ITR-3 is meant for individuals and HUFs who earn income from business or professional activities — like freelancers, consultants, doctors, designers, lawyers, and sole proprietors.

If you maintain books of accounts or have profit-and-loss details, ITR-3 is your go-to form.

Who Should File ITR-3

✅ Individuals or HUFs with:

• Proprietorship business income

• Freelance/professional income

• Income from partnership firm (other than salary)

• House property, capital gains, or other sources

Documents Required

• Profit & Loss statement

• Balance Sheet and Capital Account

• Bank statements

• TDS certificates (Form 16A/26AS)

• Expense proofs (rent, software, travel, etc.)

• Depreciation schedule for assets

Step-by-Step ITR-3 Filing

1️⃣ Log in to incometax.gov.in.
2️⃣ Choose File ITR → AY 2025–26 → ITR-3 → Business/Professional Income.
3️⃣ Enter business details (nature, code, and address).
4️⃣ Add income details from P&L account.
5️⃣ Report depreciation and expenses.
6️⃣ Declare other income sources (capital gains, house property).
7️⃣ Choose tax regime.
8️⃣ Compute tax and verify liability.
9️⃣ Upload balance sheet and P&L if audited.
🔟 Submit and e-verify.

Audit Requirements

If turnover exceeds ₹1 crore (₹10 crore for digital transactions), tax audit under Section 44AB is mandatory.

Common Errors

❌ Claiming personal expenses as business.
❌ Ignoring depreciation on fixed assets.
❌ Not reconciling GSTR data with turnover.

Conclusion

For freelancers and small businesses, ITR-3 ensures full compliance with professional income rules. Keep records organized and always reconcile with TDS and GST filings.

Continue reading:
→ Presumptive Taxation (44AD, 44ADA, 44AE): Simplified Filing
→ Advance Tax Explained: Who Should Pay & How to Calculate It
→ Common Income Tax Filing Mistakes & How to Avoid Them