budget 2024: What to keep in mind?
- Selling property? You now have two options: 12.5% tax without indexation or 20% tax with indexation.
- Earnings before July 23, 2024 will come under the old rules.
- Keep the sale documents, purchase cost and date ready for correct reporting.
Key points for professionals, freelancers and small business owners:
- If your income is less than Rs 1 crore, then fewer details will have to be given.
- More control and clear information on capital gains tax.
- Ease in claiming deductions.
- But the responsibility of giving new details of capital gains and TDS has also increased.
What to do now?
- Tax filing for FY 2024-25 (AY 2025-26) will start soon. So get ready now:
- Gather details of your income, expenses, investments and capital asset sales.
- If you are confused about LTCG tax options, consult a tax advisor.
The new ITR-3 form is your chance to make tax filing easier and smarter. With just a little preparation and the right information, you can handle it easily!
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