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)
Plus the disclosure-only Schedule AL that fires whenever total income exceeds ₹50 lakh.
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. HP loss can offset salary up to ₹2 lakh in the current year (Sec 71B); excess carries forward 8 years. 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 disqualifies on capital gains (D106) and on business income (D107). 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) |
AY 2026-27 surcharge thresholds and the 25% cap under new regime per Finance Act 2023 retained for AY 2026-27.
Rohini’s total ~₹53L → 10% surcharge applies. She’s just over the ₹50L threshold, which makes marginal relief important:
Sec 87B / surcharge marginal relief. 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. Finance Act 2023 retained the 25% maximum surcharge under new regime 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 > ₹50 lakh
Once total income crosses ₹50 lakh, Schedule AL (Assets & Liabilities) becomes mandatory. AL is disclosure-only – it doesn’t change tax – but omitting it triggers Sec 139(9) defective-return notices.
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.
Schedule AL applicable threshold for AY 2026-27 + cost basis rule.
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 fixture (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. Sec 44AB profession threshold is ₹50 lakh (₹75 lakh under digital safe harbour, both per Finance Act 2024 [VERIFY]). At ₹25L, no audit. Rohini also doesn’t elect 44ADA presumptive (would mean 50% deemed = ₹12.5L business income – worse than her actual ₹23L). Books u/s 44AA apply because gross receipts exceed ₹1.5L (the entry-level book-keeping threshold).
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: ₹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%). STCG 111A rate revision effective date; the revised 20% applies to transfers on or after 23-July-2024.
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 |
figures (Salary post-Sec-16 split: 75K/0 std-PT new vs 50K/2.4K std-PT old). Run fixture for exact.
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
Approximate output (run through BharatTax for exact):
| New regime | Old regime | |
|---|---|---|
| Slab tax (on TI − STCG) | ₹10,24,440 | ₹13,07,440 |
| STCG 111A @ 20% | ₹13,840 | ₹13,840 |
| Sub-total | ₹10,38,280 | ₹13,21,280 |
| Surcharge 10% | ₹1,03,828 | ₹1,32,128 |
| Cess 4% | ₹45,684 | ₹58,136 |
| Total tax | ₹11,87,792 | ₹15,11,544 |
| Less: TDS (salary + 194A FD) | ₹4,98,000 | ₹4,98,000 |
| Balance payable (SAT) | ₹6,89,792 | ₹10,13,544 |
arithmetic against AY 2026-27 widened slabs + revised STCG 111A rate (20%) + AY 2026-27 surcharge tiers + Sec 87B marginal-relief computation.
New regime saves ~₹3.24 lakh – decisive at this income level. The widened AY 2026-27 NEW slabs (4L bands up to ₹24L) are very efficient for ₹50-100L income brackets. Even with ₹2.85 lakh of Chapter VI-A under old regime, the gap doesn’t close. The pattern flips only at very specific high-deduction profiles (HP loss + 80C + home-loan interest + medical expenses) – which Rohini doesn’t have.
Step 12 – Schedule AL
Total income > ₹50L → AL fires. Rohini fills:
| 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 |
AL field labels in BharatTax UI; cost-basis treatment for each asset class.
AL doesn’t change tax – but mismatches with last year’s AL can trigger a notice. Year-on-year movement is monitored. If your AL assets jump ₹50L without a corresponding income trail, ITD may ask. Be consistent and document acquisitions.
Step 13 – Confirm regime + SAT challan
Rohini confirms New Regime. Balance payable ₹6,89,792 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.
Big SAT amounts and treasury timing. The challan reflects in 26AS within 1-2 working days. Wait for it before downloading the ITR-3 JSON, otherwise the Schedule IT row won’t have the matching CIN and the return may be processed with mismatch.
AY 2026-27 schema window. As of this article’s date, CBDT ITR-3 schema v1.4 for AY 2026-27 has not been published. JSON downloads show “🔒 Locked – AY 2026-27 schema pending” until CBDT releases v1.4 (target: May 2026). Compute / PDF / save all work now. Pay the SAT, then come back when the schema lands.
6. Common mistakes for surcharge-zone filers
[VERIFY all items below.]
- Mixing CG and business head. Listed-equity short-term delivery sale = CG (111A). Intraday = business (speculative). Don’t confuse. See intraday article.
- HP loss > ₹2L claimed against salary in current year. Cap is ₹2L (Sec 71B); excess carries forward 8 years. Don’t try to bypass the cap.
- Surcharge marginal relief. If TI just crosses ₹50L (or ₹1cr, ₹2cr, ₹5cr), apply marginal relief. BharatTax computes; do not override – a manual override loses precision and is the most common cause of tax-payable mismatch with ITD’s processing.
- Schedule AL skipped. Mandatory at TI > ₹50L. AL is disclosure only, but omission triggers a Sec 139(9) defective notice.
- Schedule AL at FMV instead of cost. Cost basis throughout. Jewellery, vehicles, paintings – all at original cost. Only exception: bank deposits (face value) and shares (cost).
- Old regime > New for high deduction stacks? Sometimes yes (HP loss + 80C + home-loan interest in the ₹15-25L income range can flip the result). BharatTax computes both – trust the numbers, don’t intuit.
- 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. Non-44AD businesses pay advance tax 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
[VERIFY all answers below.]
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. Cross-check that your spouse files their share too – ITD’s matching engine flags duplicate or missing ownership declarations.
Q: My CG was a small loss (STCL). Can I offset against salary? A: No. STCL / LTCL = same-head set-off only (Sec 70). Carries forward 8 years (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 – all at cost. Exception: bank deposits at face value, shares at cost (not market price).
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). Carries forward 8 years if unutilised. The “grandfathering” of pre-Feb-2018 LTCG is irrelevant for losses.
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: Non-speculative business loss can offset Salary in the current year (Sec 71). It also carries forward 8 years against any business income (Sec 72). So your ₹50K loss reduces taxable salary by ₹50K this year.
Q: I forgot to include a small consulting invoice in last year’s return – can I revise? A: Yes – file a revised return under Sec 139(5) before 31-Dec of the AY revised return deadline AY 2026-27. 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 and 20% till ₹20L. The deduction stack would need to exceed ~₹6-7L to flip the result at this income level – which is rare without a home-loan-interest component.
Verification checklist
- [ ] All
...markers above resolved. - [ ] Confirm AY 2026-27 surcharge thresholds and 25% new-regime cap.
- [ ] Confirm Schedule AL applicable threshold (TI > ₹50L) and cost-basis rule for AY 2026-27.
- [ ] Confirm STCG 111A revised rate (20%) effective date and transitional rule for FY 2024-25.
- [ ] Confirm Sec 87B marginal-relief computation around the ₹50L threshold.
- [ ] Run fixture (
fixture.json) through BharatTax + replace approximate compute figures with exact output. - [ ] Persona uniqueness in
_PERSONAS.md(Rohini Khurana, AAAPK4476R). - [ ] Confirm Schedule AL field labels in latest BharatTax UI.
- [ ] Confirm BP non-presumptive flow + 44AA book-keeping thresholds for AY 2026-27.