If you are an individual trader of stock markets in India, you may need to file Income Tax Returns Form 3 (ITR-3), especially if you are trading in Futures and Options (FNO) or carrying out intra day trading. This form is used to report your income in terms of profit earned from share market trading activities, as a business income. It is also important to file ITR-3, even if you have incurred loss under any head viz FNO trading, intra-day trading, LTCG or STCG.
This post lists out few steps which you need to follow in order to file ITR Form 3 (ITR-3):
The due date for filing ITR Form 3 for the financial year 2022-23 was 31st July 2023. However, you can file your ITR, if you have not done so, as early as possible to avoid penalties.
- Gather your documents. You will need the following documents to file your ITR:
- Form 16 or 26AS, which shows your salary income
- Tax profit and loss statement, which comprises of heads listed below. You may follow our post to get one from Zerodha easily.
- Capital gains statement from your broker.
- Dividend income statement from your broker
- Interest income statement from your bank
- Any other documents that show your income from share market activities
- Choose the correct ITR form. ITR Form 3 is for traders of share market, who need to show trading income as business income. If you don’t have trading income and only have other sources of income, such as salary or rental income, you don’t need to fill ITR-3 and you will need to file a different ITR form.
- Fill up the ITR form online on the Income Tax Department website.
- Fill out the ITR form. Be sure to enter all of your income and expenses accurately and follow all steps in the guidelines given on the website.
- E-verify the ITR form using preferred method of your choice.
- Once the process is complete, you will get the acknowledgement online.
Here are some tips for filing ITR Form 3:
- Keep your documents organized. This will make it easier to file your ITR.
- Start filing your ITR early. This will give you enough time to gather your documents and complete the form accurately.
- Use a tax filing software. This can help you to file your ITR quickly and easily.
- Get help from a tax advisor. If you are not sure how to file your ITR, you can get help from a tax advisor.
Additional Information
- You can find more information about ITR Form 3 on the Income Tax Department website.
- There are a number of tax filing software available that can help you to file your ITR.
- You can also get help from a tax advisor if you need assistance with filing your ITR.
In addition to the above, here are some other things to keep in mind when filing ITR Form 3:
- You will need to maintain a record of all your share market transactions. This includes the date of the transaction, the type of transaction (buy or sell), the number of shares traded, the price per share, and the brokerage fees.
- You will need to calculate your capital gains or losses for the financial year. Capital gains are taxed at different rates depending on whether they are short-term or long-term gains.
- You will need to claim any expenses that are related to your share market trading activities. These expenses can include brokerage fees, travel expenses, and the cost of any training courses that you have taken.
- Generally these details are available in the online statements by brokers as already mentioned above.
I hope this blog post has been helpful. If you have any questions, please feel free to leave a comment below.
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