itr2

The income tax department has categorised taxpayers based on income, source of income and many other factors to ensure easy compliance. Taxpayers with incomes from different categories, thus, have to download and fill out different income tax return forms.

For instance, the ITR-2 form is for individuals and HUFs not carrying any profession or business. In this article, we cover the following.

What is ITR-2?

ITR-2 is utilized by individuals and Hindu Undivided Families (HUFs) for filing their Income Tax returns when they do not earn income from business or profession. Typically, it is used by those receiving income from sources like salary, pension, capital gains, and other sources.

Who is eligible to file ITR-2 for AY 2024-25?

ITR-2 form is for individuals and HUF receiving income other than income from ‘Profits and Gains from Business or Profession’. Thus, individuals with income from the following sources are eligible to file Form ITR-2:

• Income from salary/pension
• Income from house property (income can be from more than one house property)
• Income from capital gains/loss on sale of investments/property (both short-term and long-term)
• Income from other sources (including winning from lottery, bets on racehorses and other legal means of gambling)
• Agricultural income of more than Rs 5,000
• Resident not ordinarily resident and a non-resident

The total income from the above sources may exceed Rs 50 lakh.

Further, if you are a Director of any company and an individual who has invested in unlisted equity shares of a company, you must file returns in ITR-2.

Who cannot file ITR-2 for AY 2024-25?

• Any individual or HUF having income from business or profession
• Individuals who are eligible to fill out the ITR-1 form (Sahaj)

Major changes in ITR-2 in AY 2023-24 and AY 2024-25

The below changes are incorporated in the ITR-2 form of the FY 2022-23 and applicable for FY 2023-24 as well:

• Schedule VDA: Income from transfer of Virtual Digital Assets 
  A new schedule is added to compute income from cryptocurrencies or other virtual Digital assets

• Relief u/s 89A: An additional clause has been added related to relief to residents who have income from foreign retirement benefits accounts: 
  Point No. 1(e)4: Income taxable during the previous year on which relief u/s 89A was claimed in any earlier previous year
• Sec 10(12C): In other Exempt Income one new exemption added under Sec 10(12C) - Any payment from the Agniveer Corpus Fund to a person enrolled under the Agnipath Scheme or to his nominee.
• Schedule SI: New point added 115BBH - Income by way of transfer of Virtual Digital assets
• Section 80 CCH: Under Chapter VI A deduction new clause was added- The entire amount contributed by applicants employed by the Central Government to the Agniveer Corpus Fund is eligible for tax deductions.
• ARN: In schedule 80G clause D additional information is required for ARN (donation Reference number)

What is the structure of ITR-2?

ITR-2 is divided into:

• Part A: General information
• Schedule S: Details of income from salaries
• Schedule HP: Details of income from house property
• Schedule CG: Computation of income under capital gains
  • Schedule 112A- From the sale of equity share of a company or a unit of equity oriented fund /business trust on which STT is paid
  • Schedule 115AD(1)(b)(iii) proviso- For non-residents -From the sale of equity share of a company or a unit of equity oriented fund/business trust on which STT is paid
• Schedule OS: Computation of income under income from other sources
• Schedule CYLA: Statement of income after set off of current year’s losses
• Schedule BFLA: Statement of income after set off of unabsorbed loss brought forward from earlier years
• Schedule CFL: Statement of losses to be carried forward to future years
• Schedule VIA: Statement of deductions (from total income) under Chapter VIA
• Schedule 80G: Statement of donations entitled for deduction under Section 80G
• Schedule 80GGA: Statement of donations for scientific research or rural development
• Schedule AMT: Computation of Alternate Minimum Tax payable under Section 115JC
• Schedule AMTC: Computation of tax credit under Section 115JD
• Schedule SPI: Statement of income arising to spouse/minor child/son’s wife or any other person or association of persons to be included in the income of the assessee in Schedules-HP, CG and OS
• Schedule SI: Statement of income which is chargeable to tax at special rates
• Schedule EI: Details of exempt income
• Schedule PTI: Pass through income details from business trust or investment fund as per Section 115UA, 115UB
• Schedule FSI: Statement of income accruing or arising outside India
• Schedule TR: Details of taxes paid outside India
• Schedule FA: Details of Foreign Assets and income from any source outside India
• Schedule 5A: Statement of apportionment of income between spouses governed by Portuguese Civil Code
• Schedule AL: Asset and liability at the year-end (applicable in case the total income exceeds Rs 50 lakh)
• Schedule tax deferred on ESOP: Information of tax-deferred on ESOPS received from eligible start-ups referred to in Section 80-IAC
• Part B-TI: Computation of total income
• Part B-TTI: Computation of tax liability on total income
• Tax payments- Details of payment of advance tax and self-assessment tax
• Declaration by the taxpayer
• Details to be filled if a tax return preparer has prepared the return

What documents do I need to file ITR-2? 

• If you have a salary income, you need Form 16 issued by your employer.
• If you have earned interest on fixed deposits or saving bank account and TDS has been deducted on the same, you need TDS certificates i.e., Form 16A issued by Deductors.
• You will need Form 26AS to verify TDS on salary as well as TDS other than salary. Form 26AS could be downloaded from the e-filing portal.
• If you are living in rented premises, you need rent paid receipts for the calculation of HRA (in case you have not submitted the same to your employer).
• If you have any capital gains transactions in shares, you will need a summary or profit / loss statement of capital gain transactions of shares or securities during a year, if any, for computation of capital gain.
• You will need your bank passbook, Fixed Deposit Receipts (FDRs) to calculate amount of interest income.
• If you have received rent from your rented house property, then you will need your tenant / local tax payment/interest on borrowed capital details (if any) to calculate income from house property.
• In case you want to claim any loss incurred during the current year, then you will need the relevant documents exhibiting the loss.
• In case you wish to claim the previous year’s loss, you will need a copy of ITR-V pertaining to the previous year, disclosing the said loss.
• You will also need documents or proofs for claiming tax saving deductions u/s 80C, 80D, 80G, and 80GG such as life and health insurance receipts, donation receipts, rent receipts, receipts for tuition fees etc., if the same were not considered in your Form 16.

How to file ITR-2 on Cleartax?

You can file your income tax return (ITR) on the Cleartax platform. Here is a guide on filing ITR-2 if you have income from the sale of shares or redemption of mutual fund units.

Step 1: Log in or sign up on the Cleartax portal. We’ve added the link to the portal for you in the description below.

Step 2: If you are filing with us for the first time, you will have to link your PAN by entering your PAN, Date of Birth, and the OTP received on your registered mobile number. Linking your PAN will allow us to submit your return to the income tax department. 

Step 3: But if you filed with us last year and your PAN is already linked, you will directly see this pre-fill screen.

Step 4: Here, you will have to complete another OTP verification if you want us to pre-fill the details for you. So there are two options here: if you have your Aadhaar registered mobile number with you, you can opt for Aadhaar registered mobile number option and enter the single OTP received as an SMS. And if you don’t have the Aadhaar registered mobile number, select the IT Department registered mobile number here. In this case, you will have to enter two OTPs- one received on your mobile and the other one by e-mail.

Step 5: I agree it seems a lot of effort, but it is totally worth it! Look, most of your information has been auto-filled. You just saved nearly 2 hours of your precious time – you didn’t have to manually fill in details or get annoyed about silly typo errors!

Step 6: At the bottom, you can see the ‘Upload Form 16’ option. If you upload your Form 16 here, all your salary details will also be captured automatically. You can also upload multiple Form-16's if you have switched jobs in the Financial Year.

Step 7: And if you still want to do this yourself, you may skip and ‘Continue to e-file’.

Step 8: Here you will see 4 tabs: Personal Info, Income Sources, Tax Saving and Tax Summary. Let us first look at the personal info tab. Here all your personal details like name, address and other details will appear. You can expand each section and review these details. You also have the option to edit them, if required. 

Step 9: Now let us move to the Income Sources section.

Step 10: If you skipped uploading Form 16 earlier, you can upload it here and fill up the salary details in seconds!

Step 11: Now let’s come to the main income head of ITR-2, the capital gains section. If you have sold assets like stocks, mutual funds, Gold, bonds, shares received as a part of ESOP or RSU scheme, land or building, then the profit/loss from such transactions must be reported under capital gains. 

ClearTax has partnered with various brokerage firms to capture the capital gains transaction details in the schedule automatically.

Step 12: Let’s look at each section here. First, is stocks and mutual funds. You will have to obtain a report from your broker and identify the list of sell transactions and the corresponding buy transactions from this report. Then, depending on how long you’ve held the stocks, you will have to separate them into long-term and short-term and then do the calculations.

Step 13: All you have to do is select your stockbroker from the list and log in to your investment account and your capital gains are computed in just seconds.

 Step 14: If you have done any intraday transactions, we will automatically add them under the business income section as they do not qualify as capital gains.

Step 15: For some brokers, we don’t have the login option yet but you can directly drag and drop or upload the P&L report here.

Step 16: And in case you do not find your broker here (which is in the rarest of rare cases), you can download the excel template given here and fill in all these details and upload the filled template here. 

Step 17: If you have mutual funds, you should upload CAMS or Karvy P&L report by clicking on their respective icons here. You can also click on the "Mutual funds" tab. Here, you will see CAMS, KARVY, and a few other brokers. Upload the P&L report here and your capital gains will be computed. And if you have non-demat mutual funds, you must upload files from both Karvy and CAMS. That should be sufficient. 

But if you do not have the Excel files or if your broker’s name is not shown here, you can add the details manually too. 

Step 18: If you have invested in foreign stocks, then what? Then there is a separate section here. Like shown for stocks, you can either directly import the details from your broker. We support transactions from players like INDMoney, Vested etc. Even if your broker is not mentioned here, you can use our excel template to report all the transactions in a single go.

Now comes ESOPs and RSUs.   
Let’s quickly understand the taxability of ESOPs. In the year when you exercise ESOPs and receive shares, the benefit you receive by getting the shares at a lower price than the market price will be taxed as your salary and TDS will be deducted by your employer. In the year when you sell these shares, the gains/loss will be reported under the capital gains section. This is where capital gains comes into picture. ("A bell icon or a tip icon saying, listen carefully”)    
So, only if you have sold the shares received under ESOP or RSU scheme, you can use this section and add all the details like the type of shares (that is whether they are listed or not listed), date of purchase and sale and value of purchase-sale and brokerage expenses. Your capital gains will be calculated. 

Step 19: Likewise, you can add details for all the other assets like Bonds, gold, land and building.

Business or profession income is not applicable for ITR-2. But if you have any income from a business or profession, you can go ahead and add them here. If your broker provides intra-day transactions in the P&L file, we would have already parsed them and populated them under the Speculative Income section under Business Income as shown earlier. 

Step 20: Also, one common error people make while filing ITR is they miss adding income from dividends, savings bank and FD interest. You can add them in the other income sources section. Again, if your broker's p&L statement or your 26AS has it, we will populate it. Otherwise, you can provide the details manually. 

Step 21: Now let’s move to the Tax Savings tab- if you have made declarations to your employer, all such details will be auto-filled here. You can also enter the details manually and claim all the deductions here.

Step 22: If you had carried forward losses from last year, you can add them here and offset them with the gains. 

Step 23: If you scroll down, you will find the ‘tax-paid’ section. All the details of TDS and advance tax that you’ve paid will appear here. You can also add these details by uploading Form 26AS. If you’ve bought a car or if you’ve gone on a foreign vacation, tax may have been collected at source (TCS). That also gets filled from 26AS. And you can get this money back or adjust it with your taxes, who misses this chance

Step 24: Here, you will see a tax summary. Based on all the details you’ve added, we have auto-selected the ITR Form for you. Also, the best part about filing with us is that we auto-suggest the best tax regime for you that saves you the maximum taxes. 

You can always compare your tax payable under both regimes and even switch to the other tax regime.

Step 25: Click on file now, make payment, e-verify your return and be done with taxes this year!    
Oh! Don’t forget to collect these rewards from over 50+ brands because filing on Cleartax is not just fast, simple and secure but also very rewarding!

   
Download the ITR-2 form for AY 2024-25

Click here to download Form ITR 2 for AY 2024-25

Major changes introduced in ITR-2 for AY 2022-23

• Foreign assets schedule (Schedule FA): The term’ accounting period’ is replaced with ‘calendar year ending as on 31st December 2021’. It means the taxpayer shall furnish the details of all foreign assets held between 01.01.2021 and 31.12.2021. This change will clarify the taxpayers for the reporting period of the foreign assets.
• Capital gains schedule (Schedule CG):
  • Disclosure of Fair Market Value (FMV) of capital assets and consideration received in a slump sale transaction
  • Year-wise details of the improvement cost of land/building
  • Acquisition cost and indexed cost of acquisition to be disclosed separately
• Other sources schedule (Schedule OS):
  • Reporting of interest accrued on the provident fund, which is taxable
  • Separate disclosure of deemed dividend income (Section 2(22)(e))
• The taxpayer has to choose from descriptions related to different clauses of the Income Tax Act to determine residential status.
• New ‘Schedule Tax Deferred on ESOP’ is inserted: Details related to ESOPs of employees received from eligible start-ups are required to keep track of the amount of tax deferred and the year it should be taxed.

Major changes introduced in ITR-2 for AY 2021-22

• ITR forms have been updated to include a declaration of choosing between the old or new tax regime introduced by the Finance Act 2020 under section 115BAC. Form 10IE must be submitted to the ITR department before filing ITR if the assessee chooses to pay tax according to the new tax regime. ITR forms seek the acknowledgement number of Form 10IE in case the assessee is opting for the new tax regime.
• Finance Act 2020 allowed to defer the payment or deduction of tax on ESOPs allotted by an eligible start-up covered under Section 80-IAC. If an employee receives ESOPs from an eligible start-up as mentioned under Section 80-IAC regarding which the tax has been deferred, the Part B of Schedule TTI (Computation of tax liability on total income) seeks the disclosure of this deferred tax.
• Finance Act 2020 shifted the taxability of dividend income from the company’s hands to the investor’s hands. Sections 10(34), 10 (35), 115-O, 115-R, and 115BBDA have been amended. A new row has been added in Schedule OS to allow the deduction of expenses like interest from the dividend income. Also, a new row has been added under schedule OS to incorporate details of dividend income taxable in the hands of the unitholders of business trust. 
• All ITR forms prompt the return filers to provide a quarterly breakdown of the dividend income for interest calculation under section 234C.
• The ITR forms have been updated to include the effect of marginal relief by showing ‘surcharge calculated ‘before marginal relief’ and ‘after marginal relief’. Previous to this, no separate effect was required to be shown in the ITR Forms.
• Schedule DI inserted in the previous ITR forms for any investment made for the extended period allowed, i.e. 1st April 20 to 31st July 20, is now removed from all the ITR Forms.
• Section 50C governs the determination of the value of the sale consideration in the case of land or building, or both. If the sale consideration is less than the stamp duty value, then the stamp duty value will be considered the full value of consideration except for 5%. Finance 2020 increased the tolerance limit from 5% to 10%, and the changes have been made in the ITR.
• Separate disclosure of cash donation under schedule 80GGA and date is required in the ITR Form. 
• ITR form has been updated with a new column under schedule 112A and 115AD (1)(b)(iii) proviso to be able to provide the details of the nature of securities transferred. Also, both the schedules have been updated to give the ‘grandfathering clause’ effect by allowing to mention the details like Sale price, FMV and COA of the securities. 

Major changes introduced in ITR-2 for AY 2020-21

• RNORs and non-resident individuals have to file their income tax return in ITR-2 even in case of total income below Rs 50 lakh.
• The taxpayer should disclose (a) the amount of cash deposits above Rs 1 crore in the current accounts with a bank, (b) expenditure incurred above Rs 2 lakh on foreign travel (c) expenditure incurred above Rs 1 lakh on electricity.
• Resident individuals who own more than one house property should also file their income tax return in ITR-2.
• ITR-2 continues to apply to resident individuals who have a total income exceeding Rs 50 lakh.
• Any individual taxpayer having income from business or profession cannot use ITR-2.
• If an individual is a director in a company or holds unlisted equity investments, the ‘type of company’ should also be disclosed.
• In case of short-term or long-term capital gains from the sale of land or building or both, the buyer’s details (s), i.e. name, PAN or Aadhaar, percentage share of ownership and address, have to be given.
• A separate schedule 112A calculates long-term capital gains on the sale of equity shares or units of a business trust that are liable to STT.
• Under ‘income from other sources’, a taxpayer should provide the details of ‘any other income’.
• The deductions against ‘income from other sources’ should be provided.
• The ‘Schedule VI-A’ for tax deductions is amended to include deductions under section 80EEA and section 80EEB.
• In the case of a business trust or investment fund, the details of ‘capital gains’ income and ‘dividend’ income should be provided.
• The details of tax deduction claims for investments, payments, or expenditures made between 1 April 2020 and 30 June 2020.
• While providing bank account details, if a taxpayer selects multiple bank accounts for refund credit, the income tax department may choose an account to process the refund.

Major changes introduced in ITR-2 for AY 2019-20

• Given that ITR-1 is not applicable for the RNORs and the non-residents, they have to go with ITR-2 for filing their return of income necessarily.
• The applicability of ITR-2 has been made more clear in as much as now it is applicable for individuals and HUF having income other than income under the head “Profits and Gains from Business or Profession”.
• The field of residential status has been categorised into “Residential status in India (for Individuals)” and “Residential status in India (for HUF)”. In the case of “Residential status in India (for Individuals)”, the three sub-categories – “Resident”, “Resident but not Ordinarily Resident’ and “Non-resident”, have been mentioned requiring the individual to tick the specific category to which they belong. Taxpayers have to mention the number of days of residency in India. Further, in the case of a non-resident, an individual is also required to specify the jurisdiction(s) of residence during the previous year providing the Taxpayer Identification Number(s) of the relevant jurisdictions. Also, in case the individual is a Citizen of India or a Person of Indian Origin (PIO), the duration of stay in India during the previous year (in days) and the duration of stay in India during the four preceding years (in days).
• In a case where a representative assessee files the ITR, additional information about the capacity of the representative assessee (by way of choice in a dropdown provided) has to be given.
• An individual taxpayer has to give information about the Directorship held in any company during the previous year, also mentioning whether the shares are listed or unlisted.
• An individual taxpayer has to give information about the investment in unlisted equity shares and the movement in such investment throughout the year.
• Under income from salaries, the following details have to be provided:1. Salary as per section 17(1)2. Value of perquisites as per section 17(2)3. Profit in lieu of salary as per section 17(3)In case of salary received from more than one employer, the gross salary with the above break-up has to be provided for each such employment. From the total gross salary, the following have to be deducted:1. Allowances exempt under section 10 – details have to be specified2. Deductions under section 16
• Under income from house property, furnishing of PAN of tenant is mandatory if tax is deducted under section 194-IB. Furnishing of TAN of tenant is mandatory if tax is deducted under section 194-I.
• In case of short-term or long-term capital gains from the sale of land or building or both, the details of the buyer(s), i.e. name, PAN, percentage share of ownership and address, have to be given. PAN has to be mandatorily given in the case of TDS under section 194-IA or when the buyer in the documents quotes PAN.
• Interest income like pass-through income must be disclosed under “Income from other sources”.
• Information about accrual/receipt of income from other sources quarterly regarding dividend income and income by way of lotteries, crossword puzzles, races, games etc., for calculation of interest under section 234C.
• Under the carried forward and set off of loss: Categorisation of income short term and long term capital gains taxed at special rates in India as per DTAA and net income from other sources chargeable at applicable rates.
• Introduction of section 80TTB deduction for senior citizens.
• Bifurcation of donation qualifying for deduction under section 80G into cash and other modes.
• Details of donations for scientific research and development under section 80GGA with details of name, address, PAN, cash and other modes of donation and eligible amount.
• Schedule AMT – computation of Alternate minimum tax payable under section 115JC and Schedule AMTC – tax credit computation under section 115JD is introduced.
• While disclosing the income of specified persons under schedule SPI, the “Nature of income” is replaced with “Head of income”.
• Under Schedule SI, the following incomes charged at special rates are added: 1. Short term and long term capital gains. 2. Any other income is chargeable at special rates. 3. Other sources of income are chargeable at special rates. 4. Other sources of income are chargeable at special rates in India as per DTAA5. Pass-through income like long term and short term capital gains. 6. through income like income from other sources
• Under Schedule EI, the following disclosures are required in case of agricultural income exceeds Rs. 5 lakh:
  • Name of the district along with pin code in which agricultural land is located
  • Measurement of agricultural land in Acre
  • Whether the agricultural land is owned or held on the lease (drop down to be provided)
  • Whether the agricultural land is irrigated or rain-fed (drop down to be provided)
  • The above disclosure is to be provided separately for each agricultural land.
  • Under Schedule EI, information about income not chargeable to tax as per DTAA giving details such as amount and nature of income, country name and code, Article of DTAA, Head of income and whether TRC obtained.
  • Details of pass-through income are not chargeable to tax.
  • Under schedule FA, under the details of foreign assets and income from any source outside India below details are required:
    • Details of Foreign Depository Accounts held (including any beneficial interest) during the relevant accounting period.
    • Details of Foreign Custodial Accounts held (including any beneficial interest) during the relevant accounting period.
    • Details of Foreign Equity and Debt Interests held (including any beneficial interest) in any entity during the relevant accounting period.
• Details of Foreign Cash Value Insurance Contract or Annuity Contract held (including any beneficial interest) during the relevant accounting period.
• In Schedule (Part B-TTI), Introduction of computation of tax payable under section 115JC for comparison purposes.
  • Additional information in Schedule TDS gives details about the head of income and Gross income in the case of income for which TDS credit is claimed.

Major changes introduced in ITR-2 for AY 2018-19

• The applicability of ITR-2 has been made more clear in as much as now it is applicable for individuals and HUF having income other than income under the head “Profits and Gains from Business or Profession”.
• The field of “Profits and Gains from Business or Profession”, which was earlier featured under Part B – TI, has now been removed.
• Following this, Schedule-IF (Income from Firm) and Schedule-BP have also been removed. This means that anyone earning income from a partnership firm must file ITR-3 and not ITR-2.
• Additionally, under Schedule AL, the field pertaining to “Interest held in the assets of a firm or association of persons (AOP) as a partner or member thereof” has been done away with.
• This means a partner in a firm who could file his return in ITR-2 until AY 2017-18 (specifically made available in ITR -2 for AY 2017-18) has to now file his return in ITR-3 form AY 2018-19 onwards.
• Similar to ITR-1, even in ITR-2, under the Schedule on TDS, there is an additional field for furnishing details of TDS as per Form 26QC for TDS made on rent. Also, provision for quoting of PAN of Tenant for such rent cases has been made.

How to file ITR-2 on Income Tax Website/Portal?

You can refer to this article for more information.

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