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ITR 2: Your Guide to Income Tax Return Filing

ITR-2 Your Guide to Income Tax Return Filing

ITR 2: Your Guide to Income Tax Return Filing

In India, taxpayers are categorized based on Income, and specific Income Tax Return (ITR) forms are assigned to individuals according to their income sources. Among these forms, ITR-2 is designated for individuals and Hindu Undivided Families who do not generate Income from professional or business activities. This article will delve into the details of ITR-2, applicability, differences from other forms, required documents, and the step-by-step process of filing it.

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What is the ITR-2 Form?

In India, taxpayers are categorized based on Income, and specific Income Tax Return (ITR) forms are assigned to individuals according to their income sources. Among these forms, ITR-2 is designated for individuals and Hindu Undivided Families who do not generate Income from professional or business activities.  

Who Should Utilize the ITR-2 Form?

The ITR-2 form is designed for individuals and Hindu Undivided Families (HUFs) who earn Income from sources other than ‘Profits and Gains from Business or Profession.’ If your Income originates from any of the following sources, you are required to file ITR-2:

  • Income from Salary/Pension
  • Income derived from house property, which may involve multiple properties
  • Income from Capital Gains or losses incurred from the sale of investments or property, encompassing both long-term and short-term gains/losses
  • Income from Other Sources, which includes winnings from lotteries, bets on racehorses, and other legally recognized forms of gambling
  • Payment exceeding Rs 5,000 from agricultural activities
  • Foreign Income or ownership of Foreign Assets
  • Status as a Resident Not Ordinarily Resident (RNOR) or a Non-Resident
  • Holding the position of a Director in both listed and unlisted companies

Who Cannot File ITR-2?

  • Individuals or Hindu Undivided Families (HUFs) with Income from business or profession.
  • Individuals who are eligible to fill out the ITR-1 form (Sahaj)

Structure of the ITR-2 Form

The ITR-2 Form is structured into two main parts, each with specific sections and schedules:

  • Part A: This section includes general information, such as your Name, Address, Date of Birth (DOB), PAN, Aadhar card, Contact Number, and Email Address.
  • Part B: This section deals with the computation of your total Income and the tax payable on your earnings.

In addition to Part A and Part B, the form also incorporates various schedules that detail different types of Income and deductions:

Schedule Description
Schedule S Income from Salary
Schedule HP Income from House Property
Schedule CG Income from Capital Gains (both long and short-term)
Schedule OS Income from Other Sources (e.g., gifts, interest)
Schedule CYLA Information on losses incurred in the current year
Schedule BFLA Income remaining after setting off losses from previous years
Schedule CFL Carry forward losses to the next financial year
Schedule VIA Tax-saving deductions under various sections (e.g., 80C, 80E)
Schedule 80G/80GG Donations and conclusions for scientific research or rural development
Schedule AMT Alternate Minimum Tax computation (area 115JC)
Schedule AMTC Tax credit computation under section 115JD
Schedule SPI Income arising from your spouse, minor child, or son’s wife
Schedule SI Special tax rates for specific income sources
Schedule EI Details of exempt Income
Schedule PTI Income from business trust or investment fund
Schedule FSI Income outside India
Schedule TR Taxes paid outside India
Schedule FA Foreign assets and Income from sources outside India
Schedule 5A Portuguese Civil Code, allocation of Income to spouse

Part B-TI – Computation of Total Income:

This section calculates your Gross Total Income from salary, house property, and other sources. Total tax-saving deductions are then subtracted from your Gross Total Income to determine your Total Income.

Part B-TTI – Computation of Tax Liability:

Based on the Total Income, tax liability will be calculated.

Once you have completed all the required information, there’s a verification section to ensure that the details you provided are factually correct and self-attested.

Documents Required for ITR 2 Filing

Before commencing the filing process, ensure you have the following documents and information at hand:

  • Form 16/16A: These documents contain details about your salary and tax deductions (TDS).
  • Form 26AS/AIS/TIS: This statement provides information on tax credits, TDS, and other relevant data.
  • Bank Statements: Gather statements reflecting Income from interest, dividends, or other financial transactions.
  • Capital Gains Details: Collect the necessary transaction documents if you’ve sold assets like property or stocks.
  • Details of Foreign Assets and Income (if applicable): Gather relevant documents if you have foreign assets or earned Income abroad.
  • Aadhaar Card, PAN Card, and Other Identification and Contact Information: Ensure you have these documents readily available.

Instructions for Completing the ITR-2 Form

When filling out the ITR-2 Form, it is essential to adhere to the following instructions and guidelines:

  • Fill out the form in the following sequence: Part A, all the schedules, Part B-TI, Part B-TTI, and finally, the verification section.
  • Any schedules that do not apply to the Assessee should be struck out with ‘NA’ (Not Applicable) mentioned.
  • The Assessee should use ‘NA’ against any item that does not apply to them.
  • 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.
  • For individuals falling under the Employer Category, select ‘Government’ if they are a Central/State Government employee.
  • If working in a public sector company of the Central/State Government, choose ‘PSU.’
  • If the Assessee claims double taxation relief under section 90/90A/91, the ITR-2 Form cannot be used.
  • ITR-2 is an annexure-less form, and no documents need to be attached during submission

Modes of Submission for ITR 2

There are two primary methods for filing ITR 2: offline and online.

Filing ITR-2 Offline

If you are 80 years of age or older, you have the option to file ITR-2 offline. In this case, you must submit a physical paper return or use a bar-coded form. Upon submission, the Income Tax Department will issue an acknowledgment.

Filing ITR-2 Online

For online filing of ITR 2, you can transmit all the necessary information electronically, either with or without a digital signature. After completing the online filing, you can verify the return through Return Form ITR-V. If you submit ITR 2 electronically with a digital signature, you will receive the acknowledgment on the registered email.”

Procedure to File ITR 2 Online

Login with Your Credentials

Visit the official Income Tax India website and log in using the appropriate login credentials.

Select the Correct Assessment Year

When filing ITR-2, choose the appropriate assessment year and the filing mode (Online/Offline). The assessment year is when you file the return following the financial year.

Select the Assessee Status

Next, select your status as the assessee. ITR-2 primarily applies to individuals and HUFs. The system may prefill this information based on your registration status on the income tax portal.

Choose the ITR-2 Form

Proceed to select the ITR-2 form from the dropdown menu. Once selected, the form will be enabled for filling. You must provide details such as the reason for filing, confirming personal information, validating your bank account, nature of employment, and more. Ensure all figures are entered correctly, and review for any errors or omissions.

Provide Income Details

This section provides comprehensive information about your Income from various sources, including salary, capital gains, rental Income, and other sources. Fill in the required fields accurately, and ensure you have supporting documents. Complete the schedules provided in the form, if applicable.

Deductions and Taxable Income

Specify eligible deductions under various sections of the Income Tax Act. These may include deductions for investments, insurance premiums, home loans, and other allowable expenses. Choose appropriate conclusions from the dropdown menu and calculate your taxable Income after applying them.

Calculate Your Tax Liability

The form will automatically calculate your tax liability based on the income details provided, considering various deductions and exemptions available. Ensure the correct TDS/TCS/Advance Tax details are imported from Form 26AS.

Validate, Verify, and Generate the JSON File

Validate the ITR-2 form using the validation criteria on the income tax website to ensure it is error-free and ready for submission. After validation, generate the JSON file for online filing.

Verify the Return

After successfully filling out the JSON file, you must verify your return. Verification methods include using an electronic verification code (EVC), Aadhar OTP, digital signature, or sending a signed physical copy to the Centralized Processing Centre (CPC) if electronic verification is not done.

Acknowledgment and Verification:

Upon successful verification, the income tax department will issue an acknowledgment receipt, which will be sent to your registered email address. Keep this acknowledgment for future reference.

Key Differences Between ITR 1 and ITR 2

Selecting the correct form for filing income tax returns is crucial. Failure to do so can result in the rejection of your return by the Income Tax department, along with possible penalties for missing deadlines. Consequently, individual taxpayers often encounter confusion when deciding between ITR 1 and ITR 2

Particulars ITR 1 ITR 2
Applicant type Individual (resident or non-resident) Individuals (resident or non-resident) and HUFs
Income from salary/pension within a financial year Up to Rs 50 lakh More than Rs 50 lakh
Income from Other Sources Excluding activities like horse racing, gambling, lotteries, etc. Including activities like lotteries, gambling, horse racing, card games, etc.
Exempt Income Up to Rs 5,000 More than Rs 5,000
Income from Property Up to 1 house More than one house

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