Instructions for filling FORM ITR-3

These instructions are guidelines for filling the particulars in this Return Form. 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 2011-2012 only, i.e., it relates to income earned in Financial Year 2010-11.

2. Who can use this Return Form?

This Return Form is to be used by an individual or a Hindu Undivided Family who is a partner in a firm and where income chargeable to income-tax under the head “Profits or gains of business or profession” does not include any income except the income by way of any interest, salary, bonus, commission or remuneration, by whatever name called, due to, or received by him from such firm. In case a partner in the firm does not have any income from the firm by way of interest, salary, etc. and has only exempt income by way of share in the profit of the firm, he shall use this form only and not Form ITR-2.

3. Who cannot use this Return Form?

This Return Form should not be used by an individual whose total income for the assessment year 2011-12 includes Income from Business or Profession under any proprietorship.

4. Annexure-less Return Form

5. Manner of filing this Return Form

6. Filling out the acknowledgement

Only one copy of this Return Form is required to be filed.  Where the Return Form is furnished in the manner mentioned at 5(i) or at 5(iv), the acknowledgement slip attached with this Return Form should be duly filled.

7. Codes for filling this Return Form

Under the heading ‘Filing Status’ in the Return Form details have to be filled regarding section under which the return is being filed by ticking in the relevant box provided therein.

8. Obligation to file return

Every individual 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.

9. Instructions for filling out this Return Form

10. Brief Scheme of the Law- Before filling out the form, you are advised to read the following-

A) “Previous year” is the financial year (1st April to the following 31st March) during which the income in question has been earned.  “Assessment Year” is the financial year immediately following the previous year.

B) Total income is to be computed as follows, in the following order:

1. Classify all items of income under the following heads of income-

   (A) Salaries; (B) “Income from house property”; (C) “Profit and gains from business or profession” (by way of salary, interest, commission, etc., from the firm in which the assessee is partner); (D) “Capital gains”; and (E) “Income from other sources”.  [There may be no income under one or more of the heads at (A), (B), (D) and (E)].

2. Compute taxable income of the current year (i.e., the previous year) under each head of income separatelyin the Schedules which have been structured so as to help you in making these computations as per provisions of the Income-tax Act.  These statutory provisions decide what is to be included in your income, what you can claim as an expenditure or allowance and how much, and also what you cannot claim as an expenditure/allowance.
3. Set off current year’s head wise loss(es) against current year’s head wise income(s) as per procedures prescribed by the law. A separate Schedule is provided for such set-off.
4. Set off, as per procedures prescribedby the law, loss(es) and/or allowance(s) of earlier assessment year(s) brought forward.  Also, compute loss(es) and/or allowance(s) that could be set off in future and is (are) to be carried forward as per procedures prescribed by the law.  Separate Schedules are provided for this.
5. Aggregate the head wise end-results as available after (iv) above; this will give you “gross total income”.
6. From gross total income, subtract, as per procedures prescribedby the law, “deductions” mentioned in Chapter VIA of the Income-tax Act.  The result will be the total income.  Besides, calculate agricultural income for rate purposes.

(2) Computation of income-tax, education cess including secondary and higher education cess and interest in respect of income chargeable to tax

1. Compute income-tax payable on the total income.  Special rates of tax are applicable to some specified items.  Include agricultural income, as prescribed, for rate purposes, in the tax computation procedure.
2. Add Education cess including secondary and higher education cess as prescribed on the tax payable.
3. Claim relief(s) as prescribed by the law, on account of arrears or advances of salary received during the year or of double taxation and calculate balance tax payable.
4. Add interest payable as prescribed by the law to reach total tax, and interest payable.
5. Deduct the amount of prepaid taxes, if any, like “tax deducted at source”, “advance-tax” and “self-assessment-tax”.  The result will be the tax payable (or refundable).

(3)  Obligation to file return

1. Every individual and HUF has to furnish the return of his income if his total income before allowing deduction under Chapter VI-A (i.e., if his gross total income referred to in item 10 of Part B-TI of this Form) exceeds the maximum amount which is not chargeable to income tax [Rs. 1,60,000/- in case of individuals below the age of 65 years (other than women) and HUF, Rs. 1,90,000/- in case of women below the age of 65 years, and Rs. 2,40,000/- in case of individuals who are of the age of 65 years or more at any time during the financial year 2010-11] .
2. The losses, if any, (item-15 of Part B-TI of this Form) shall not be allowed to be carried forward unless the return has been filed on or before the due date.

The Scheme of this form follows the scheme of the law as outlined above in its basic form. The Form has been divided into two parts. It also has sixteen schedules. The details of these parts and the schedules are as under:-

12.GUIDANCE FOR FILLING OUT PARTS AND SCHEDULES

1. All items must be filled in the manner indicated therein; otherwise the return maybe liable to be held defective or even invalid.
2. If any schedule is not applicable score across as “—NA—“.
3. If any item is inapplicable, write “NA” against that item.
4. Write “Nil” to denote nil figures.
5. Except as provided in the form, for a negative figure/ figure of loss, write “-” before such figure.
6. All figures should be rounded off to the nearest one rupee. However, the figures for total income/ loss and tax payable be finally rounded off to the nearest multiple of ten rupees.

2. Sequence for filling out parts and schedules

You are advised to follow the following sequence in filling in the sheets;

1. Part A- General on page 1.
2. Schedules
3. Part B-TI and Part B-TTI
4. Verification
5. Details relating to TRP and counter signature of TRP if return is prepared by him.

13. Part-GEN

Most of the details to be filled out in Part-Gen  of this form are self-explanatory.  However, some of the details mentioned below are to be filled out as explained hereunder:-

14. Schedules

In case there were more than one employer during the year, please give the details of the last employer. Further, in case, there were more than one employer simultaneously during the year, please furnish the details of the employer you have got more salary. Fill the details of salary as given in TDS certificate(s) (Form 16) issued by the employer(s). However, if the income has not been computed correctly in Form No. 16, please make the correct computation and fill the same in this item. Further, in case there were more than one employer during the year, please furnish in this item the details in respect of total salaries from various employers. In the case of salaried employees, perquisites have to be valued by the employee in accordance with the notification No. SO.3245(E) dated 18.12.2009, for the purposes of including the same in their salary income.

b) Schedule-HP,-

In case, a single house property is owned by the assessee, which is self-occupied and interest paid on the loan taken for the house property is to be claimed as a deduction. This schedule needs to be filled up. If there are two or more than two house properties, fill out the details for each properties in this Schedule. If there are more than two house properties, the details of remaining properties be filled in a separate sheet in the format of this Schedule. and attach this sheet with this return. The results of all the properties have to be filled in last row of this Schedule. Following points also need to be clarified,-

1. Annual letable value means the amount for which the house property may reasonably be expected to let from year to year, on a notional basis: Deduction for taxes paid to local authority shall be available only if the property is in the occupation of a tenant, and such taxes are borne by the assessee and not by the tenant and have actually been paid during the year.
2. Deduction is available for unrealized rent in the case of a let-out property.  If such a deduction has been taken in an earlier assessment year, and such unrealized rent is actually received in the assessment year in question, the unrealized rent so received is to be shown in item 3a of this Schedule.
3. Item 3b of this Schedule relates to enhancement of rent with retrospective effect.  Here mention back years’ extra rent received thereon, and claim deduction @ 30% of such arrear rent received.

c) Schedule-IF,-

1. This Schedule has to be filled for each firm in which you are partner.
2. In case you are partner in more than 5 firms, a separate sheet may be enclosed giving the details in same format.
3.  In column (i) of the Schedule, furnish the amount of share in the profit of the firm (amount of profit) as computed in accordance with the provisions of the Income-tax Act in case of the firm. Such share is exempt from tax in hands of the partner.
4. In column (ii), please furnish the amount of capital balance (including the capital on which you are entitled for an interest) in the firm in which you are partner.

d) Schedule-BP,-

1. The details of the salary, bonus, commission, remuneration or interest received by you from the firms in which you are partner (filled in Schedule-IF are to be filled in this Schedule).
2. The expenses, if any, relating to earning of such income (which have not been deducted while computing such income) shall be filled in column v of this Schedule.

e) Schedule-CG,-

1. If more than one short-term capital asset has been transferred, make the combined computation for all the assets. Similarly, make the combined computation for all the assets if more than one long-term capital asset has been transferred.
2. For computing long-term capital gain, cost of acquisition and cost of improvement may be indexed, if required, on the basis of following cost inflation index notified by the Central Government for this purpose.
3. Sections 54/ 54B/ 54D/ 54EC/ 54F mentioned in this schedule provides exemption on capital gains subject to fulfillment of certain conditions.  Exemption under some of these sections is available only in respect of long-term capital gains. Therefore, please ensure that you are claiming the benefit of any of these sections correctly in accordance with the provisions of law.
4. Item C of this Schedule computes the total of short-term capital gain and long-term capital gain (item A4 + item B5). Please note that if balance in item B5 in respect of long-term capital gain is a loss, same shall not be set-off against short-term capital gain. In such situation, the figure of item B5 would be entered as 0 and then the figures of item A4 be added in item C.

f) Schedule-OS,-

1. Against item 1a and 1b, enter the details of gross income by way of dividend and interest which   is not exempt.
2.  Against item 1c,  indicate the gross income from machinery, plant or furniture let on hire and also such income from building where its letting is inseparable from the letting of the said machinery, plant or furniture, if it is not chargeable to income-tax under the head “Profits and gains of business or profession”.
3. Income from owning and maintaining race horses is to be computed separately as loss from owning and maintaining race horses cannot be adjusted against income from any other source, and can only be carried forward for set off against similar income in subsequent years.
4. Winnings from lotteries, crossword puzzles, races, etc., are subject to special rates of tax; hence a separate item is provided and the income from these can not be adjusted against the losses arising under the head Income from other sources.
5. Item 5 of this Schedule computes the total income chargeable under the head “Income from other sources” (item 3 + item 4c). If balance in item 4c from owning and maintaining race horses is a loss, please enter 0 and enter the total of item 3.

g) Schedule-SPI,-

1. Furnish the details of income of spouse, minor child, etc., if to be included in your income in accordance with provisions of Chapter V of the Income-tax Act.
2. The income entered into this Schedule has to be included in the respective head.
3. Section 10(32) provides exemption to extent of Rs. 1,500/- in respect of minor’s income for the purpose of clubbing. Therefore, exclude Rs. 1,500/- from the income of the minor while clubbing the income of the minor in the respective head. However, if income of the minor is to be clubbed in various heads, total exclusion should not exceed Rs. 1,500/-.

h) Schedule-CYLA,-

1. Mention only positive incomes of the current year in column 1, headwise, in the relevant rows.
2. Mention total current year’s loss(es), if any, from house property, business or profession and other sources (other than losses from race horses) in the first row against ‘loss to be adjusted’. These losses are to be set off against income under other heads in accordance with the provisions of section 71. The amount set off against the income of respective heads has to be entered into in columns 2, 3 and 4, in the relevant rows.
3. Mention the end-result of the above inter-head set-off(s) in column 5, headwise, in relevant rows.
4. Total of loss set off out of columns 2, 3 and 4 have to be entered into row vii.
5. The losses remaining for set off have to be entered in row viii.

i) Schedule-BFLA,-

1. Mention only positive incomes of the current year (after set-off of loss in Schedule-CYLA in column 1, headwise in relevant rows.
2. The amount of brought forward losses which may be set off are to be entered in column 2 in respective rows except under the head ‘Salary’ where no loss could be brought forward.
3. The end result of the set off will be entered in column 3 in respective heads. The total of column 3 shall be entered in row viii which shall give the amount of gross total income.
4. The total amount of brought forward losses set off during the year shall be entered in column 2 of row vii.

j) Schedule-CFL,-

1. In this Schedule, the summary of losses carried from earlier years, set off during the year and to be carried forward for set off against income of future years is to be entered.
2. The losses  under the head “house property”, ‘profit and gains of business or profession” short term capital loss and long term capital loss, losses from other sources (other than losses from race horses) are allowed to be carried forward for 8 years. However, loss from owning and maintaining race horses can be carried forward only for 4 assessment years.

k) Schedule-VIA,-

The total of the deductions allowable is limited to the amount of gross total income.  For details of deductions allowable, the provisions of the Chapter VI-A may kindly be referred to. Details of deductions which are available to an individual/ HUF not carrying out any business or profession are as under:-

1. section 80C (Some of the major items for deduction under this section are- amount paid or deposited towards life insurance, contribution to Provident Fund set up by the Government, recognised Provident Fund, contribution by the assessee to an approved superannuation fund, subscription to National Savings Certificates, tuition fees, payment/ repayment for purposes of purchase or construction of a residential house and many other investments)(for full list, please refer to section 80C of the Income-tax Act) (Please note that as provided in section 80CCE, aggregate amount of deduction under section 80C, 80CCC and 80CCD shall not exceed one lakh rupees).
2. Section 80CCC (Deduction in respect of contributions to certain pension funds).
3. Section 80CCD (Deduction in respect of contributions to pension scheme of Central Government)
4. Section 80CCF (Deduction in respect of long-term infrastructure bonds, not exceeding twenty-thousand rupees during the previous year).
5. Section 80D (Deduction in respect of Medical Insurance Premium and contributions to CGHS).
6. Section 80DD (Deduction in respect of maintenance including medical treatment of dependent who is a person with disability)
7. Section 80DDB (Deduction in respect of medical treatment, etc.)
8. Section 80E (Deduction in respect of interest on loan taken for higher education)
9. Section 80G (Deduction in respect of donations to certain funds, charitable institutions, etc.)
10. Section 80GG (Deduction in respect of rents paid)
11. Section 80GGA (Deduction in respect of certain donations for scientific research or rural development)
12. Section 80GGC (Deduction in respect of contributions given by any person to political parties)
13. Section 80RRB (Deduction in respect of royalty on patents)
14. Section 80U (Deduction in case of a person with disability)

l) Schedule-SI,-

Mention the income included in Schedule-CG and Schedule-OS which is chargeable to tax at special rates. The codes for relevant section and  special rate of taxes are given in Instruction No.9(iii)

m) Schedule-EI,-

Furnish the details of income like agriculture income, interest, dividend, etc. which is exempt from tax. The details may be filled on cash basis unless there is any provision/ requirement to declare them on accrual basis.

n) Schedule-IT,-

1. In this schedule, fill out the details of payment of advance income-tax and income-tax on self-assessment.
2. The details of BSR Code of the bank branch (7 digits), date of deposit, challan serial no., and amount paid should be  filled out from the acknowledgement counterfoil. out from the acknowledgement counterfoil.

O) Schedules-TDS1 and TDS2,-

1. In these Schedules fill the details of tax deducted on the basis of TDS certificates( Form 16 or Form No.16A) issued by the deductor(s).
2. Details of each certificate are to be filled separately in the rows. In case rows provided in these Schedules are not sufficient, please attach a table in same format.
3. It may please be noted that the TDS certificates are not to be annexed with the Return Form.
4. In order to enable the Income Tax Department to provide accurate, quicker and full credit for taxes deducted at source, the taxpayer must ensure to quote the PAN for every TDS transaction.

15. Part B-TI-Computation of Total Income

16. Part B-TI-Computation of tax liability on Total Income

17. Verification

18. Details regarding Tax Return Preparer (TRP)