My experiences with e-filing of ITR 3

I have been using the Income tax e-filing site for a long time now and have been a tax payer since I started working in 1988. Of course, in those days all tax filing was manual and I used my offices to calculate taxes, pay them and also file the returns. Till 1998 or so this worked quite well as I had only my salary to work with as my source of income.

As the sources of income increased, the complexities also did and I got introduced to TDS from Fixed deposits etc and the need to pay extra taxes as Advanced tax. Even though the tax filing was still being done by my office people, I was able to calculate my tax liability with the help of Form 16 and Form 26 AS. With passing years, my sources of incomes were more – a house property, capital gains from equity/debt funds, consulting income, dividends, interests and so on. This was also the time when I engaged a CA to file my tax returns as the ITR 4 was quite involved. As a consultant, I had to show business income and the expenses needed to be maintained along with depreciation claims etc.

In the last budget the Finance minister did a great service to all professionals like us by saying that you can claim 50 % of all your gross receipts as expenses. So this time I decided to try filing the ITR 3 on my own. When I got the Excel utility first, my heart sank by seeing all the schedules, but on closer examination I realized that not too many of them had to be filled up by me. Before that though, I had to get all my information in order. This involved the following:-

  1. Looking at Form 26 AS to record both TDS by my Clients as well as the Advance tax paid by me in September 2016.
  2. As there was no TDS in Post Office MIS interest, I made a note of it separately.
  3. All my Debt investments were in ICICI Direct and I got the Capital gains statement from there.
  4. I went through all cash receipts in my 2 main bank accounts, ICICI and HDFC and divided those into the following categories for filling in ITR 3 later :-
    • Receipts from rental of my Chennai apartment.
    • Interest from the savings bank accounts.
    • Dividend from Equity MF and stocks.
    • Receipts from my Consulting income.
    • Receipts from redemption of my FMP investments.
    • Receipts from interest in Tax free bonds.

Once the above data was gathered it was just a case of putting these in the right places in the form. Not all schedules needed to be filled and even in the ones which did, not all fields were needed. For example, the P & L schedule that is surely the most complicated, I just had to fill up 3 lines as my income from profession was less than 50 lacs last year.

The good thing about the ITR forms is that you can fill up each sheet and validate them individually, before you proceed to the next one. After you calculate the tax, you can get the overall ITR 3 validated too. Once this is done the XML can be generated. This is where I had an issue. There is a schedule in ITR 3 where you are supposed to declare your assets if your income in the year is more than 50 lacs. I did not fill this up as my income in the FY was not greater than 50 lacs. However, as I had put some income from house property, the software was checking if the asset was declared in the schedule. It was good I could read XML and was therefore able to correct it.

After that it was easy going, the XML had to be uploaded and the acknowledgement had to be e-verified. As my Aadhaar number was already linked to my PAN it was pretty straightforward. The total time taken was about 5 hours – 4 to get all the data in place and only an hour to actually fill up ITR 3.

The most crucial part in filling up these forms is to understand how you can arrive at your taxable income. Note that even income that may not be taxable such as dividends or interest from tax free bonds needs to be recorded in the form.

I will do another post to clarify as to how you can take care of both these issues correctly.

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14 thoughts on “My experiences with e-filing of ITR 3

  1. *In the last budget the Finance minister did a great service to all professionals like us by saying that you can claim 50 % of all your gross receipts as expenses.*
    Can you explain more about this ? Who can available this ? Employees working in private sectors ?

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  2. I need one clarification. You mentioned about 50% of gross receipts to be considered as income for professionals. Where did you make use of this provision if you have made P&L Account and Balance Sheet? Thanking you in advance.

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    • I did not maintain any books as such for my gross receipts from consulting were less than 50 lacs. I used the last 3 lines in the P & L tab. It asks you to fill these if you are exempt from maintaining books.

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  3. Have you tried the Java utility available on the income tax site ?
    It is incredibly easy as compared to the excel sheet.

    Download the zip file for the java utility in a folder on your laptop, extract it in the same folder and run the batch file. A new window will open where you can enter your figures and you can calculate your tax and even submit remaining tax if any. There is a submit button also which will do the final submit.

    Try it now and you would see how you missed it.

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  4. Dear Sir, while filling the “No Account Case” in the Balance Sheet and P&L tabs,a warning appears “Please ensure that the relevant fields of P&L and BS are filled, else Return may be treated as defective u/s 139(9)”, though it allows to save the xml. This is business income with turnover of 50L, net income @9% 4.5L. Advance tax has been paid in full.

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    • If you are trying No Account in ITR 3, the expenses cannot be more than 50% of the gross receipts. In case your expenses are more you will need to maintain books and get these audited.
      If this is a regular business which can get relevant benefit of the presumptive taxation, you can look at filing ITR 4, where the presumptive income is at 8 %.
      Hope this helps, if you have further questions you can write to me at rajshekhar_roy@yahoo.co.uk

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  5. Sir
    Is it itr3 or itr4s that one having consulting income should fill up ? What abt ppf interest – shud that be shown in returns ? If i am freelancer getting paid thru paypal what recordx shud i maintain ?
    Thanks

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    • It is ITR 3 now, the forms have been changed. So earlier ITR 4 is now ITR 3. ITR 4S is for business where the presumptive income is at 8 % of turnover.
      You need to fill up ITR 3, can show the PPF interest as exempt interest payment. Just maintain a sheet on transfers from your PayPal account to your bank account, that will be good enough.

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