Published 7 May 2026
Meet Rohini Khurana, 44, a strategy consultant at Octave Strategy LLP in Gurugram. She also runs a small bilingual content-advisory practice on the side and dabbled in some short-term equity trades during the year. Her total income lands around ₹53 lakh – which puts her in the 10% surcharge zone (₹50L-₹1cr bracket).
This is the “kitchen sink” ITR-3 – the realistic complex case where multiple income heads, Schedule AL disclosure, surcharge mechanics, and marginal relief all enter at once. The pattern matters for any high-income consultant / proprietor / multi-asset filer.
She has four heads:
- Salary (Octave Strategy LLP)
- Business / Profession (own consulting, non-presumptive)
- Capital Gains (STCG 111A on listed equity, one trade)
- Other Sources (savings + FD interest)
The disclosure-only Schedule AL is also explained below; on the current ₹1 crore threshold it does not apply to her (see section 3).
Adding House Property? Many filers in this profile also own rental property. If you have one or more let-out / self-occupied homes, add a Schedule HP row per property. Under the old regime, HP loss can offset salary up to ₹2 lakh in the current year (Sec 71(3A)); the new regime bars that set-off (Sec 115BAC(2)(ii)(b)). The excess carries forward 8 years against HP income (Sec 71B). The flow is otherwise identical to what’s shown below.
1. Why ITR-3 specifically (form-selector logic)
The four heads above push out every other form:
- ITR-1 excludes business income and any capital gain other than Section 112A LTCG up to ₹1.25 lakh. Out.
- ITR-2 allows salary + CG + OS but excludes PGBP. Rohini’s consulting income is PGBP. Out.
- ITR-4 allows presumptive PGBP only (44AD/ADA/AE). Rohini’s consulting is non-presumptive (or at least she elects to file actual). Out.
- ITR-3 is the residual catch-all. ✓
BharatTax’s questionnaire collects all four flags up-front; ticking Salary + Business / Profession + Capital Gains routes to ITR-3 and unlocks all the relevant schedules.
2. Surcharge tier-up at ₹50 lakh
| Total income | Surcharge rate |
|---|---|
| ≤ ₹50 lakh | 0% |
| ₹50L - ₹1 cr | 10% |
| ₹1 cr - ₹2 cr | 15% |
| ₹2 cr - ₹5 cr | 25% |
| > ₹5 cr | 37% (capped at 25% under new regime) |
The bands are in Paragraph A of Part I of the First Schedule to the Finance Act, 2025; the surcharge on income under Section 111A, 112 or 112A and on dividends is capped at 15%.
Rohini’s total ~₹53L → 10% surcharge applies. She’s just over the ₹50L threshold, which makes marginal relief important:
Surcharge marginal relief (proviso under “Surcharge on income-tax”, Paragraph A, Part I of the First Schedule – there is no Section 87B). When total income just crosses a surcharge threshold, the increase in (tax + surcharge) over the corresponding pre-threshold amount cannot exceed the excess income. Concretely: at TI = ₹50,01,000, the Rs 1,000 of “extra” income triggers ₹1+ lakh of surcharge – absurd. Marginal relief caps the extra burden so it doesn’t exceed the extra income. BharatTax computes this automatically; do not override.
The 25% surcharge cap under new regime. Since the Finance Act 2023, surcharge under the new regime is capped at 25% even for taxpayers above ₹5 cr. Old regime keeps the 37% slab. This makes the new regime substantially cheaper for ultra-high-income filers – not relevant for Rohini at ₹53L, but worth knowing.
3. Schedule AL – mandatory at TI > ₹1 crore
The ITR-3 form for AY 2025-26 (CBDT Notification No. 41/2025) applies Schedule AL (Assets & Liabilities) “in a case where total income exceeds Rs. 1 crore”, up from ₹50 lakh earlier. AL is disclosure-only – it doesn’t change tax. At about ₹53 lakh, Rohini is below that threshold.
What goes in:
- Immovable property – each parcel at cost (not FMV); address; acquisition date.
- Movable assets – aggregate values for: jewellery / bullion, vehicles, yachts / aircraft, archaeological collections, paintings, bank deposits, shares / securities, insurance policies, loans given, cash in hand.
- Liabilities – aggregate of loans, debts, etc.
Cost basis applies throughout (not market value). Round to nearest rupee. Use as-on-31-March-2026 balances.
The form asks for each item at cost (“Amount (cost) in Rs.”).
4. What you need
| Document | Why |
|---|---|
| Form 16 | Salary breakup + perquisite valuation. |
| Broker P&L | CG transactions; intraday vs delivery split. |
| Bank statements (all banks) | Business + personal flows; cash vs digital ratio. |
| Books of account (consulting) | Schedule BP – gross receipts, expenses, net profit. |
| Form 26AS + AIS | TDS + SFT cross-check; AIS picks up your broker SFT-005 + bank SFT-016. |
| Asset register / property docs | Schedule AL disclosure. |
| PAN, Aadhaar, bank | Standard. |
5. Step-by-step walkthrough
Step 1 – Sign in
Step 2 – Skip last-year import
Step 3 – Personal information
Step 4 – Questionnaire
Tick all four heads (Salary / Business / CG / OS). The HP row stays unticked for this walkthrough (extend the article if your case differs).
Step 5 – Salary schedule
- Employer: Octave Strategy Consulting LLP, TAN DELO22890Y
- Basic ₹15,00,000 + HRA ₹6,00,000 + Special ₹6,00,000 + Perquisites ₹2,00,000 = Gross ₹29,00,000
- Profession tax (Haryana): ₹2,400
- TDS: ₹4,80,000
(HRA goes into Sec 10(13A) only if rent is paid; Rohini owns the flat she lives in, so HRA forms part of taxable salary. The ₹6 lakh just adds to her gross.)
Step 6 – Schedule BP (consulting practice)
NIC code 16013 – “Other professional services / writing / advisory”.
| Line | Amount |
|---|---|
| Gross receipts (profession) | ₹25,00,000 |
| Professional fees paid out | ₹60,000 |
| Telephone | ₹24,000 |
| Travel (domestic) | ₹80,000 |
| Depreciation (laptop / equipment) | ₹35,000 |
| Net profit (PGBP) | ₹23,01,000 |
No audit at ₹25L profession receipts. The Sec 44AB(b) profession threshold is ₹50 lakh; there is no higher cash-based threshold for professions. At ₹25L, no audit. 44ADA is open only for a profession named in Sec 44AA(1) or notified under it, and Rohini computes actual profit. Whether books are compulsory turns on Sec 44AA: sub-section (1) for those professions, otherwise sub-section (2) (for an individual, income above ₹2.5 lakh or receipts above ₹25 lakh in any of the three preceding years).
Step 7 – Schedule CG (STCG 111A on listed equity)
She had one short-term trade:
- Tau Industries: bought 12-Apr-2025, sold 20-Sep-2025
- Sale value: ₹3,50,000
- Cost: ₹2,80,000
- Brokerage (STT is not deductible): ₹800
- STCG: ₹3,50,000 − ₹2,80,000 − ₹800 = ₹69,200
Tax on STCG 111A is at 20% (revised by Finance Act (No. 2) Act, 2024 – previously 15%) for transfers on or after 23 July 2024 (Sec 111A(1)(i)(b)).
Step 8 – Other Sources
- Savings bank interest: ₹12,000
- FD interest: ₹1,80,000
- Total OS: ₹1,92,000
Step 9 – Chapter VI-A (old regime path)
- 80C (PPF): ₹1,50,000
- 80D (self ₹35K, capped at ₹25K for non-senior): ₹25,000
- 80D (parents senior): ₹50,000
- 80CCD(1B): ₹50,000
- 80TTA (savings interest, ₹10K cap): ₹10,000
- Total VI-A: ₹2,85,000
Step 10 – Schedule TI
| Line | New regime | Old regime |
|---|---|---|
| Salary (after Sec 16) | ₹28,25,000 | ₹28,47,600 |
| Income from PGBP | ₹23,01,000 | ₹23,01,000 |
| STCG 111A (special rate) | ₹69,200 | ₹69,200 |
| Income from Other Sources | ₹1,92,000 | ₹1,92,000 |
| Gross Total Income | ₹53,87,200 | ₹54,09,800 |
| Less: Chapter VI-A | – | ₹2,85,000 |
| Total Income (Sec 288A) | ₹53,87,200 | ₹51,24,800 |
Both regime totals are above ₹50L → 10% surcharge in both cases. The STCG ₹69,200 is taxed at 20% separately (it’s not part of the slab tax).
Step 11 – Compute tax
The computation:
| New regime | Old regime | |
|---|---|---|
| Slab tax (on TI − STCG) | ₹11,75,400 | ₹13,29,180 |
| STCG 111A @ 20% | ₹13,840 | ₹13,840 |
| Sub-total | ₹11,89,240 | ₹13,43,020 |
| Surcharge 10% (old: ₹1,34,302 less marginal relief ₹46,942) | ₹1,18,924 | ₹87,360 |
| Cess 4% | ₹52,327 | ₹57,215 |
| Total tax | ₹13,60,491 | ₹14,87,595 |
| Less: TDS (salary + 194A FD) | ₹4,98,000 | ₹4,98,000 |
| Balance payable (SAT) | ₹8,62,491 | ₹9,89,595 |
New regime saves ₹1,27,104 – even after ₹2.85 lakh of Chapter VI-A under old regime and marginal relief on the old-regime surcharge, the widened AY 2026-27 NEW slabs (4L bands up to ₹24L) leave it cheaper for Rohini.
Step 12 – Schedule AL
Rohini’s total income is below ₹1 crore, so the form does not require AL of her. Had it applied, it would read:
| AL line | Amount |
|---|---|
| Land + building (PH-2 Ambience Lagoon) | Cost ₹2,80,00,000 |
| Bank deposits (across HDFC SB + FDs) | ₹22,00,000 |
| Shares / securities (cost) | ₹4,50,000 |
| Insurance (cost / surrender) | ₹3,80,000 |
| Jewellery (estimated cost) | ₹8,00,000 |
| Vehicles (cost) | ₹15,00,000 |
| Cash in hand | ₹50,000 |
| Loans given | ₹0 |
| Total assets | ₹3,33,80,000 |
| Less: Loans / liabilities (home loan outstanding) | ₹95,00,000 |
| Net worth disclosed | ₹2,38,80,000 |
Step 13 – Confirm regime + SAT challan
Rohini confirms New Regime. Balance payable ₹8,62,491 needs to go in via challan ITNS-280 before filing. Plus 234B/C interest if quarterly advance tax was missed (likely – Rohini’s STCG and business profit were back-loaded, so she may not have paid full advance tax by 15-Mar). BharatTax computes 234B/C automatically; just pay both before downloading the JSON.
6. Common mistakes for surcharge-zone filers
- Mixing CG and business head. Listed-equity short-term delivery sale = CG (111A). Intraday = business (speculative). Don’t confuse. See the intraday article.
- HP loss > ₹2L claimed against salary in current year. Cap is ₹2L (Sec 71(3A)), old regime only; excess carries forward 8 years (Sec 71B).
- Surcharge marginal relief. If TI just crosses ₹50L (or ₹1cr, ₹2cr, ₹5cr), marginal relief applies. BharatTax computes it.
- Schedule AL skipped. Mandatory at TI > ₹1 crore (ITR-3 form, Notification 41/2025). AL is disclosure only.
- Schedule AL at FMV instead of cost. Cost basis throughout. Jewellery, vehicles, paintings, deposits and shares – the form asks for cost throughout.
- Old regime > New for high deduction stacks? It depends on the deductions; BharatTax computes both.
- STCG 111A at 15% (old rate). Finance Act (No. 2) 2024 raised STCG 111A to 20% for transfers on/after 23-Jul-2024. Pre-23-Jul transfers stay at 15%. AY 2026-27 = FY 2025-26 = entirely at the new 20%.
- Forgetting advance tax under Sec 211. Businesses other than 44AD/44ADA cases pay advance tax (Sec 211(1)(a)) at 15%/45%/75%/100% by 15-Jun/15-Sep/15-Dec/ 15-Mar. Missing means 234B/C interest. BharatTax computes 234B/C based on what you’ve paid via Schedule IT.
7. Frequently asked questions
Q: I have a co-owned property with my spouse. Each files HP? A: Each spouse reports their share of net rental income (and interest deduction proportionate to ownership). 50/50 ownership = 50/50 split (Sec 26).
Q: My CG was a small loss (STCL). Can I offset against salary? A: No. STCL / LTCL = same-head set-off only (Sec 70, 71(3)). Carries forward 8 years (Sec 74; Schedule CFL). Salary is never available as a sink for capital losses.
Q: Schedule AL is asking for FMV of jewellery. Cost or current? A: AL discloses cost basis (what you paid). Not FMV. Cars, luxury items, paintings, deposits and shares – all at cost, as the form’s columns state. (AL applies only where total income exceeds ₹1 crore.)
Q: I rent out my Pune flat to my brother at below-market rent. Tax treatment? A: ITD applies a “deemed annual letting value” (ALV) under Sec 23(1)(a) – what the property could reasonably let for at fair rent, regardless of below-market arrangement. Rent paid by relative isn’t relevant. Use municipal valuation or rental comparables.
Q: I have STCG ₹2 lakh and an STCL ₹50K from same year. Net? A: Set-off within head: STCG ₹2L − STCL ₹50K = ₹1.5L net STCG, taxed at 20% (111A if listed equity). Sec 70 allows intra-head set-off in the year of loss.
Q: I sold listed equity at a loss (delivery, > 12 months) – LTCL. Where does it go? A: LTCL on listed equity (Sec 112A) can offset LTCG only (within 112A or other LTCG) (Sec 70(3)). Carries forward 8 years if unutilised (Sec 74).
Q: My consulting business had a small loss this year (gross receipts ₹4L, expenses ₹4.5L = loss ₹50K). How does it interact with salary? A: A business loss cannot be set off against Salary (Sec 71(2A)). It can be set off against other heads in the same year (Sec 71(1)), here her Other Sources and capital gains, and any balance carries forward 8 years against business income (Sec 72).
Q: I forgot to include a small consulting invoice in last year’s return – can I revise? A: Yes, within the Sec 139(5) window: before the end of the relevant AY or the completion of assessment, whichever is earlier (Sec 139(5) as substituted by the Finance Act 2026 from 1 March 2026 – for AY 2026-27, 31 March 2027), with a fee under the new Sec 234-I for a revision filed late in that window. BharatTax supports revised filings; you’ll need the original ack number.
Q: Why does my old regime tax show much higher than new even though I have ₹2.85 lakh deductions? A: At ₹50L+ income, the AY 2026-27 widened new-regime slabs (4L bands up to ₹24L) are decisive. Old regime starts paying 30% above ₹10L; new regime stays at 15% till ₹16L, 20% till ₹20L and 25% till ₹24L.