The Central Board of Direct Taxes (CBDT) has officially released ITR Form 3 for Assessment Year 2025-26 through Notification No. 41/2025 dated April 30, 2025. This move comes in alignment with the amendments introduced via the Finance Act, 2024, and aims to bring greater clarity, compliance, and transparency for taxpayers falling under the ambit of this form.
Key Updates in ITR-3 for AY 2025-26
1. Capital Gains Split Based on Date
A major update is the split in the Schedule-Capital Gains, requiring taxpayers to report gains separately for transactions before and after 23rd July 2024. This change aligns with the amendments introduced in the Finance Act, 2024, and is expected to help in more accurate computation and taxation of capital gains under the revised regime.
2. Capital Loss Allowed on Share Buyback (Post 01.10.2024)
For transactions executed on or after 1st October 2024, capital losses arising from share buybacks can now be claimed only if the corresponding dividend income is reported under “Income from Other Sources.” This addresses past ambiguities and brings uniformity in taxation treatment for share buybacks.
3. Revised Threshold for Asset & Liability Reporting
The CBDT has revised the reporting threshold for foreign assets and liabilities. Taxpayers with total income exceeding ₹1 crore will now be required to disclose their assets and liabilities in Schedule AL. This revision is aimed at reducing the compliance burden on smaller taxpayers while enhancing transparency among high-income individuals.
4. New Section 44BBC for Cruise Business
A new presumptive taxation scheme under Section 44BBC has been introduced specifically for businesses engaged in the cruise tourism sector. Eligible assessees can now opt for presumptive taxation under this section, which simplifies return filing and reduces compliance requirements for small cruise operators.
5. Enhanced Disclosure for Deductions under Sections 80C and 10(13A)
The new ITR-3 format mandates detailed disclosure of deduction claims under Section 80C (which includes life insurance premiums, PPF, NSC, etc.) and Section 10(13A) (house rent allowance). This measure is aimed at ensuring more accurate reporting and reducing the scope for incorrect claims.
6. Mandatory TDS Section Code Reporting in Schedule-TDS
Taxpayers will now be required to mention the specific TDS section code (e.g., 194A, 194C, 194H, etc.) in Schedule-TDS. This aims to improve reconciliation between Form 26AS/Annual Information Statement (AIS) and the TDS/TCS schedules in the return.
Who Should Use ITR-3?
ITR-3 is applicable for individuals and Hindu Undivided Families (HUFs) having income from business or profession, which includes income from proprietary business or carrying on a profession. This form is not applicable for individuals opting for presumptive income under sections 44AD, 44ADA, or 44AE unless specifically required under the new amendments.
Conclusion
The changes introduced in ITR Form 3 for AY 2025-26 reflect the government’s ongoing efforts to streamline tax compliance, promote transparency, and integrate updates introduced in the Finance Act, 2024. Taxpayers and professionals are advised to thoroughly review the new form and ensure accurate reporting based on the revised requirements to avoid discrepancies and scrutiny.