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Before you start to file an income tax return, you must determine the relevant ITR form. However, decoding the details of these forms can be taxing and time-taking. So, today we will offer a comprehensive overview of ITR-2 by way of this article.
Without much ado, let’s get started!
ITR-2 is an income tax return form that is applicable for individual taxpayers as well as Hindu Undivided Family (HUF) who are not engaged in any profession or business. Its applicability depends upon the category of the taxpayer and his/her source of income. Now that you know what ITR-2 is in income tax, here is its structure.
After assessing ITR-2 meaning, one must understand that the form consists of several components, namely the following:
Furthermore, this form comprises a number of schedules, which are described below:
Now that you are familiar with the nitty-gritty of ITR-2, let’s find out if it is applicable for you.
As aforementioned, resident individuals and Hindu Undivided Families (HUFs) who receive income from sources under the heading ‘Profits and Gains from Business or Profession’ can file ITR-2. Therefore, you are eligible to file income tax returns with an ITR-2 form if you earn income from the following sources:
Additionally, a taxpayer who is a director of any company or has invested in unlisted equity shares of a company is required to file returns with ITR-2.
So, who does not come under this ITR-2 eligibility? The following category of taxpayers cannot file ITR-2:
You can file an income tax return offline or take the online route. However, only those taxpayers who are of 80 years of age or above can opt for an offline filing of ITR-2.
These individuals can, therefore, easily furnish returns by way of a physical ITR-2 form and a bar-coded return of details on income earned. Moreover, when an assessee submits this paper form, he/she receives an acknowledgement from the Income Tax Department.
One can choose to file ITR-2 online by following these steps:
Step 7: Once the excel file opens, you must remember the following points:
Listed below are the major changes in ITR-2 with respect to AY 22-23:
The taxpayer needs to provide additional disclosures under the Capital Gains Schedule. These disclosures pertain to the following:
• Acquisition and transfer dates of building/land
• Details of cost of improvement, year of improvement and indexed cost of improvement
• Separate disclosures pertaining to cost and indexed cost of acquisition
• If the property is located in a foreign country, then the country code and zip code
Taxpayers need to provide reports of interest accrued on Provident Fund upon which he would not be able to avail exemptions.
There is a provision of new schedule for reporting of deferred tax on ESOP. One has to disclose the following details:
• Tax deferred in the ITR filed
• Date of sale of the particular securities and the amount of payable tax on such sales
• The amount of tax payable in the current assessment year
• The date from which the assesse was no longer a part of the organization
• The balance of the tax amount that would be carried over to the next assessment year
As per Section 89A, the assesee will receive relief from taxation of income from retirement benefits account that he has in a notified country. In the new ITR form, details of income from salary or Schedule S needs the following disclosures:
• Income from the account of retirement benefits that is maintained in a notified country mentioned under Section 89A
• Income from retirement benefits account that exists in any other country other than the ones notified u/s 89A
Pensioners need to provide further classification of their nature of employment. The following options have been incorporated for pensioners:
• Pensioners – CG
• Pensioners – PSU
• Pensioners – SC
• Pensioners – Others
Schedule FA needs disclosure of foreign assets that one holds during a calendar year:
• A resident taxpayer needs to disclose his foreign assets and all foreign income earned under Schedule FA in the new ITR forms.
• Even if the taxpayer is the beneficial owner of a foreign asset or has any financial interest in a foreign entity, he needs to provide an adequate report in the ITR form.
• Furthermore, the assessee needs to disclose the information if he holds foreign assets like foreign equity and debt interest in trusts that were created outside India. Additionally, information about Foreign Deposit Account, if applicable is required.
ITR-2 underwent a number of significant changes for AY 2020-21, the most notable of which are highlighted below:
That concludes our guide on ITR-2. You can now use this information to simplify the process of filing your income tax returns.
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Disclaimer: This information is added only for informative purposes and collected from different sources across the Internet. Digit Insurance is not promoting or recommending anything here. Please verify the information before making any decisions.
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