ITR-3 Filing Is Live for AY 2025-26: Your Ultimate Guide

Well, it’s that time of year again! The Income Tax Department has officially rolled out the online utility for ITR-3 on its e-filing portal as of July 30, 2025. If you’re an individual or part of a Hindu Undivided Family (HUF) with income from a business or profession, this is the form for you. But before you dive in, it’s crucial to understand who should use it, what’s changed this year, and how it differs from other forms like ITR-4.

Key Highlights

• ✓ The online filing utility for ITR-3 was activated on the Income Tax e-filing portal on July 30, 2025.
• ✓ It's designed for individuals and Hindu Undivided Families (HUFs) who earn income from a business or profession.
• ✓ Key changes for AY 2025-26 include a higher asset disclosure threshold (now ₹1 crore) and new rules for reporting capital gains.
• ✓ Capital gains must now be split based on a cut-off date of July 23, 2024, reflecting changes from the Union Budget 2024.
• ✓ The filing deadline is September 15, 2025, for non-audit cases and October 31, 2025, for audit cases.

Are You an ITR-3 Filer? Let's Find Out

First things first, let's talk about eligibility. The ITR-3 form isn't for everyone. It's specifically tailored for individuals and a Hindu Undivided Family (HUF) who have income under the head "profits and gains of business or profession." This could mean you're a freelancer, a consultant, a doctor with your own practice, or someone running a small business. It covers both audit and non-audit cases, so it's quite comprehensive.

But that's not all. You'd also use this form if you have other types of income on top of your business earnings, like a salary, pension, or capital gains from investments. What's particularly important to note is its role for partners in a firm. The Income Tax Department explicitly states that ITR-3 is also for someone whose income is "in the nature of interest, salary, bonus, commission or remuneration...received by him from a partnership firm." So, if you're a partner drawing remuneration, this is your form.

On the flip side, it's just as important to know who cannot use this form. The rules are crystal clear: "Form ITR-3 cannot be used by any person other than an individual or a HUF." So, if you're a company or an LLP, this isn't for you. Furthermore, even if you are an individual or HUF, if you don't have any income from a business or profession, you shouldn't be using ITR-3. You’d likely need ITR-1 or ITR-2 instead.

💡 What's Interesting: The ITR-3 form isn't just for business owners; it’s also mandatory for partners in a firm who receive any form of remuneration, like salary, bonus, or commission from that partnership. This small detail often trips people up!

Major Shake-Up: What's New in ITR-3 for AY 2025-26?

Every year brings a few tweaks to the tax forms, and this year is no different. The Income Tax Department has introduced some significant changes for the Assessment Year 2025-26 to make things a bit easier and align with new budget proposals. Here’s a breakdown of what you need to keep an eye on.

A Higher Threshold for Schedule AL

One of the most welcome changes is in Schedule AL, which deals with reporting your assets and liabilities. Previously, you had to fill this out if your total income exceeded ₹50 lakh. Now, that threshold has been doubled to ₹1 crore. This is fantastic news for many middle-income taxpayers, as it significantly reduces the disclosure burden and simplifies the filing process.

Split Reporting for Capital Gains

This is a big one. The Union Budget 2024 introduced new tax and indexation rules, and to implement them, the ITR-3 form now requires you to split your capital gains. You’ll need to report gains realized before and after July 23, 2024, separately. This is a direct consequence of the budget changes and ensures that the new tax rates are applied correctly.

For instance, if you sold a house purchased before July 23, 2024, the budget gives you a new choice. You can either pay a long-term capital gains (LTCG) tax of 12.5% without the benefit of indexation or stick to the 20% rate with indexation. The budget also revised the tax rates and exemption limits for LTCG on equity shares and mutual funds, so this split reporting is absolutely critical for accurate calculations.

More Detailed Deduction Reporting

The form is also getting more granular when it comes to deductions. For taxpayers with business or professional income, ITR-3 has introduced new dropdown menus for reporting deductions. You'll need to provide more specific, section-wise details for claims under sections like 80C, 80E (education loan), 80EEA, 80EE (home loan interest), 80EEB (electric vehicle loan), and 10(13A) (HRA). This move aims to streamline reporting and ensure greater transparency.

ITR-3 vs. ITR-4 (Sugam): Don't Get Them Confused!

This is a common point of confusion for many small business owners and professionals. Both forms deal with business income, but they serve very different purposes. Getting it right is key to a smooth filing experience. Here’s the simple difference: ITR-3 is for anyone with income from a business or profession, regardless of the amount or whether they need an audit.

On the other hand, ITR-4, also known as Sugam, is a much simpler form designed for those who opt for the presumptive taxation scheme. This scheme allows you to declare your income as a fixed percentage of your turnover, saving you the hassle of maintaining detailed books of accounts. To be eligible for ITR-4, your total income cannot exceed ₹50 lakh. It's meant for resident individuals, HUFs, or firms (but not LLPs) who have presumptive income under Sections 44AD, 44ADA, or 44AE.

There are other conditions for ITR-4 as well. Your agricultural income must be ₹5,000 or less, you can only have income from one house property, and your LTCG under section 112A can't be more than ₹1.25 lakh. It also covers income from other sources like savings account interest, but excludes winnings from lotteries or horse races. If your financial situation is more complex than this, you'll almost certainly need to file ITR-3.

Mark Your Calendars: Filing Due Dates

Finally, let's talk deadlines. Procrastination and taxes don't mix well! For the Assessment Year 2025-26, the due dates are clearly set. If your accounts are not required to be audited, you need to file your ITR-3 by September 15, 2025. However, if your case falls under the audit category, you have a bit more time—your deadline is October 31, 2025. Be sure to mark these dates on your calendar to avoid any last-minute rush or penalties.

Conclusion

So there you have it! The ITR-3 online utility for AY 2025-26 is up and running, bringing with it some important changes you need to be aware of. The bottom line is to first confirm your eligibility—if you're an individual or HUF with business or professional income, this is likely your form. Pay close attention to the new rules, especially the split reporting for capital gains based on the July 23, 2024, cut-off and the increased ₹1 crore threshold for Schedule AL. Understanding the difference between ITR-3 and ITR-4 is also crucial to ensure you're using the right form for your situation. With the deadlines set for September and October, now is the perfect time to get your documents in order and start the process. Happy filing!