ITR-3: for business and professional income

ITR-3 is the return for an individual or HUF with income from a business or profession who keeps books of account, or who has speculative or F&O income. If your business income is taxed on a presumptive basis and your income is up to ₹50 lakh, you may be able to use the simpler ITR-4 instead. If you are a freelancer or small trader, work out which of the two applies before you file.

These are the rules for the tax year 2025-26. TaxCare will update this guide for the tax year 2026-27 forms and rules once they are published.

Who files ITR-3

You file ITR-3 if you are a resident individual or a HUF with any of these:

• Business or professional income where you keep full books of account and do not use a presumptive scheme.
• Business income where you have opted out of the presumptive scheme.
• Speculative business income, such as intraday equity trading, or income from futures and options.
• Business income above the presumptive limits.
• A partner's income from a firm, together with other business or professional income.

You also file ITR-3 if you have salary or capital gains in the same year as business income that does not fit ITR-4.

ITR-3 versus ITR-4

The Income-tax Act, 2025 consolidates the presumptive schemes into one section, section 58.

The presumptive limits that decide it

On the 2025-26 rules, a presumptive scheme is available when:

• Section 44AD (business): turnover up to ₹2 crore, or ₹3 crore when cash receipts are within 5% of turnover. Profit is taken as 8% of turnover, or 6% for digital receipts.
• Section 44ADA (profession): gross receipts up to ₹50 lakh, or ₹75 lakh when cash receipts are within 5%. Profit is taken as 50% of receipts.

If you go above these limits, or you declare profit lower than the presumptive profit, you must keep books and usually get them audited. Then the return is ITR-3.

When an audit is needed

Under section 44AB, a business needs a tax audit when turnover exceeds ₹1 crore, or ₹10 crore when cash receipts and payments are within 5%. A profession needs an audit when gross receipts exceed ₹50 lakh.

What ITR-3 contains

ITR-3 has everything in ITR-2, plus the business side:

• Schedule BP, built from your profit and loss account and balance sheet.
• Depreciation on blocks of assets, at the rates in the rules (for example 15% on plant and machinery, 40% on computers).
• Disallowances, such as cash payments above ₹10,000 in a day and tax not deducted at source on payments.
• Loss set-off and carry-forward, including business loss and unabsorbed depreciation.

A business loss cannot be set off against salary income. Speculative loss can be set off only against speculative profit.

Due dates

On the rules for the tax year 2025-26 and later, a person with business or professional income whose accounts need no audit has until 31 August after the tax year. Where an audit is needed, the date is 31 October. The CBDT can extend these dates. For the tax year 2026-27 the dates fall on 31-Aug-2027 and 31-Oct-2027.

Common mistakes

• Using ITR-4 when you have F&O or speculative income. That income needs ITR-3.
• Showing profit below the presumptive rate without books and an audit.
• Leaving out depreciation or bringing forward losses wrongly.
• Not reporting bank accounts or GST details the schedule asks for.

How TaxCare helps

TaxCare chooses the form from your data. For business income it separates presumptive income from income that needs books, and moves you to ITR-3 only when the rules require it. Cases that need an audit report, or that the guided flow does not cover, are handed to a Tax Expert. See which ITR form to file and how freelancers file ITR.

This guide gives general information and is not professional tax advice.