ITR-2 is an Income Tax Return form in India for individuals and Hindu Undivided Families (HUFs) who do NOT have income from “Profits and Gains of Business or Profession.”  

The article contains 5 parts : 

1. Who can file ITR-2
2. Prerequisites for Online ITR-2 Submission
3.  Using the Offline Utility 
4. Online ITR-2 Submission 
5. Changes Compared to the Previous Year

Who can file ITR-2:

Individuals and HUFs who are NOT eligible for ITR-1 (Sahaj) and do NOT have business or professional income.

This typically includes those with:

• Income from Salary/Pension.
• Income from more than one House Property. (If you have only one house property and meet other ITR-1 criteria, you might be able to file ITR-1).
• Income from Capital Gains (Short-term or Long-term) from the sale of shares, mutual funds, property, etc. This is a primary reason to use ITR-2.
• Income from Other Sources, including:
  • Interest income (from savings accounts, fixed deposits, etc.)
  • Dividend income
  • Winnings from lottery, horse races, gambling, etc.
  • Family pension.
• Agricultural income exceeding Rs. 5,000.
• Foreign income or foreign assets. This includes holding foreign shares, immovable property abroad, or foreign bank accounts.
• Being a Director in a company.
• Holding unlisted equity shares.
• Total taxable income exceeding Rs. 50 lakh (even if income sources are otherwise simple, like only salary and interest).
• Having the income of another person (like a spouse or minor child) to be clubbed with their income, if that clubbed income falls into any of the above categories.
• Resident But Not Ordinarily Resident (RNOR) or Non-Resident (NRI) residential status.

In essence, if you are an individual or HUF with a more complex income profile than what ITR-1 allows, but you don’t earn any income from a business or profession, ITR-2 is likely the correct form for you.

Who cannot file ITR-2:

• Individuals or HUFs having income from “Profits and Gains of Business or Profession.” For them, ITR-3 or ITR-4 might be applicable.
• Companies and trusts.

How to submit ITR2 online ? 

Submitting ITR-2 online is done through the e-filing portal of the Income Tax Department, India. There are generally two modes for online submission: Online Mode (directly on the portal) and Offline Utility Mode (using a downloaded software).

Here’s a general step-by-step guide for both methods:

Pre-rerequisites for Online ITR-2 Submission : 

Before you begin, ensure you have the following ready:

• PAN (Permanent Account Number) and Aadhaar Card (linked is recommended, else PAN might be inoperative).
• Registered user ID and password on the e-Filing portal.
• Pre-validated bank account for refund, if applicable.
• Valid mobile number linked with Aadhaar/e-Filing portal/bank for e-Verification.
• All relevant financial documents for the Financial Year (FY 2024-25 for Assessment Year AY 2025-26). These include:
  • Form 16 (from employer, if salaried).
  • Form 26AS (for TDS/TCS details).
  • Annual Information Statement (AIS) and Taxpayer Information Summary (TIS) (highly recommended to cross-verify).
  • Bank statements/passbooks (for interest income from savings, FDs, etc.).
  • Capital Gains statements (from broker, mutual fund houses for sale of shares, mutual funds, property, Virtual Digital Assets).
  • Home Loan Interest Certificate (if applicable).
  • Details of other income sources (dividends, lottery winnings, etc.).
  • Investment proofs for deductions under Chapter VI-A (e.g., 80C, 80D, 80G).
  • Foreign income/asset details (if applicable).
  • Property details (for house property income).

Method 1: Using the Offline Utility 

This method involves downloading a software utility to fill your ITR details offline and then uploading the generated file to the e-filing portal.

1. Download the Offline Utility:
   • Go to the official Income Tax e-filing portal (incometax.gov.in).
   • Navigate to the “Downloads” section.
   • Select “ITR Utilities” for the relevant Assessment Year (e.g., AY 2025-26) and download the ITR-2 Excel utility (or Java utility, if available).
   • Extract the contents of the downloaded ZIP file.
2. Open the Utility and Import Pre-fill Data:
   • Open the downloaded Excel utility.
   • Locate the “Download Pre-fill Data” option within the utility.
   • Enter your PAN and the Assessment Year.
   • Log in using your e-filing portal credentials when prompted within the utility. This will fetch pre-filled data like personal information, salary details, TDS, etc., from the Income Tax Department’s records.
3. Fill in All Schedules:
   • Carefully review the pre-filled data and make any necessary corrections.
   • Systematically fill in all applicable schedules based on your income sources, deductions, and assets.
     • Part A General: Verify personal details, residential status, etc.
     • Schedule S: Salary/Pension income details.
     • Schedule HP: Income from House Property (for more than one property).
     • Schedule CG: Capital Gains (from shares, mutual funds, property, VDA, etc.). Pay attention to the new sections for gains before/after July 23, 2024.
     • Schedule OS: Income from Other Sources (interest, dividends, lottery, etc.).
     • Schedule CYLA, BFLA, CFL: For current year losses, brought forward losses, and losses to be carried forward.
     • Schedule VIA: Deductions under Chapter VI-A (80C, 80D, 80G, etc.).
     • Schedule FSI, TR, FA: For foreign income, tax relief, and foreign assets (if applicable).
     • Schedule AL: Assets and Liabilities (mandatory if total income exceeds ₹1 crore for AY 2025-26).
     • Review other schedules as applicable to your income profile.
4. Validate the Data:
   • The utility usually has a “Validate” button on each sheet and a final “Validate” or “Calculate Tax” button. Click this to ensure all mandatory fields are filled correctly and there are no calculation errors. The utility will highlight errors if any.
5. Calculate Tax and Generate XML:
   • After successful validation, click on “Calculate Tax” or “Generate XML” (the exact button name may vary slightly). This will compute your tax liability.
   • If there’s a tax payable, make the payment through the e-pay tax service on the Income Tax portal (or pay later, though “Pay Now” is recommended).
   • Once calculated, generate the XML file. Save this file to your computer.
6. Upload the XML File to the e-Filing Portal:
   • Log in to the e-Filing portal (incometax.gov.in) using your User ID (PAN) and password.
   • On your Dashboard, go to e-File > Income Tax Returns > File Income Tax Return.
   • Select the Assessment Year (AY 2025-26).
   • Select Filing Mode as “Offline”.
   • Choose ITR Form as “ITR-2”.
   • Upload the XML file you generated from the offline utility.
7. E-Verify Your Return:
   • After successful upload, you’ll be prompted to e-Verify your return. This is a crucial step; without verification, your ITR is considered not filed.
   • Common e-Verification methods include:
     • Aadhaar OTP: An OTP is sent to your mobile number registered with Aadhaar.
     • Net Banking: Verify through your bank’s net banking portal.
     • Bank ATM: Generate EVC (Electronic Verification Code) through specific bank ATMs.
     • Demat Account: Generate EVC through your Demat account.
     • Sending ITR-V (Acknowledgement Form) by Post: If online verification isn’t possible, you can print, sign, and send the ITR-V form to CPC, Bengaluru, within 30 days of filing. However, e-verification is faster and highly recommended.
   • Important Note: The date of e-verification or submission of ITR-V determines the date of furnishing the return if done after 30 days of uploading. To avoid late filing consequences, verify within 30 days.

Step-by-Step Method 2 :

Process of   Online ITR-2 Submission for AY 2025-26

This guide assumes you have all your necessary documents ready, including Form 16, Form 26AS, Annual Information Statement (AIS), Taxpayer Information Summary (TIS), and details of all income sources and deductions.

1. Log in to the e-Filing Portal:
   • Go to the official Income Tax e-filing portal: incometax.gov.in.
   • Click on “Login” and enter your User ID (PAN) and password.
   • If your PAN is not linked with Aadhaar, you may see a pop-up. It’s advisable to link them, but you can continue filing if not.
2. Navigate to File Income Tax Return:
   • On your Dashboard, go to e-File > Income Tax Returns > File Income Tax Return.
3. Select Assessment Year and Mode:
   • Select Assessment Year: “2025-26”.
   • Select Online as the Mode of Filing.
   • Click “Continue”.
4. Select Your Status and ITR Form:
   • Select your Status as “Individual” (or HUF, as applicable for ITR-2).
   • The system may help you determine the correct ITR. If you’re sure, select “I know which ITR Form I need to file”.
   • From the dropdown, select “ITR-2”.
   • Click “Proceed with ITR”.
5. Choose Reason for Filing:
   • Select the applicable reason for filing your ITR (e.g., “Taxable income is more than the basic exemption limit” or “Having foreign assets/income”).
   • Click “Continue”.
6. Review Pre-filled Data and Fill Schedules:
   • The portal will display various sections of ITR-2. Much of your data will be pre-filled from sources like Form 16, Form 26AS, AIS, and TIS.
   • Carefully review and verify all pre-filled information in:
     1. Personal Information: Verify name, PAN, Aadhaar, contact details, bank accounts (ensure pre-validation for refund). You can update contact details directly in the form or through your profile.
     2. Filing Status: Confirm or select your residential status (Resident, RNOR, NRI). Also, declare if you are opting for the new tax regime under Section 115BAC.
   • Proceed to fill/verify details in the relevant schedules based on your income and deductions:
     1. Schedule S (Salary): Review pre-filled salary details, exempt allowances, and deductions under Section 16.
     2. Schedule HP (House Property): Enter details for more than one house property, including rental income or interest on housing loan.
     3. Schedule CG (Capital Gains): This is a key section for ITR-2. Enter details of all short-term and long-term capital gains/losses from shares, mutual funds, property, Virtual Digital Assets (cryptocurrencies), etc.
     4. Schedule OS (Other Sources): Report income from interest (savings, FDs), dividends, lottery winnings, family pension, etc.
     5. Schedule CYLA, BFLA, CFL: For current year loss adjustments, brought forward losses, and losses to be carried forward.
     6. Schedule VIA (Deductions): Enter details for deductions under Chapter VI-A (e.g., 80C, 80D, 80G, 80CCD(2)). Remember, most deductions are not available if you opt for the new tax regime.
     7. Schedule FSI, TR, FA: For foreign income, tax relief under DTAA, and foreign assets, if applicable.
     8. Schedule AL (Assets and Liabilities): Mandatory if your total income exceeds ₹1 Crore for AY 2025-26.
     9. Review any other schedules pertinent to your specific financial situation.
7. Calculate Tax and Pay (if applicable):
   • As you fill the form, the tax liability will be calculated.
   • If there’s a tax payable, you’ll be given options to “Pay Now” or “Pay Later”. It’s highly recommended to pay the tax dues immediately before final submission. You can generate a challan (ITNS 280) and pay online through net banking or debit card.
8. Preview and Confirm Your Return:
   • After filling all sections, click “Preview Return”.
   • Thoroughly review the entire return for accuracy. Ensure no information is missing or incorrect. This is your last chance to make changes.
9. Submit Your Return:
   • Once satisfied with the preview, click “Proceed to Validation” or “Submit”. The system will perform final validation checks and highlight any errors or omissions. Correct them as prompted.
10. E-Verify Your Return:
    • This is the final and most critical step. Your ITR is considered not filed until it’s verified.
    • You’ll be prompted to e-Verify. Choose your preferred method:
      1. Aadhaar OTP: An OTP will be sent to your mobile number registered with Aadhaar.
      2. Net Banking: Verify by logging into your bank’s net banking portal.
      3. Bank ATM: Generate an EVC (Electronic Verification Code) through specific bank ATMs.
      4. Demat Account: Generate an EVC through your Demat account.
      5. Digital Signature Certificate (DSC): If you have one.
      6. Send ITR-V by Post: As a last resort, if online verification isn’t possible, print the ITR-V (acknowledgement form), sign it in blue ink, and send it to the CPC, Bengaluru, by ordinary post within 30 days of filing. E-verification is faster and recommended.
    • Upon successful e-verification, you will receive a confirmation message and an acknowledgement (ITR-V) to your registered email ID.

Changes Compared to Previous Year (AY 2024-25) for ITR-2 submission in AY 2025-26 : 

The Income Tax Department has introduced several key changes in the ITR-2 form for AY 2025-26 (FY 2024-25) to align with recent amendments in tax laws. These changes impact reporting requirements:

1. Capital Gains Bifurcation (Before/After July 23, 2024):
   • Significant Change: New distinct sections have been introduced in Schedule CG to differentiate capital gains/losses arising from asset transfers before and on or after July 23, 2024.
   • Reason: The Finance Act, 2024, brought changes to capital gains tax rates, particularly affecting indexation benefits. This bifurcation ensures accurate application of the correct tax rates. For land/building transfers, separate details for cost of acquisition and improvement before and after this date are also required.
2. Asset and Liability (AL) Disclosure Threshold Increased:
   • The requirement to disclose assets and liabilities in Schedule AL now applies only if your total income exceeds ₹1 Crore (previously ₹50 lakh). This simplifies filing for a larger segment of taxpayers.
3. Detailed Deduction Disclosures:
   • For several deductions under Chapter VI-A (e.g., Section 80C, 80D), and exemptions like Section 10(13A) (HRA), taxpayers are now required to provide more specific details. For instance, for HRA, landlord’s PAN/Aadhaar may be needed, and for 80C, specific policy/certificate numbers.
   • For home loan interest deduction under Section 24(b), detailed information like lender’s name, loan sanction date, loan account number, original loan amount, and closing balance might be required.
4. TDS Section Code Requirement:
   • In Schedule TDS, taxpayers are now mandated to mention the specific section code under which TDS was deducted. This enhances transparency and tracking.
5. Capital Loss on Share Buybacks:
   • For share buybacks occurring on or after October 1, 2024, capital losses can now be claimed only if the corresponding dividend income is declared under “Income from Other Sources”. The sale consideration in the capital gains schedule should be ‘Nil’ in such cases.
6. Virtual Digital Assets (VDA) Reporting:
   • Continued focus on VDA taxation, with specific fields and schedules (like Schedule VDA) to report income from cryptocurrencies and other VDAs.
7. New Tax Regime as Default:
   • While not a direct change in ITR-2 online submission process itself, remember that the new tax regime (Section 115BAC) is the default regime from AY 2024-25 onwards. If you wish to opt for the old tax regime to claim various deductions, you must explicitly select this option within the ITR form.

These changes primarily aim to enhance the granularity of reporting, ensure correct tax computation based on recent law amendments, and streamline compliance. Taxpayers should pay close attention to these new fields while filling their ITR-2 for AY 2025-26.

Note : The information in the  article is based  on  answers we got   from  a Reputed AI app and has been edited by us .     Anym correction / update from our readers are welcome

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