Income tax filing: Are you an individual or Hindu Unidivided Family who have income from business or profession and do not want to opt for presumptive taxation scheme? Then you may need to file ITR-3

Income tax filing: 3 updated utilities available for filing this ITR form for AY 2024-25; find out which one works best for you To help you file ITR-3 easily, the income tax department has launched online, offline using Java and Excel based utilities. But which one is better?

The Income Tax Department has released offline, online, and Excel utilities for ITR-3 for FY 2023-24 (AY 2024-25). Individuals who need to file ITR-3 for FY 2023-24 (AY 2024-25) can now use either the offline (Java), online or Excel-based utility to file their income tax return (ITR).

These utilities are available for download on the e-filing ITR portal under the 'Downloads' section. The last date to file income tax returns for FY 2023-24 (AY 2024-25) is July 31, 2024, for those who are not required to conduct an income tax audit.

"All 3 utilities are different (online, offline JAVA and Excel). Excel utility is to be downloaded and has tabs to fill and then the uploadable file can be created. Online is to be filled by logging into the e-filing ITR portal and one has to go page by page and submit their ITR. In the online process most, information is auto populated. The offline utility is software that is downloaded and is Java-based, not Excel-based. It's comparatively easier when you don't want to fill using the online utility process," says Divya Jokhakar, partner of a Mumbai-based CA firm and co-convenor of the Bombay Chartered Accountant Society (BCAS). She is also an associate of Association of Chartered Certified Accountants (ACCA) at United Kingdom (UK).

Which taxpayers can file ITR-3?

According to a frequently asked question (FAQ) released by the Income Tax Department, the ITR-3 form is to be used by an individual or a Hindu Undivided Family (HUF) who has income under the head's 'profits or gains of business or profession' and who is not eligible to file Form ITR-1 (Sahaj), ITR-2 or ITR-4 (Sugam).

"ITR-3 may also have to be used if an individual receives remuneration from a partnership firm or LLP since this income is classified as Income from Business/Profession," says Jokhakar. However, for those who have chosen the presumptive taxation scheme they are required to file ITR-4 and not ITR-3 even if they have income from business or profession.
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It must be noted that income from trading in derivative contracts of the stock market (options and future) is considered as business income, and upon crossing certain thresholds, a tax audit is also required. Hence taxpayers who have this type of income need to file ITR-3 if they have not chosen the presumptive taxation scheme option.

Which utility should be used by taxpayers for filing ITR-3?

All the different utilities are meant for usage by a specific set of taxpayers. Chartered accountant Mihir Tanna, associate director, S.K Patodia LLP explains which taxpayers may choose to use which utility.

Online utility: Taxpayers need to log into the e-filing ITR portal and file their ITR. Most information in the ITR form will be auto populated. Taxpayers using online utilities will be shown pre-filled data automatically in the ITR form. After confirming pre-filled data on each schedule and adding data (if any); they can easily file ITR.Offline utility (Java): Java-based offline utility in JSON (JavaScript Object Notation) format is usually used by taxpayers having substantial data to be filed in ITR like an individual who is required to maintain books of accounts, a tax audit is applicable and/or details are available in parts. "Income tax portal also provides an option of saving draft ITR using offline Java based utility," says Tanna.Excel utility: This is an offline utility that uses Excel as its format. Excel utility may be used by taxpayers who are facing issues using the Java-based utility. "Excel utility works with MACRO enabled functions, so taxpayers need to work carefully while using copy/cut paste of data to avoid corruption of the Excel utility," says Tanna."One of the issues faced by the users of offline utilities is version update. In case the Income tax department updates the respective utility's version after the taxpayer already downloaded the utility then they will face an error message while uploading the ITR due to a mismatch in the utility's version," says Tanna.

Common offline utility for ITR-1, 2, and 4 was also updated

The Income Tax Department has also updated the common offline utility for ITR-1, 2, and 4 as of May 9, 2024. Experts say that this is not a major update, and such updates will keep on happening till July.

Can you switch to filing ITR using offline utility after filing online ITR for previous years?

According to a FAQ by the tax department, individuals can file ITR using the offline utility even if their online ITR is already partially filed.

"You can use the Import Draft ITR filled-in online mode option in case you have already partially filled your return in online mode and wish to change the mode of filing from online to offline. This applies to ITRs available in online mode, currently ITR-1 and ITR-4," says the Income Tax Department in a FAQ.

This story originally appeared on: India Times - Author:Faqs of Insurances