ITR 3 & Presumptive taxation

[Sangeetha D]

A taxpayer has income from salary, business, and capital gains, and wants to opt for presumptive taxation for the business income. Can they file using ITR-3?

 

[YAGAY andSUN]

A taxpayer having income from salary, business, and capital gains, and opting for presumptive taxation under section 44AD, 44ADA, or 44AE of the Income-tax Act, 1961, is required to furnish the return of income in Form ITR-4, subject to the conditions prescribed therein.

Form ITR-3 is applicable to individuals and Hindu Undivided Families having income from business or profession which is not computed under the presumptive taxation scheme and includes income under the head “Profits and gains of business or profession” where books of account are maintained as per section 44AA and income is computed under the normal provisions of the Act.

Therefore, a person opting for presumptive taxation under section 44AD or other relevant provisions cannot furnish return in Form ITR-3, as the said form does not provide for reporting of income computed on presumptive basis under the aforesaid sections.

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AI Summary

Presumptive taxation requires filing ITR-4; ITR-3 cannot be used when business income is declared on a presumptive basis. A taxpayer with salary, business and capital gains opting to compute business income under presumptive taxation must file Form ITR-4; ITR-3 applies only where business or professional income is computed under normal provisions with books of account maintained and cannot be used for presumptive basis reporting.