ITR-3 Filing Online for traders, professionals & business owners.

What is ITR-3?

ITR-3 is the return form for individuals and Hindu Undivided Families (HUFs) who earn income from a business or profession and are not using the presumptive scheme. It is the most detailed individual return, because along with salary, house property, capital gains and other income, it contains a profit and loss account, a balance sheet and several business schedules. For FY 2025-26 (AY 2026-27), it is filed under the Income-tax Act, 1961.

Who must use ITR-3

• Futures and options (F&O) traders, even if they are salaried
• Intraday equity traders, whose income is speculative business income
• Doctors, lawyers, consultants and other professionals who maintain books
• Proprietors whose turnover or profit rules them out of presumptive tax
• Partners receiving salary, commission or interest from a partnership firm
• Anyone with business income plus foreign assets or income above ₹50 lakh

Key rules to know

• F&O income is non-speculative business income. Its losses can be set off in the same year against other income except salary, and carried forward for 8 years.
• Intraday equity income is speculative. Its losses can be set off only against speculative income and carried forward for 4 years.
• Losses are carried forward only if the return is filed by the due date.
• A tax audit under section 44AB applies if business turnover exceeds ₹1 crore, or ₹10 crore when cash receipts and payments are each within 5%. For professionals, the limit is ₹50 lakh of gross receipts.
• The due date is 31 July for non-audit cases and 31 October when a tax audit applies, unless extended.
• The new regime is the default. To choose the old regime, Form 10-IEA must be filed before the due date, and you can switch back only once.

Common mistakes we see

• Taking F&O turnover as the contract value instead of the total of profits and losses
• Setting off F&O losses against salary
• Filing late and losing the right to carry forward trading losses
• Claiming personal spending as a business expense
• Showing income that does not match GST returns or AIS

How our expert handles your ITR-3

• Step 1: We study your broker reports, bank statements and invoices.
• Step 2: We classify income as speculative, non-speculative or professional.
• Step 3: We compute turnover and check whether a tax audit is needed.
• Step 4: We prepare the profit and loss account, balance sheet and depreciation.
• Step 5: We compare both regimes, set off losses and file after your approval.

A short example

Suppose a salaried person traded options in FY 2025-26. Profitable trades earned ₹3,40,000 and loss-making trades lost ₹2,10,000, so the net profit is ₹1,30,000. Turnover, as per ICAI guidance, is the total of both amounts: ₹5,50,000, which is well below any audit limit. After deducting brokerage, exchange charges and internet costs of ₹20,000 (securities transaction tax is not deductible), business income is ₹1,10,000. This is added to salary and taxed at slab rates. Since total income now includes business income, the old regime can be chosen only through Form 10-IEA before the due date, so we compare both regimes before filing. If the result had been a loss, it could not reduce salary, but it could be carried forward for 8 years if filed on time.