ITR 3 is available for E filing for AY 2020-21 FY 2019-20

ITR utility software has introduced by the Income Tax Department.

The ITR utility helps a taxpayer to file their returns easily.Income Tax Department releases an updated version of the ITR Utility software for online filing of Income Tax Return every year. Income tax Department has notified ITR 3 utility today.

Let's know about ITR-3 in detail.

ITR 3 can be filed by an Individual/HUF having income from profits and gains from Business/Profession or, Individual/HUF covered under section 44AB of the Income Tax Act i.e. Tax Audit.

ITR 3 Applicability:-

The ITR 3 is applicable for individual and HUF who have income from profits and gains from business or profession. The persons having income from following sources are eligible to file ITR 3:

1. Carrying on a business or profession (both tax audit and non-audit cases)
2. The return may include income from House property, Salary/Pension, capital gains and Income from other sources

Who is not liable to file ITR 3?

Following are not eligible to file ITR 3:-

• Individual having income other than Income from business and filing ITR 2 or ITR 1
• Company who are filing 6
• Partnership firm filing ITR 5
• Limited Liability partnership firm filing ITR 5
• AOP/ BOI filing ITR 5
• Cooperative Society filing ITR 5
• Trust filing ITR 7
• Local Authority filing ITR 5

Due date to file ITR 3

Filing Tax Audit Report:-extended to 31 October from 30 September.

The threshold limit of Rs 1 crore for a tax audit is proposed to be increased to Rs 5 crore with effect from AY 2020-21 (FY 2019-20) if the taxpayer’s cash receipts are limited to 5% of the gross receipts or turnover, and if the taxpayer’s cash payments are limited to 5% of the aggregate payments.

Documents required for filing ITR 3

1. Aadhaar card copy.
2. Form 16 issued by employer in case salary income is earned.
3. Month wise salary slip where form 16 is not been issued by the employer in case salary income is earned.
4. Rent receipts in case of rental income and rental agreement.
5. Bank statement for the financial year for interest on savings account.
6. Form 16A or Interest Statement issued by Banks for Fixed Deposit Interest Income.
7. In case of capital gains, tax profit and loss or capital gain statement issued by the Share broker.
8. Chapter VIA Investment details for claiming deduction as follows:
9. Receipt of children’s school tuition fees.
10. Life insurance premium receipt.
11. Stamp-duty and registration charges.
12. Principal repayment on your home loan.
13. Equity Linked Savings Scheme/Mutual funds investment.
14. Mediclaim payment receipt etc.
15. Profit and loss statement and Balancesheet for the previous year
16. Details of Chartered Accountant conducting Tax audit in case the person is covered under section 44AB.
17. Copies of books of accounts required to be maintained as per section 44AB i.e. Cash book, Journal book, Sales and Purchase register in case of business and Receipt book in case of profession.

Major changes made in ITR 3 for AY 2020-21

The Income tax department has made the following major changes in ITR 3:

Assesee is required to report cash receipts or payment where the turnover is between Rs.1 crore to Rs. 5 Crore

Until AY 2019-20, each assessee, carrying on business, was required to get its books of record examined from a Practicing Chartered Accountant where its all out deals, turnover or gross receipt from the business surpasses Rs. 1 crore during the earlier year.

So as to decrease the compliance burden on small and medium enterprises, the Finance Act, 2020 has expanded the edge furthest reaches of turnover under segment 44AB for review. From AY 2020-21, as far as possible for the Tax review, for individual carrying on business, is expanded from Rs. 1 crore to Rs. 5 crores. Be that as it may, the expanded furthest reaches of Rs. 5 crores will be material just where the money receipts and money installments during the year doesn't surpass 5% of complete receipt or installment, all things considered.

In order to incorporate the above amendments, the department has amended the ITR forms where the assessee is required to tick the check-box if cash receipts or cash payments exceed 5%. In case the assessee selects ’Yes’, then he will be liable to tax audit under Section 44AB.

Addition of 45% rate of depreciation in the block of plant and machinery

Until AY 2019-20, there were 3 blocks available to calculate depreciation on the plant and machinery, i.e. 15%, 30% and 40%.

In order to boost the demand for motor vehicles, the Finance Minister has announced an additional depreciation of 15% on motor vehicles purchased between 23-08-2019 and 31-03-2020. This announcement was made on 23-08-2019 as part of a stimulus package. The new depreciation rates were notified by the CBDT vide Notification No. 69/2019, dated 20-09-2019 with retrospective effect from 23-08-2019. As per new Appendix I, the rates of depreciation on the motor vehicles shall be as under:

As there is no 45% existing rate of depreciation, the relevant columns and depreciation schedule have been modified to allow computation of depreciation at the rate of 45%.