While the income tax return filing season for Assessment Year 2025-26 arrives, taxpayers need to choose the right Income Tax Return (ITR) form depending on their income and financial status. For taxpayers who are individuals and Hindu Undivided Families (HUFs) earning no income from profession or business, ITR-2 could be the form to file. Yet, not all can avail themselves of ITR-2. Here’s the easy-to-understand division of who can use it and who cannot, and what documents are required.
What Is ITR-2 and What’s New This Year?
Individuals and HUFs who do not receive income from business or profession make use of ITR-2. Fresh updates for this year include:
Individuals can now report capital gains arising from transactions entered into prior to or on or after July 23, 2024, by virtue of amended rules.
Capital loss on share buybacks executed on or after October 1, 2024, can also be reported under this form.
Who is eligible to file ITR-2?
You may file ITR-2 if you fulfill any of the following conditions:
- You are a person or a member of a Hindu Undivided Family (HUF).
- Your income exceeds Rs 50 lakh in FY 2024-25.
- You belong to one of the following residential statuses: Resident but Ordinarily Resident (ROR), Resident but Not Ordinarily Resident (RNOR), or Non-Resident.
You receive income from:
- Salaries
- More than one house property
- Other sources such as interest and dividend income
- Capital gains on sale of listed/unlisted shares, mutual fund, property, or digital assets
- Foreign sources such as rent, capital gains, or interest from abroad
- You are a director of a company
- You hold unlisted equity shares
- You received income from transfer or sale of Virtual Digital Assets (VDAs) such as cryptocurrency or NFTs
Who Cannot File ITR-2?
You must not file ITR-2 if:
- You receive income from business or profession profit or gains
- You get interest, salary, bonus, or commission from a firm in partnership
- If your income is clubbed with someone else’s income such as a minor child or spouse, and that income is from the business side
New Limit for Filing Assets and Liabilities
Taxpayers this year have to file assets and liabilities only if their income is above Rs 1 crore. Previously, it was Rs 50 lakh. This reduction gives some relief to those whose income range is between Rs 50 lakh and Rs 1 crore.
Documents Required While Filing ITR-2
Ensure you keep these documents in hand while filing ITR-2:
- Form 16: In case you are a salaried individual, the employer issues this.
- Form 16A: In case you have received interest through savings accounts or fixed deposits and TDS has been deducted.
- Form 26AS: Reflects all details of TDS and can be downloaded from the income tax website.
- Rent Receipts: Required if you reside in a rented accommodation and haven’t handed over the same to your employer.
- Capital Gains Summary: In case of any sale of securities or shares.
- Bank Passbook and Fixed Deposit Receipts: To exhibit interest income.
- Rental Income Documents: Tenant details, local tax receipts, and interest on loan (if any).
- Loss-Related Papers: In case you’re reporting any losses incurred by you in the current year.
- Previous ITR-V: If you have a carry forward loss from the previous year.
- Tax Saving Receipts: To claim deductions under sections such as 80C (tuition, insurance), 80D (health insurance), 80G (donations), and 80GG (rent), particularly if these have not been covered in your Form 16.
