Filing income tax return by 31 August? Key schedules to note in ITR-3 and 4 forms — and how to verify them

Taxpayers with business or professional income who are filing ITR-3 or ITR-4 by 31 August should carefully fill in the schedules in their returns and reconcile key details with their financial records.

Siddharth Maurya, Managing Director, Vibhavangal Anukulkara, explained the key schedules taxpayers should review and the checks they should complete.

Which schedules are important in ITR-3?

“The schedules most typically filled by ITR-3 filers comprise Part A- Profit and Loss Account, Part A-Balance Sheet, Schedule BP, Schedule CG, Schedule OS and, where there are losses, Schedules CYLA, BFLA and CFL,” Maurya explained.

• P&L and Balance Sheet: Report turnover, purchases, expenses, depreciation, assets and liabilities based on the books.
• Schedule BP: Convert accounting profit into taxable business income after adding back inadmissible, personal and capital expenses and other disallowances.
• Schedule CG/112A: Report capital gains or losses from property, shares, mutual funds and other capital assets.
• Schedule VDA: Report income from transfers of cryptocurrencies and other virtual digital assets.
• Schedule OS: Covers income from interest, dividends, family pension, and interest on tax refunds, etc.
• CYLA, BFLA and CFL: Check adjustment and carry-forward of current-year and brought-forward losses.

Which schedules should ITR-4 filers know about?

Maurya noted that “ITR-4 is a simpler form. The most used sections are Salary or Pension, House Property, Other Sources, Chapter VI-A Deductions and the Payment Schedules”.

• The “Salary” section includes gross salary and falls under the purview of deductions under Section 16.
• If the “House Property” section includes two houses, ownership, rental, unrealised rent, municipal taxes, and interest on the housing loan are all required to be disclosed.
• Interest from savings and deposits, dividends, family pension, and income-tax refund interest also come under “Other Sources”.

How should taxpayers verify Schedule BP?

For regular business or professional income in Form ITR-3, Maurya said taxpayers should first prepare the Profit and Loss Account and Balance Sheet, followed by Schedule BP.

“The turnover should be the same as the sales as reported in the sales register, GST return, bank and payment-gateway receipts, AIS and TDS certificates,” he noted.

Personal and capital expenses, unpaid statutory dues and other inadmissible expenses need to be added back. Intraday and F&O turnover and income should be reported separately in ITR-3.

“For presumptive taxation in ITR-4 form, Section 44AD generally considers 6% of eligible digital receipts and 8% of other eligible receipts, or the actual income if higher. Under Section 44ADA, at least 50% of gross professional receipts is treated as income. Section 44AE requires vehicle-wise calculations. Routine expenses must not be deducted again from presumptive income,” he noted.

What are the key checks ITR-3 and ITR-4 filers should make?

Maurya explained that “filers of ITR-3 and ITR-4 must have Form 26AS, AIS, TIS, Form 16 and 16A, bank passbooks and advance/self-assessment tax challans”. He highlighted the following checks:

• Check the TDS break-up with Form 16 and match professional and other receipts with Form 16A, AIS and bank statements.
• Businesspersons must retain the Trial Balance, Profit and Loss Account, Balance Sheet, sales and purchase registers and invoices.
• Keep GST returns, payment-gateway statements and the fixed-asset register, and reconcile them with turnover, expenses and depreciation in the return.
• Keep brokerage statements, contract notes, demat statements and capital gains details.
• Property owners should retain rental agreements, municipal tax receipts, ownership records and housing loan interest certificates.
• Keep tax audit reports, Form 10-IEA acknowledgements, and evidence supporting deductions.

What changed in ITR-3 and ITR-4 for AY 2026-27?

Maurya noted that “AY 2026-27 relates to income earned during FY 2025-26. More specifically, the Income Tax Act, 1961 applies”.

He added that key changes include allowing taxpayers to report income from up to two houses in ITR-4, along with a new field for reporting rent that was not collected.

“Both forms have fields for secondary addresses and contact details. ITR-3 now separately captures F&O turnover and trading income and includes a schedule for interest and remuneration from firms/partnerships. Schedule VDA requires separate reporting of acquisition and transfer dates,” he mentioned.

Disclaimer: This is only for informational and educational purposes. Please consult a qualified expert for the latest laws and regulations.