Capital gains to TDS: Key changes in ITR-3 Excel utility to know before filing ITR

The Excel utility for the ITR-3 form is available for taxpayers now. For the financial year 2024-25 (assessment year 2025-26), the IT department has introduced several changes in the ITR-3 Excel utility that taxpayers, including stock market traders, should know.

Excel utilities of ITR forms are the offline Excel-based tools provided by the Income Tax (IT) department to help taxpayers file their ITRs. The IT department makes ITR utilities available for taxpayers every year. These utilities are editable forms that can be downloaded, saved, filled out, and uploaded to the website.

After filling in the details in Excel utilities, taxpayers need to validate all the sheets using the built-in buttons on the utility and generate a JSON file for submission on the e-filing portal.

Note: The CBDT has not released the online utility for filing the ITR-3 form. Currently, taxpayers can only file ITR-1, ITR-2 and ITR-4 on the e-filing portal. Other online utilities are expected to be made available soon.

Changes in ITR-3 Excel utility

ITR-3 is meant to be filed by individuals and Hindu Undivided Families (HUFs) whose earnings from business or profession are above ₹50 lakh. There are many changes in the ITR-3 form for the assessment year 2025-26.

One of the major changes includes the higher threshold for reporting assets and liabilities under 'Schedule AL', which is now ₹1 crore, up from ₹50 lakh before. In simple words, this means that only those with total assets above ₹1 crore need to disclose their asset details now. Further, section-wise TDS reporting is now needed in the form.

These changes have been incorporated in the Excel utility of ITR-3. Let’s have a look at the changes in detail:

In the Schedule Capital Gains, taxpayers now need to specify whether the gains were realised before or after July 23, 2024, due to changes in taxation and indexation rules.

The segregation of capital gains reporting is one of the key changes in the ITR-3 utility. These changes are aimed at streamlining the ITR filing process and improving compliance for taxpayers who use ITR-3.

TDS (Tax Deducted at Source) will now be reported section-wise to make tax credits clearer. Taxpayers are required to report Tax Deducted at Source (TDS) under specific sections where taxes have been deducted.

Note: Tax credits are the amounts of TDS that have already been paid on your behalf and are used to reduce your overall tax liability.

Taxpayers are now required to provide more detailed information for their deduction claims. Detailed information will be required when claiming deductions under Sections 80E, 80EE, 80EEA and 80EEB, and each deduction must be backed by relevant documentation. Some extra fields have been added for more detailed disclosures under Sections 80C, 10(13A) (House Rent Allowance), with details like employer PAN or landlord details.

For reporting deductions for home loan interest under Section 24(b), taxpayers will need to give detailed information about the loan, like the lender’s name, when the loan was sanctioned, the loan account number, etc.

For transactions involving share buybacks made after October 2024, the new ITR-3 utility has provided specific guidelines. The updated ITR-3 form has a specific row in Schedule CG for reporting capital losses from companies buying back shares from shareholders, under Section 68 of the Companies Act, 2013. Taxpayers can claim these losses if the dividend income is reported under the ‘Income from Other Sources’.

Taxpayers who have an income of ₹1 crore or above now need to disclose their assets and liabilities for the financial year in Schedule AL to ensure correct declarations. Previously, this threshold was ₹50 lakh.

For the dividend income earned under Section 2(22)(f), the updated ITR-3 utility now has a dedicated row. Taxpayers can report dividend income received in the form of buyback proceeds under Section 2(22)(f) through this specific row.

The updated utility includes the new provisions under Section 44BBC for presumptive taxation related to cruise ship operations. The provisions are expected to enhance compliance by simplifying the process for some income categories.

For any properties transferred before 23 July 2024, resident taxpayers have to now provide details on the cost of acquisition and the cost of improvement. This is to ensure that indexation benefits are applied accurately. In the form, taxpayers have to specify if their capital gains from a capital asset transfer occurred before or after July 23, 2024, to determine the applicable tax rates.

There are other changes as well, like taxpayers now need to confirm whether they filed Form 10-IEA in the previous financial year along with the declaration for tax regime selection, and more details are needed from taxpayers, like sanction dates and policy numbers, in order to fully substantiate their claims. Taxpayers must consider these changes carefully before filing their ITR to maintain accuracy and avoid any rejections.