By furnishing income tax returns, the taxpayer provides a statement of the income and expenses they incur in a financial year. The Income Tax department aims to make the process of furnishing returns as simplified as possible. As a result, there is a provision for 7 different income tax returns forms to be submitted. The applicability of these forms depend on the type of taxpayer and source of their income. Through this blog, we discuss what is ITR 2 form and its applicability and format. Read more to find out if ITR 2 form is applicable to you for your ITR filing needs!
What is ITR 2?
According to the income tax department, the ITR 2 form is for individuals and HUFs not having income from profit and gains of business or gains. So, at a glance, you can say that this form is applicable to those persons who are not eligible to file their income tax returns through ITR 1 Sahaj form. Based on this, it is quite evident that the ITR 2 form has a wide scope.
What is the eligibility criteria for ITR 2?
The following categories of individuals and Hindu Undivided Families can furnish their returns through ITR 2:
- Individuals not eligible to file ITR 1;
- When an individual earns income from salary/pension;
- One or more house property income;
- Income from short term or long term capital gains;
- Winnings from lottery or horse races etc;
- Income of the Director of a company;
- Individual who earns income from holding shares in an unlisted company; and
- Lastly, all these categories even if the income is more than INR 50 lakh in a financial year.
Who cannot file ITR 2?
By now it is pretty clear that ITR 1 filers are not eligible to file ITR 2. However, apart from them, the other entities and who cannot file ITR 2 are:
- Any individual or HUF who earns income through a business or profession;
- Individuals who are partners in a partnership firm;
- A company;
- A Limited Liability Partnership;
- Charitable trusts; and
- Religious Institutions; etc.
Also Read: What is ITR 1?
What is the format of ITR 3?
The ITR 2 form is divided into 3 components:
- Personal information; and
- Filing status.
- Firstly, Detail of Income from salary;
- Income from House Property;
- CG: Capital Gains;
- Sale of shares in a company;
- Sale of shares by non residents;
- Income from transfer of virtual digital assets;
- Income from other sources;
- Details of income after set off of current year losses;
- Income after set off of brought forward losses of earlier years;
- Deductions under section 80;
- Special rates of taxation;
- Exempt income;
- Pass through income details;
- Foreign income;
- Tax relief summary;
- Foreign Assets;
- Assets and liabilities; and
- Lastly, tax deferred on ESOP
- Computation of Total Income; and
- Computation of tax liability on total income.
You can furnish your annual returns in the ITR 2 online using the tax e-filing portal. There are 2 modes of calculating your tax liabilities:
- Furnishing details electronically; or
- Uploading offline JSON utility.
Apart from this, citizens above the age of 80 years are also permitted to furnish their ITR 2 using the bar coded paper format.
Documents required for ITR 2
While furnishing your returns through the ITR 2 it will be useful to have the below-mentioned documents in handy:
- Form 16 (for salaried income);
- Form 16A ie. TDS Certificate (if applicable);
- For verification of TDS in salary, Form 26AS;
- Rent Receipts to calculate HRA;
- A statement of capital gains;
- Loss related documents (if applicable); and
- Lastly, documents to prove valid deductions under section 80.
However, a fun fact is that you do not have to submit any of the documents along with your returns. These documents are for your reference, so you can file returns with accurate details.
What is the due date for filing ITR 2?
31st July of each year is the deadline for filing ITR 2. However, in case you miss filing the returns on time, or even if you fail to provide accurate information in your returns, you can file ITR U , i.e., updated tax returns to rectify the errors.
ITR 2 is the form applicable to individuals and HUFs that earn income mostly from other sources and capital gains. Further, it is even applicable to salaried employees if their annual income is more than 50 lakhs, or for individuals having income from more than one house property. So, it is a very important form that the eligible taxpayers need to furnish before the income tax department. So, you can easily furnish your returns from the comfort of your home by connecting with LegalWiz.in experts.