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Instructions to Form ITR-3 (A.Y 2022-23)

Instructions for filling out FORM ITR-3

These instructions are guidelines for filling the particulars in Income-tax Return Form-3 for the Assessment Year 2022-23 relating to the Financial Year 2021-22. In case of any doubt, please refer to relevant provisions of the Income-tax Act, 1961 and the Income-tax Rules, 1962.

1. Assessment Year for which this Return Form is applicable

This Return Form is applicable for assessment year 2022-23 only, i.e., it relates to income earned in Financial Year2021-22.

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-filingweb portal of Income-tax Department [www.incometax.gov.in]and verified in any one of the following manners –

(i) digitally signing the verification part, or

(ii) authenticating by way of electronic verification code (EVC), or

(iii) Aadhaar OTP, or

(iv) by sending duly signed paper Form ITR-V – Income Tax Return Verification Form by post to CPC at the following address –

“Centralized Processing Centre,

Income Tax Department,

Bengaluru— 560500,

Karnataka”.

The Form ITR-V-Income Tax Return Verification Form should reach within such time as specifiedfrom the date of e-filing the return, which is being intimated at the time of uploading the return data.

The confirmation of the receipt of ITR-V at Centralized Processing Centre will be sent to the assessee over mail on the e-mail ID registered in the e-filing account.

However, in a case where accounts are required to be audited u/s 44AB, it is mandatory to verify the return electronically under digital signature.

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. Filling out the ITR V-Income Tax Return Verification Form

Where the Return Form is furnished in the manner mentioned at 3(iv), the assessee should print out Form ITR-V-Income Tax Return Verification Form. ITR-V-Income Tax Return Verification Form, duly signed by the assessee, has to be sent by ordinary post or speed post only to Centralized Processing Centre, Income Tax Department, Bengaluru–560500 (Karnataka).

5. Key changes with reference to the ITR of AY 2022-23)

> “Date of commencement of business” field has been inserted in case of assessee having income from business or profession, interest u/s 234C will be levied from the date when income accrues or arises under the said head for the first time.

> Option to avail benefit u/s 115BAC has been bifurcated into the following fields:

i. “Have you opted for new tax regime u/s 115BAC and filed Form 10IE in AY 2021-22” with “Yes/No” options

ii. “Option for current assessment year” with the following options:

      • Opting in now
      • Not opting
      • Continue to opt
      • Opt out

If the taxpayer had opted for new tax regime u/s 115BAC in AY 2021-22, the “Continue to opt” & “Opt out” are made available under “Option for current assessment year”

If the taxpayer had not opted for new tax regime u/s 115BAC in AY 2021-22, the “•Opting in now” & “Not opting” are made available under “Option for current assessment year”

> The following additional conditions have been prescribed under clause (iv) of seventh proviso to section 139(1) to mandatorily file return of income:

1. if his total sales, turnover or gross receipts, as the case may be in the business exceeds sixty lakh rupees during the previous year; or

2. if his total gross receipts in profession exceeds ten lakh rupees during the previous year; or

3. if the aggregate of tax deducted at source and tax collected at source during the previous year, in the case of the person, is twenty-five thousand rupees (fifty-thousand for resident senior citizen) or more; or

4. The deposits in one or more savings bank account of the person, in aggregate, is rupees fifty lakh or more during the previous year.

> In Part A General – additional drop downs have been inserted to determine the residential status of individual, in case of the following:

Resident:

i. You are a citizen of India, who left India, for the purpose of employment, as a member of the crew of an Indian ship and were in India for 182 days or more during the previous year and 365 days or more within the preceding 4 years [Explanation 1(a) of section (6)(1)(c)]

ii. You are a citizen of India or a person of Indian origin and have come on a visit to India during the previous year and were in India for

a) 182 days or more during the previous year and 365 days or more within the preceding 4 years; or

b) 120 days or more during the previous year and 365 days or more within the preceding 4 years if the total income, other than income from foreign sources, exceeds Rs. 15 lakh. [Explanation 1(b) of section (6)(1)(c)]

“Resident but not ordinary Resident”:

i. You are a citizen of India or person of Indian origin, who comes on a visit to India, having total income, other than the income from foreign sources, exceeding Rs. 15 lakh and have been in India for 120 days or more but less than 182 days during the previous year [section 6(6)(c)]

ii. You are a citizen of India having total income, other than the income from foreign sources, exceeding Rs. 15 lakh during the previous year and not liable to tax in any other country or territory by reason of your domicile or residence or any other criteria of similar nature [section 6(6)(d) rws 6(1A)

> In case of non-resident who is having significant economic presence in India has to provide the following details

(a) aggregate of payments arising from the transaction or transactions during the previous year as referred in Explanation 2A(a) to Section 9(1)(i);

(b) number of users in India as referred in Explanation 2A(b) to Section 9(1)(i).

In Part A-OI, new field has been added at Sl. No.10da, to capture in amount to be allowed as deduction for current previous year u/s 43B w.r.t payment to NBFC

> In Schedule S& in Schedule OS:

The following additional fields have been inserted to provide that the income of a specified person from specified account shall be taxedas per the manner prescribed u/s 89A:

a) Income from retirement benefit account maintained in a notified country u/s 89 A

b) Income from retirement benefit account maintained in a country ‘other than notified country’ u/s 89A

Further, for “Income from retirement benefit account maintained in a notified country u/s 89A” is required to be provided Country wise under both Salary and income from other sources.

Also, “Income from retirement benefit account maintained in a notified country u/s 89A”, Quarterly breakup has to be provided for the said income disclosed under Income from other sources.

Under Salary and Income from other sources, new field is added to claim the relief u/s 89A for the income offered from retirement benefit account maintained in a notified country u/s 89A.

> In Schedule DPM, the following fields have been removed as it is not applicable from AY 2022-23

    • No.3a Amount as adjusted on account of opting for taxation under section 115BAC
    • No.3b Adjusted written down value on the first day of previous year

> In Schedule CG, the following field have been inserted w.r.t slump sale as per the rule 11UAE under Long term & Short term

i Fair market value as per Rule 11UAE(2)

ii Fair market value as per Rule 11UAE(3)

> In Schedule OS ,

a. In existing Sl.No1b, new fields have been inserted with regard to interest earned on provident fund exceeding the limit specified will be chargeable to tax as per section 10(11) and 10 (12);.

b. Income chargeable at special rates Anonymous donationsin certain cases chargeable u/s 115BBC has beengreyed off as it is not applicable for ITR 3.

c. In existing Sl. No. 2d and Sl. No. 2e w.r.t “Income by way of interest or dividend from bonds or GDR purchased in foreign currency in case of a non-resident u/s 115AC(1)(a&b) has been bifurcated into the below for the purpose of calculation of Interest under section 234C:

      • “Income by way of interest on bonds purchased in foreign currency in case of a non-resident u/s 115AC(1)(a)” and
      • “Income by way of dividend on GDR purchased in foreign currency in case of a non-resident u/s 115AC(1)(b)”;

d. In existing Sl.No 10 “Information about accrual/receipt of income from Other

Sources” new fields have been added w.r.t dividend income chargeable at special rates for the purpose of calculation of interest u/s 234C

> “Schedule 80GGA: Details of donations for scientific research or rural development” has been inserted to allow the deductions to a person who is a partner of firm deriving only profit from the firm and the corresponding changes have been made under schedule for Chapter VIA

> In Schedule 80-IA, following options have been removed.

a. Deduction in respect of profits of an undertaking referred to in section 80-IA(4)(ii) (Telecommunication services)

b. Deduction in respect of profits of an undertaking referred to in section 80-IA(4)(iii) (Industrial Park and SEZs)

c. Deduction in respect of profits of an undertaking referred to in section 80-IA(4)(v) (Revival of power generating plant) and Deduction in respect of profits of an undertaking referred to in section 80-IA(4)(vi) (Cross country natural gas distribution network)

> In Schedule 80-IB, following options have been removed.

Deduction in the case of multiplex theatre section 80-IB(7A)

Deduction in the case of convention centre section 80-IB(7B)

Deduction in the case of an undertaking engaged in operating and maintaining a rural hospital section 80-IB(11B)

Deduction in the case of an undertaking engaged in operating and maintaining a hospital in any area, other than excluded area section 80-IB(11C)

> In Schedule AMT ‘Adjusted Total Income under section 115JC(1)’has been bifurcated into the following to levy 9% AMT for units located in IFSC units and 18% AMT for other units

    • Adjusted Total Income u/s 115JC from units located in IFSC, if any
    • Adjusted Total Income u/s 115JC from other Units

> In Schedule TPSA,total aggregate of adjustments is to be provided instead of providing primary adjustments assessment year wise to simplify the structure of the ITR form.

> Schedule Tax deferred on ESOP is newly inserted to provide the details of amount of deferred tax

> In Part BTI, Sl. No.3c – “Tax deferred from earlier years but payable during current Assessment Year” has been inserted to pay the taxes which has been deferred last Assessment year

5. Obligation to file return

a. 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 2022-23, in case of different categories, is as under:

(Applicable if New Tax Regime u/s 115BAC is not opted)

S. No. Category Amount (in ₹)
(i) In case of an individual who is below the age of 60 years or a Hindu Undivided Family (HUF) 2,50,000
(ii) In case of an individual, being resident in India, who is of the age of 60 years or more at any time during the financial year 2021-22 but below the age of 80 years 3,00,000
(iii) In case of an individual, being resident in India, who is of the age of 80 years or more at any time during the financial year 2021-22 5,00,000

(Applicable if New Tax Regime is opted u/s 115BAC)

Sl. No. Category Amount (in ₹)
(i) In case of an individual who is below the age of 60 years or a Hindu Undivided Family (HUF) 2,50,000
(ii) In case of an individual, being resident in India, who is of the age of 60 years or more at any time during the previous year 2021-22 2,50,000
(i) in case of an individual, being resident in India, who is of the age of 80 years or more at any time during the previous year 2021-22 2,50,000

b. 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 exceed 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.

i. Depositsan amount or aggregate of amount exceeding Rs 1 crore during the previous year in one or more current accounts.

ii. Incurred expenditure of an amount or aggregate of amount exceeding Rs. 2 lakhs during the previous year for travel to a foreign country for yourself or any other person.

iii. Incurred expenditure of amount or aggregate of amount exceeding Rs. 1 lakh during the previous year on consumption of electricity.

iv. if his total sales, turnover or gross receipts, as the case may be in the business exceeds Rs. 60 lakh during the previous year; or

v. if his total gross receipts in profession exceeds 10 lakh during the previous year; or

vi. if the aggregate of tax deducted at source and tax collected at source during the previous year, in the case of the person, is Rs. 25,000 (Rs. 50,000 for resident senior citizen) or more; or

vii. Deposits in one or more savings bank account of the person, in aggregate, is Rs. 50 lakhs or more, during the previous year.

Obligation to file form 10-IE

1. Any individual or HUF opting for new tax regime u/s 115BAC and having business income has to mandatorily file Form 10-IE before due date of filing of return u/s 139(1).

2. Form 10IE once filed cannot be withdrawn during the year.

3. If option for New tax regime u/s 115BAC was exercised for AY 2021-22, and if the option is being withdrawn during the AY 2022-23, Form 10-IE has to be filed, with an option “Withdrawn”.

4. 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.

5. If Form 10IE is filed within due date, benefit of 115BAC can be claimed even if return is filed after due date.

Read Full Instructions for filling out ITR-3 for assessment year 2022-23

(Republished with amendments)

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