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What is ITR 2?
ITR-2, short for Income Tax Return Form 2, plays a crucial role in the Indian taxation landscape. It serves as a vital document for both Indian citizens and non-resident Indians (NRIs) when filing their income tax returns with the Income Tax Department of India. Unlike ITR-1, which is also known as Sahaj, ITR-2 is tailored to accommodate a broader spectrum of taxpayers who have diverse income sources.
Individuals and Hindu Undivided Families (HUFs) who derive income from various streams, such as salary, pension, multiple properties, capital gains, foreign assets, business or professional partnerships, and other sources like lottery winnings, racehorses, or legal gambling, find ITR-2 as the appropriate channel for filing their income tax returns.
Additionally, individuals with an annual income exceeding Rs. 50 lakh are mandated to use ITR-2, making it essential for a specific group of taxpayers.
Documents Required For filing ITR 2
✔ Copy of Previous Year’s Tax Return
✔ Bank Statement
✔ TDS Certificate
✔ Savings Certificate / Deductions
✔ Interest Statement
✔ Annual report, Account Statement & Audit Reports
ITR 2 Filing Charges
| Basic | Essential | Advanced |
|---|---|---|
|
₹ 1500 |
₹ 2500 |
₹ 4000 |
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ITR 2 Filing Process with Avery Biz Solutions
Consult and Document Submission
ITR 2 Form Selection and Expert Review
Income and Deduction Assessment
Tax Calculation & Payment Updates
Final ITR 2 Filing and Acknowledgment
How to file ITR 2 online?
Visit Official Website: Start by visiting the official income tax e-filing website.
Login: Log in using your User ID, which is your PAN (Permanent Account Number), and your password.
Enter Captcha: Enter the displayed captcha to verify your identity.
Access e-File: From the menu options, click on ‘e-File.’
Select ITR: Choose ‘Income Tax Return’ from the available options.
Automatic PAN Update: Your PAN information will be automatically updated on the income tax return page.
Assessment Year: Select the ‘Assessment Year’ for which you are filing your return.
Choose ITR Form: Pick the ‘ITR Form Number’ relevant to your financial situation.
Select Filing Type: Indicate whether it’s an ‘Original’ or ‘Revised’ return
Continue: Click ‘Continue’ to proceed.
Review Instructions: Familiarize yourself with the provided instructions.
Complete ITR 2 Form: Fill in all the necessary fields of the ITR-2 form with your financial details.
Save Draft: To prevent data loss due to session time-out, use the ‘Save Draft’ option regularly.
Taxes Paid and Verification: In the ‘Taxes Paid’ and ‘Verification’ sections, select the appropriate options.
Verify ITR: Choose a suitable verification method for your ITR.
Taxes Paid and Verification: In the ‘Taxes Paid’ and ‘Verification’ sections, select the appropriate options.
Preview and Submit: Review all the entered information in the ‘Preview and Submit’ section.
Accuracy Check: Double-check the accuracy of your ITR details.
Submit: Finally, click the ‘Submit’ button to complete the online filing process.
Who can File ITR 2?
ITR 2 Eligibility
ITR-2, designed for income tax return filing, serves as the go-to form for individuals and Hindu Undivided Families (HUFs) whose income sources are more diverse and intricate. If you’re wondering about the ITR 2 applicability, here’s a breakdown:You are eligible for ITR 2 filing if:
✔ Your income includes earnings from Salary or Pension.
✔ You receive income from House property, and this can pertain to multiple properties.
✔ Capital Gains form a part of your income.
✔ You have income from other sources, which could encompass activities like lottery winnings, bets on horses, and other forms of gambling.
✔ You possess Foreign Assets or earn Foreign Income.
✔ Your Agricultural income exceeds Rs. 5,000.
✔ You are a resident but not an ordinary resident, or you are an NRI (Non-Resident Indian).
✔ You serve as a director in any company.
✔ You hold investments in unlisted equity shares of a company.
Non Eligible for ITR 2 Filing
Business or Profession Income
✔ Individuals or Hindu Undivided Families (HUFs) whose income is primarily or partially derived from a business or profession should not use ITR-2 for filing their income tax returns. They should explore other applicable ITR forms that cater to business income.
Eligible for ITR 1
✔ If you meet the criteria for filing ITR-1 (Sahaj), which is designed for individuals with straightforward income sources, ITR-2 is not the appropriate form for you. Stick to ITR-1 for your tax return filing needs.
Partners in Partnership Firms
✔ Individuals who are partners in a Partnership Firm and draw income from such partnerships should consider other ITR forms that are specific to partnership income. ITR-2 is not meant for this purpose.
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Benefits of ITR 2 Filing
01.
Legal Compliance
Ensures compliance with tax laws and regulations.
02.
Claim Deductions
Allows you to claim deductions and exemptions.
03.
Record Keeping
Maintains a record of your financial transactions.
04.
Faster Refunds
Expedited processing for refund claims.
05.
Avoid Penalties
Prevents penalties for non-filing or incorrect filing.
What Instructions Should You Follow While ITR 2 Return Filing?
When filling out your ITR-2 form, it’s essential to adhere to specific guidelines and instructions to ensure accurate and compliant tax return filing. Here’s a list of instructions to keep in mind:
✔ Follow Sequence: Complete the form in the specified sequence, starting with Part A, followed by all the schedules, then Part B-TTI and Part B-TTI, and finally, the verification section.
✔ Strike Out Non-Applicable Sections: If a particular schedule doesn’t apply to your financial situation, strike it out and clearly mention “NA” (Not Applicable).
✔ Use “NA” as Needed: Make liberal use of “NA” against any item that is not relevant to your tax filing situation.
✔ Rounding Off Figures: Round off all figures to the nearest one rupee, except for total income/loss and tax payable, which should be rounded off to the nearest multiple of ten.
✔ Choose Employer Category: If you are employed, select the appropriate category, such as “Government” for Central or State government employees or “PSU” for those in Public Sector Companies.
✔ Avoid Double Taxation Relief Claims: Do not use ITR-2 if you are claiming double taxation relief under Section 90/90A/91; choose the relevant ITR form that accommodates such claims.
✔ Annexure-Less Form: ITR-2 is an annexure-less form, which means no supporting documents are required to be attached when submitting the form.
What Are the Key Changes in ITR-2 for FY 2022-23 (AY 2023-24)?
Filing your ITR-2 for FY 2022-23 (AY 2023-24) comes with significant changes, especially regarding the reporting of crypto and other Virtual Digital Assets (VDA) income. Here’s a concise list of the key modifications:
- Crypto and VDA Reporting: A separate schedule has been introduced to report income generated from cryptocurrencies and Virtual Digital Assets (VDA). This addition emphasizes the need for taxpayers to declare income from these sources accurately.
Major Changes in Form ITR-2 for FY 2021-22 (AY 2022-23)
For FY 2021-22 (AY 2022-23), Form ITR-2 underwent notable alterations to enhance reporting clarity and accuracy. Here are the significant changes:
1. Foreign Assets Schedule (Schedule FA)
✔ The term ‘calendar year ending as on 31st December 2021’ replaced ‘accounting period.’
✔ This change mandates taxpayers to provide information on all foreign assets owned between January 1, 2021, and December 31, 2021.
✔ This clarification streamlines the reporting period for foreign assets.
2.Capital Gains Schedule (Schedule CG)
✔ Year-by-year breakdown of land/building improvement costs is now required.
✔ Separate disclosure of acquisition cost and indexed acquisition cost has been introduced.
✔ Disclosure of Fair Market Value (FMV) for capital assets and consideration paid in slump sale transactions is now mandatory.
3.Other Sources Schedule (Schedule OS)
✔ Taxable accumulated interest on the provident fund must be reported.
✔ Deemed dividend income under Section 2(22)(e) should be disclosed separately.
✔ To determine residence status, taxpayers must select from descriptions relevant to several sections of the Income Tax Act.
4.New Schedule: Tax Deferred on Employee Stock Ownership Plan (ESOP)
✔ A new schedule has been added to keep track of the tax amount deferred and the year it must be taxed.
✔ This is essential for information related to employee stock ownership plans (ESOPs) obtained from qualifying start-ups.
Note:- These changes in Form ITR-2 for FY 2021-22 (AY 2022-23) aim to provide more precise and comprehensive reporting guidelines, ensuring taxpayers accurately disclose their financial information and adhere to the evolving tax regulations.
What is the Structure of ITR 2 Form?
Filing your income tax return using ITR 2 requires a systematic approach due to its comprehensive structure.
Here’s a list that breaks down the various components and schedules within ITR 2 applicability:
1. Part A: General Information
This section captures your personal and basic financial details.
- Schedule S: Details of Income from Salaries: Report your income earned from salary sources.
- Schedule HP: Details of Income from House Property: Provide information regarding income from house property.
- Schedule CG: Computation of Income under Capital Gains: Calculate your income from capital gains and the associated taxes.
- Schedule OS: Computation of Income under Income from Other Sources: Detail your income from miscellaneous sources.
- Schedule CYLA: Statement of Income after Set Off of Current Year’s Losses: Reflect income after setting off losses incurred in the current year.
- Schedule BFLA: Statement of Income after Set Off of Unabsorbed Loss Brought Forward from Earlier Years: Account for income after setting off losses carried forward from previous years.
- Schedule CFL: Statement of Losses to be Carried Forward to Future Years: Document losses that will be carried forward to offset future income.
- Schedule VIA: Statement of Deductions (from Total Income) under Chapter VIA: List deductions eligible under Chapter VIA to reduce your total income.
- Schedule 80G: Statement of Donations Entitled for Deduction under Section 80G: Report donations made that are eligible for deductions under Section 80G.
- Schedule 80GGA: Statement of Donations for Scientific Research or Rural Development: Specify donations for scientific research or rural development eligible for deductions.
- Schedule AMT: Computation of Alternate Minimum Tax Payable under Section 115JC: Calculate the Alternate Minimum Tax (AMT) as per Section 115JC.
- Schedule AMTC: Computation of Tax Credit under Section 115JD: Compute tax credits under Section 115JD.
- Schedule SPI: Statement of Income Arising to Spouse/Minor Child/Son’s Wife or Any Other Person or Association of Persons: Include income arising to specific individuals or associations in relevant schedules.
- Schedule SI: Statement of Income Taxable at Special Rates: Report income subject to special tax rates.
- Schedule EI: Details of Exempt Income: Provide details of income that is exempt from taxation.
- Schedule PTI: Pass-through Income Details from Business Trust or Investment Fund as per Section 115UA, 115UB: Record pass-through income from business trusts or investment funds.
- Schedule FSI: Statement of Income Accruing or Arising Outside India: Document income earned outside India.
- Schedule TR: Details of Taxes Paid Outside India: Specify taxes paid in foreign countries.
- Schedule FA: Details of Foreign Assets and Income from Any Source Outside India: Report foreign assets and income.
- Schedule 5A: Statement of Apportionment of Income Between Spouses Governed by Portuguese Civil Code: Applicable when income is divided between spouses under the Portuguese Civil Code.
- Schedule AL: Asset and Liability at the Year-End (Applicable if Total Income Exceeds Rs. 50 Lakhs): Provide details of assets and liabilities if your total income exceeds Rs. 50 lakhs.
- Schedule DI: Schedule of Tax-Saving Investments or Deposits or Payments to Claim Deduction or Exemption: List tax-saving investments and deductions within the extended period from April 1, 2020, to June 30, 2020.
2. Part B-TI: Computation of Total Income: Calculate your total income based on the information provided in various schedules.
3. Part B-TTI: Computation of Tax Liability on Total Income: Determine your tax liability on the total income.
- Details to be Filled if Prepared by a Tax Return Preparer: If a Tax Return Preparer has prepared your return, provide their details as required.
Understanding this structured format is crucial for accurately reporting your income and deductions when filing your ITR-2 return.
When filing ITR-2, it is crucial to adhere to the following instructions:
- Ensure accurate reporting of all income sources.
- Provide correct details of deductions and exemptions.
- Verify your Aadhar and PAN details.
- Keep track of changes in tax laws and regulations.
- Retain all supporting documents for future reference.
How to File ITR-2 Using Offline Utility?
Visit Income Tax Website: Start by visiting the official income tax e-filing website.
Access Downloads: Navigate to ‘e-File’ > ‘Income Tax Returns’ > ‘File Income Tax Return’ and click on ‘Downloads’ at the top.
Select Assessment Year: Choose the relevant assessment year from the drop-down menu.
Download Excel File: Download the Microsoft Excel file in zip format. Extract it to your computer and open the file.
Enable Content and Macros: When prompted, select ‘Enable Content’ and activate macros by clicking ‘Enable Macros.’
Understand Field Colors: Red fields require completion, while green fields are for data entry. Avoid ‘cut’ or ‘paste’ operations for data.
Complete Tabs: Fill out the fields under each tab in the ITR form.
Validate Data: Click ‘Validate’ after filling out all tabs to validate the information.
Generate XML File: Generate and save the file in XML format.
Log In to Portal: Log in to the income tax e-filing portal.
Follow Previous Steps: Follow the same steps as mentioned earlier.
Select Return Type: Choose ‘Original/Revised Return’ and select the ‘Submission Mode.’
Upload XML File: Submit the excel file by clicking ‘Upload XML.’ Proceed to file ITR-2 as directed previously.
Difference between ITR-1 and ITR-2
Aspect | ITR 1 | ITR 2 |
Applicability | For individuals with income up to ₹50 lakhs | In this ITR 2 applicability, especially, for individuals and HUFs with income exceeding ₹50 lakhs, and having income from various sources including capital gains, foreign assets, and more. |
Source of Income | Salary, one house property, other sources | Salary, more than one of house property, capital gains, foreign assets, business or professional income as a partner, lottery, racehorses, legal gambling, and others. |
Eligibility for Salaried Individuals | Salaried individuals, pensioners, and individuals with one house property | Salaried individuals, pensioners, and individuals with more than one house property, capital gains, foreign assets, business income as a partner, and various other sources. |
Foreign Asset Disclosure | No requirement | Mandatory disclosure of foreign assets and foreign income. |
Capital Gains | Not suitable for reporting capital gains | Suitable for reporting capital gains and requires detailed calculations and disclosures. |
Business Income | Not suitable for reporting business income | Suitable for reporting business income as a partner or having income from a profession as a partner. |
Agricultural Income | Suitable for reporting agricultural income | When focussing on agricultural income in ITR 2, it’s suitable for reporting it when exceeding ₹5,000. |
Tax Deferred on ESOPs | No specific provision | Includes a schedule for tax-deferred on employee stock ownership plans (ESOPs) from qualifying start-ups. |
Use for Residents and NRIs | Applicable to both residents and NRIs | Applicable only to residents, not NRIs. |
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