Income Tax New Rules – If you’re someone earning through business or professional services, the ITR-3 form is something you absolutely need to understand before filing your income tax return. For the financial year 2024-25, the Income Tax Department has brought in several key reforms in the ITR-3 form to make things easier, smoother, and more transparent for taxpayers. Whether you’re a freelancer, consultant, small business owner, or a member of a Hindu Undivided Family (HUF) with business income, these updates matter to you.

Let’s break down the most important changes in a simple and casual tone so you’re ready when it’s time to file.

Who Should File ITR-3

First things first. ITR-3 is not for salaried employees, farmers, or traders with no business or professional income. This form is specifically meant for individuals and HUFs who earn income through a profession or business. So, if you are running a small business, offering consultancy services, or working independently in a professional capacity like a CA, lawyer, doctor, or architect, then ITR-3 is the right form for you.

What’s New in the ITR-3 for 2024-25

The government notified the new ITR-3 form on 30 April 2025 and introduced several updates to make the process of filing returns easier and more efficient. The key changes revolve around three main areas: asset-liability reporting, foreign asset disclosure, and capital gains.

Schedule AL Made Simpler

One of the most complex parts of the old ITR-3 form was Schedule AL, where taxpayers had to report assets and liabilities if their total value exceeded 50 lakh rupees. This often created confusion, especially for people with property, investments, or gold holdings.

Now, the limit has been revised. You only need to report your assets and liabilities in Schedule AL if the total value crosses 1 crore rupees. This means a lot of middle-income taxpayers no longer need to worry about detailing every asset they own, reducing paperwork and time.

Clarity on Foreign Assets in Schedule FA

Another headache for many was Schedule FA, where people had to disclose foreign assets or income. The older format was not very clear, and people often made mistakes that led to notices from the tax department.

The updated ITR-3 now has clear and separate columns for every type of foreign asset and income. Whether it is shares, bank accounts, property, or any other foreign income source, everything has been categorized neatly. This makes it easier to fill and also reduces the risk of errors.

New Changes in Capital Gains Section

If you had income from selling shares, mutual funds, or property, you had to report it under Schedule CG. But now, the government has added a new column to disclose capital gains under section 50, which deals with gains on depreciable assets, and short-term capital gains (STCG). This move increases transparency and ensures accurate reporting for people who earn from buying and selling assets.

TDS Rules for E-commerce Operators

For e-commerce operators, a new rule under section 194Q has been introduced. If their annual turnover is more than 5 crore rupees, they will now be subject to 1 percent TDS. This is aimed at better tracking of digital business transactions and ensuring proper compliance by large online sellers.

Switching Between Tax Regimes

One common question is whether taxpayers can switch between the old and new tax regimes. The answer is yes, you can. If you wish to opt for the old tax regime for the year, you need to submit Form 10-IEA along with your ITR. This form lets the Income Tax Department know your preference, and based on that, your tax will be calculated accordingly.

Why These Reforms Matter

The updated ITR-3 form is a step forward in making the tax system simpler and more taxpayer-friendly. The government wants to move towards a more digital and transparent way of handling taxes, and this new form reflects that vision. By easing the requirements and bringing clarity, it reduces confusion and the chances of errors, especially for self-employed individuals who don’t have access to corporate tax support systems.

What You Should Do Next

If you’re planning to file ITR-3 this year, start by:

• Collecting all necessary documents related to your income, expenses, and capital gains
• Checking if your total assets and liabilities cross the 1 crore rupee threshold
• Verifying if you need to report any foreign assets or income
• Deciding which tax regime you want to opt for and filling Form 10-IEA accordingly

It’s also a good idea to keep a record of all your business transactions, especially if you are running an online business, to make sure you comply with the new TDS rules.

The changes in ITR-3 for the assessment year 2025-26 aim to reduce the complexity of filing returns and promote better compliance. With higher thresholds for asset reporting, clear guidelines on foreign income, and detailed columns for capital gains, taxpayers now have a cleaner and easier path to filing their returns correctly and on time.