Simplified Tax Compliance: Key Updates to ITR Form 3

The Income Tax department has updated ITR Form 3 for individuals and HUFs with business income. Key changes include raising the asset reporting threshold to Rs 1 crore and revised capital gains tax rules. New dropdowns for deductions enhance compliance, aligning reporting with current policies.

The Income Tax department has officially notified the new ITR Form 3 for the Assessment Year 2025-26, applicable to individuals and Hindu Undivided Families (HUFs) earning income from business or profession.

A crucial update to the form involves raising the threshold for asset and liability reporting under 'Schedule AL' from Rs 50 lakh to Rs 1 crore, reducing the disclosure requirements for middle-income taxpayers.

Changes also extend to the Schedule Capital Gains, where capital gains are now detailed based on their occurrence before or after July 23, 2024. Furthermore, the government has proposed a reduced long-term capital gains tax rate on real estate, offering taxpayers a choice between the new 12.5% rate or the traditional 20% with indexation.

(With inputs from agencies.)