The ITR3 is applicable for individual and HUF who are carrying on a business or profession. The return may include earning from House property, Salary/Pension and Income from other sources. It comes under Section 44ADA read with Section 44AA of the Income Tax Act, 1961.

If you are a salaried person with 10 lakh and you have short-term capital gains let say 20,000 Rs :

  • As you all are aware of and satisfaction with the rules under Section 44AAD. You can propose to avail benefits as per sub-section 1 of Section 44ADA, You should specify the deemed income from profession under Section 44ADA in Item 36(ii) of Schedule BP (of ITR-3)
  • Update the details of your profession in the Profit and Loss and Balance Sheet schedules that are declared for taxpayers who do not need to maintain books of accounts.

If you are other than salaried class and you want to use ITR for intraday gains/losses:

  • Any income/loss arising from intra-day trade in stocks without taking actual delivery of the stocks is treated as “speculative business income”, after deducting eligible expenses (including securities transaction tax) incurred in connection with such trading. You will need to use ITR-3 to mention such income irrespective of whether you have salary income or not.
  • Maintain appropriate documentation and specified books of accounts to support the income and expense claims. Have a tax audit completed?
  • This all factors depend upon various factors like the quantum of net profit loss, gross turnover, and volume of trades, etc.

If you are a salaried person and already paying tax and filing returns for your income and in case if you want to sell your land that you have brought 6 years before:

  • This property come under Capital gain as nonagricultural land are taxable. Also, the property was held by you for more than 24 months, so it would be considered under Long Term Capital Gains(LTCG). which is computed as the difference between the net sale proceeds and the indexed cost of acquisition.
  • The LTCG from this sale will be subject to tax at the rate of 20% (plus applicable surcharge and cess) unless you are eligible to claim the exemption.
  • If you invest the net sale proceeds from the sale in purchasing/constructing a residential house property in India, in respect of the timelines to re-invest, the ownership of other house properties during such timelines, etc. In such cases, you can claim exemption from tax under Section 54F of the Income-tax Act, 1961,
  • In case of re-investing the LTCG, capped to Rs50 lakh in specified bonds notified by Central Government, you can claim an exemption under Section 54EC of the Act. Also, you can claim bonds under schemes of Rural Electrification Corporation (REC) and National Highways Authority of India (NHAI)) within six months from the sale of the property.
  • In case you are not able to reinvest the sales proceeds/LTCG into the new asset before the last  date of filing your return for the year in which you sell the property, the unutilized balance should be deposited into Capital Gains Account Scheme (CGAS) in order to claim tax exemption prior to filing the tax return. In that case, the amount deposited into the CGAS scheme can then be utilized to reinvest in the new asset within the aforesaid timelines. In case the amounts deposited are not utilized, you will be liable to pay tax on such unutilized amount.

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