Key changes taxpayers must know before filing ITR-3 for FY 24-25 | Fusion - WeRIndia

As the income tax filing season for FY 2024-25 (AY 2025-26) progresses, the Income Tax Department has introduced several significant changes in Form ITR-3, affecting individuals and Hindu Undivided Families (HUFs) with income from business or profession.

The new updates, aimed at enhancing transparency and compliance, require detailed disclosures that taxpayers must carefully review before submission.

Declaration of Tax Regime Preference

Taxpayers must now declare if Form 10-IEA was filed for AY 2024–25, indicating their choice of the new or old tax regime in the previous year. Additionally, they must state their preference to continue or opt out of the chosen regime for the current assessment year.

Detailed Disclosure for Deductions

Revised reporting norms now require taxpayers claiming deductions under Section 24(b) (interest on housing loan) to provide detailed loan information, including:

• Source of the loan
• Name of the lender
• Loan account number
• Date of sanction
• Total loan sanctioned
• Outstanding loan amount
• Interest paid

Capital Gains Segregation Based on Transaction Date

Updates to Schedule CG mandate taxpayers to report Long-Term (LTCG) and Short-Term Capital Gains (STCG) based on transaction dates, before or on/after 23rd July 2024, reflecting changes under Finance Act (No. 2), 2024.

Separate Indexed Cost Reporting

For property transfers made before 23rd July 2024, resident individuals must now separately disclose:

• Cost of acquisition
• Cost of improvement
• This facilitates the accurate application of indexation benefits.

Revised Threshold for Asset & Liability Disclosure

The threshold for reporting assets and liabilities has increased from ₹50 lakh to ₹1 crore. Taxpayers exceeding this income must disclose end-of-year holdings, excluding those already reported in the balance sheet.

New Presumptive Taxation under Section 44BBC

Form ITR-3 now includes reporting for presumptive income under the newly introduced Section 44BBC, applicable to businesses operating cruise ships.

Deemed Dividend Reporting – Section 2(22)(f)

A dedicated field now exists to report deemed dividend income arising from share buybacks, in line with Section 2(22)(f).

Separate Row for Buyback Capital Losses

A new row in Schedule CG allows taxpayers to report capital losses from share buybacks. These losses are deductible, provided the corresponding dividend income is declared under “Income from Other Sources”.

These updates reflect the government’s push toward greater transparency and accuracy in tax reporting.

Taxpayers using ITR-3 must review all changes thoroughly and ensure all supporting details are correctly disclosed.

The Excel-based utility for ITR-3 is now available on the official income tax e-filing portal.

Image from Pxhere (Free for commercial use / CC0 Public Domain)

Image Published on February 21, 2017

Image Reference: https://pxhere.com/en/photo/782062