The CBDT has made significant updates in the ITR-3 form for the financial year 2025-26. The threshold for reporting assets and liabilities under ‘Schedule AL’ has been increased from Rs 50 lakh to Rs 1 crore. Dropdowns for deductions such as section 80C and section-wise TDS reporting have also been introduced
The Income Tax Department has notified the ITR-3 form for filing income tax returns. In a post on social media platform X late Thursday night, the Income Tax Department said that ITR-3 for assessment year 2025-26 has been notified on April 30. This form is filed by individuals and HUFs (Hindu Undivided Families) earning profits and gains from business or profession. These taxpayers include proprietors, freelancers; professionals such as doctors, lawyers, consultants; Partners in firms (except those who earn only salary or interest from the firm).
Apart from this, taxpayers who have business or professional income as well as house property, capital gains or income from other sources can also use the ITR-3 form.
What changes have been made
In the new ITR-3 form, the threshold for reporting assets and liabilities under ‘Schedule AL’ has been increased from Rs 50 lakh to Rs 1 crore. This has reduced the disclosure burden on middle income taxpayers.
In Schedule Capital Gains of ITR, capital gains should now be split on the basis of whether they are generated before or after July 23, 2024. In the budget presented on July 24, 2024, the government had proposed to reduce the long term capital gains tax on real estate to 12.5 percent without indexation benefit. This tax is 20 per cent with indexation benefit. Indexation benefit allows taxpayers to arrive at the cost price of the property after adjusting for inflation.
In such a situation, now individuals or HUFs who buy a house before July 23, 2024, can choose to pay long term capital gains (LTCG) tax under the new scheme at the rate of 12.5 per cent without indexation benefit, or pay 20 per cent tax by claiming indexation benefit.
Share buyback loss rule: From October 1, 2024, capital loss on listed share buyback will be allowed only if the relevant dividend income is shown under “income from other sources”.
Detailed deduction reporting: ITR-3 form now asks for more details under sections such as 80C (investment) and 10(13A) (house rent allowance).
TDS Section Code: Taxpayers will now have to mention the TDS section code (such as 194A, 194H) in Schedule-TDS for better tax credit tracking.
According to a report by news agency PTI, Sandeep Sehgal, Partner-Tax at tax consultancy firm AKM Global, says that the Central Board of Direct Taxes (CBDT) has made important updates in the ITR-3 form for FY 2025-26. This has made compliance easier for individuals and HUFs with income from business or profession. According to Sehgal, dropdowns have also been introduced for deductions like section 80C and section-wise TDS reporting, which has increased transparency, accuracy and ease of filing. Earlier on April 29, the government notified the ITR-1 form and ITR-4 form for the assessment year 2025-26.
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