Budget 2021 update :It has been proposed to exempt the senior citizens from filing income tax returns if pension income and interest income are their only annual income source. Section 194P has been newly inserted to enforce the banks to deduct tax on senior citizens more than 75 years of age who have a pension and interest income from the bank.
Income tax Department has categorized taxpayers on the basis of income, source of income and many other factors to ensure easy compliance. Taxpayers having incomes from different categories, thus, have to download and fill different Income Tax Return forms. For instance, the ITR-2 Form is for individuals and HUFs not carrying any profession or business.
In this article, we cover the following.
ITR Form 2 is for Individuals and HUF receiving income other than income from “Profits and Gains from Business or Profession”. Thus persons having income from following sources are eligible to file Form ITR 2:
Income from Salary/Pension
Income from House Property(Income Can be from more than one house property)
Income from Capital Gains/loss on sale of investments/property (Both Short Term and Long Term)
Income from Other Sources (including winning from Lottery, bets on Race Horses and other legal means of gambling)
Foreign Assets/Foreign Income
Agricultural Income more than Rs 5000
Resident not ordinarily resident and a Non-resident
A Director of any company and an individual who is invested in unlisted equity shares of a company will be required to file their returns in ITR-2.
2. Who cannot file ITR 2 for AY 2020-21?
Any individual or HUF having income from Business or Profession
Individuals who are eligible to fill out the ITR-1 Form
Schedule HP: Details of income from House Property
Schedule CG: Computation of income under Capital gains
Schedule OS: Computation of income under Income from other sources
Schedule CYLA: Statement of income after set off of current year’s losses
Schedule BFLA: Statement of income after set off of unabsorbed loss brought forward from earlier years
Schedule CFL: Statement of losses to be carried forward to future years
Schedule VIA: Statement of deductions (from total income) under Chapter VIA
Schedule 80G: Statement of donations entitled for deduction under section 80G
Schedule 80GGA: Statement of donations for scientific research or rural development
Schedule AMT: Computation of Alternate Minimum Tax payable under section 115JC
Schedule AMTC: Computation of tax credit under section 115JD
Schedule SPI: Statement of income arising to spouse/ minor child/ son’s wife or any other person or association of persons to be included in the income of the assessee in Schedules-HP, CG and OS
Schedule SI: Statement of income which is chargeable to tax at special rates
Schedule EI: Details of Exempt Income
Schedule PTI: Pass through income details from business trust or investment fund as per Section 115UA, 115UB
Schedule FSI: Statement of income accruing or arising outside India.
Schedule TR: Details of taxes paid outside India
Schedule FA: Details of Foreign Assets and income from any source outside India
Schedule 5A: Statement of apportionment of income between spouses governed by Portuguese Civil Code
Schedule AL: Asset and liability at the year-end (applicable in case the total income exceeds Rs 50 lakhs)
Schedule DI: Schedule of tax-saving investments or deposits or payments to claim deduction or exemption in the extended period from 1 April 2020 until 30 June 2020
Part B-TI: Computation of Total Income
Part B-TTI: Computation of tax liability on total income
Details to be filled if the return has been prepared by a Tax Return Preparer
4. How to file ITR 2?
You can submit your ITR-2 Form either online or offline.
Only following persons can file their ITR offline:
Individuals who are of the age of 80 years or more.
Return can be filed offline by:
By furnishing a return in a physical paper form
By furnishing a bar-coded return
The Income Tax Department will issue you an acknowledgement at the time of submission of your physical paper return.
By furnishing the return electronically under digital signature
By transmitting the data electronically and then submitting the verification of the return in Return Form ITR-V
If you submit your ITR-2 Form electronically under digital signature, the acknowledgement will be sent to your registered email id. You can also choose to download it manually from the income tax website. You are then required to sign it and send it to the Income Tax Department’s CPC office in Bangalore within 120 days of e-filing.Remember that ITR-2 is an annexure-less form i.e. you do not have to attach any documents when you send it.
How do you send your ITR-V to the CPC Office?
We have a guide to help you print and send your ITR-V to the CPC office.Read our Guide →
5. Major changes introduced in ITR 2 for AY 2020-21
RNORs and non-resident individuals have to file their income tax return in ITR-2 even in case of total income below Rs 50 lakh.
The taxpayer should disclose (a) the amount of cash deposits above Rs 1 crore in the current accounts with a bank, (b) expenditure incurred above Rs 2 lakh on foreign travel (c) expenditure incurred above Rs 1 lakh on electricity.
Resident individuals who own more than one house property should also file their income tax return in ITR-2.
ITR-2 continues to apply to resident individuals who have total income exceeding Rs 50 lakh.
Any individual taxpayer having income from business or profession cannot use ITR-2.
In case an individual is a director in a company or holds unlisted equity investments, the ‘type of company’ should also be disclosed
In case of short-term or long term capital gains from sale of land or building or both, the details of the buyer(s) i.e. name, PAN or Aadhaar, percentage share of ownership and address have to be given.
A separate schedule 112A for the calculation of the long-term capital gains on the sale of equity shares or units of a business trust which are liable to STT.
Under ‘income from other sources’, a taxpayer should provide the details of ‘any other income’.
The details of the deductions against ‘income from other sources’ should be provided.
The ‘Schedule VI-A’ for tax deductions is amended to include deduction under section 80EEA and section 80EEB.
In the case of a business trust or investment fund, the details of ‘capital gains’ income and ‘dividend’ income should be provided.
The details of tax deduction claims for investments or payments or expenditure made between 1 April 2020 until 30 June 2020.
While providing the details of bank accounts, if a taxpayer selects multiple bank accounts for credit of refund, the income tax department may choose any account for processing the refund.
6. Major changes introduced in ITR 2 for AY 2019-20
Given that ITR-1 is not applicable for the RNORs and the non-residents, they have to necessarily go with ITR-2 for filing their return of income
The applicability of ITR-2 has been made more clear in as much as now it is applicable for individuals and HUF having income other than income under the head “Profits and Gains from Business or Profession”
The field for residential status has been categorised into “Residential status in India (for Individuals)” and “Residential status in India (for HUF)”.In case of “Residential status in India (for Individuals)”, the 3 sub-categories – “Resident”, “Resident but not Ordinarily Resident’ and “Non-resident”, have been mentioned requiring the individual to tick the specific category to which they belong. Taxpayers have to mention the number of days of residency in India.Further, in the case of non-resident, an individual is also required to specify the jurisdiction(s) of residence during the previous year providing the Taxpayer Identification Number(s) of the relevant jurisdictions. Also, in case the individual is a Citizen of India or a Person of Indian Origin (PIO), the duration of stay in India during the previous year (in days) and the duration of stay in India during the 4 preceding years (in days).
In a case where the ITR is filed by a representative assessee, additional information about the capacity of the representative assessee (by way of choice in a drop down provided) has to be given.
An individual taxpayer has to give information about the Directorship held in any company during the previous year, also mentioning whether the shares are listed or unlisted.
An individual taxpayer has to give information about the investment in unlisted equity shares and the movement in such investment throughout the year.
Under income from salaries, the following details have to be provided:1. Salary as per section 17(1)2. Value of perquisites as per section 17(2)3. Profit in lieu of salary as per section 17(3)In case of salary received from more than one employer, the gross salary with the above break-up has to be provided for each such employment. From the total gross salary, the following have to be deducted:1. Allowances exempt under section 10 – details have to be specified2. Deductions under section 16
Under income from house property, furnishing of PAN of tenant is mandatory, if tax is deducted under section 194-IB. Furnishing of TAN of tenant is mandatory if tax is deducted under section 194-I.
In case of short-term or long term capital gains from sale of land or building or both, the details of the buyer(s) i.e. name, PAN, percentage share of ownership and address have to be given. PAN has to be mandatorily given in case of TDS under section 194-IA or when PAN is quoted by buyer in the documents.
Interest income in the nature of pass through income has to be disclosed under “Income from other sources”.
Information about accrual/ receipt of income from other sources on a quarterly basis regarding dividend income and income by way of lotteries, crossword puzzles, races, games etc. for the purpose of calculation of interest under section 234C.
Under the carried forward and set off of loss: Categorization of income short term and long term capital gains taxed at special rates in India as per DTAA and net income from other sources chargeable at applicable rates.
Introduction of section 80TTB deduction for senior citizen.
Bifurcation of donation qualifying for deduction under section 80G into cash and other mode.
Details of donations for scientific research and development under section 80GGA with details of name, address, PAN, cash and other mode of donation and eligible amount.
Schedule AMT – computation of Alternate minimum tax payable under section 115JC and Schedule AMTC – computation of tax credit under section 115JD is introduced.
While disclosing income of specified persons under schedule SPI, the “Nature of income” is replaced with “Head of income”.
Under Schedule SI, the following incomes charged at special rates are added:1. Short term and long term capital gains2. Any other income chargeable at special rates3. Other sources of income chargeable at special rates4. Other sources of income chargeable at special rates in India as per DTAA5. Pass through income in the nature of long term and short term capital gains6. through income in the nature of income from other sources
Under Schedule EI, following disclosures are required in case of agricultural income exceeds Rs. 5 Lakhs:1. Name of district along with pin code in which agricultural land is located2. Measurement of agricultural land in Acre3. Whether the agricultural land is owned or held on lease (drop down to be provided)4. Whether the agricultural land is irrigated or rain-fed (drop down to be provided)5. Above disclosure to be provided separately for each agricultural land
Under Schedule EI, information about income not chargeable to tax as per DTAA giving details such as amount and nature of income, country name and code, Article of DTAA, Head of income and whether TRC obtained.
Details of pass-through income not chargeable to tax.
Under schedule FA, under the details of foreign assets and income from any source outside India below details are required:1. Details of Foreign Depository Accounts held (including any beneficial interest) at any time during the relevant accounting period2. Details of Foreign Custodial Accounts held (including any beneficial interest) at any time during the relevant accounting period3. Details of Foreign Equity and Debt Interest held (including any beneficial interest) in any entity at any time during the relevant accounting period4. Details of Foreign Cash Value Insurance Contract or Annuity Contract held (including any beneficial interest) at any time during the relevant accounting period
In Schedule (Part B-TTI), Introduction of computation of tax payable under section 115JC for comparison purposes.
Additional information in Schedule TDS giving details about the head of income and Gross income, in the case of income for which TDS credit is claimed.
7. Major changes introduced in ITR 2 for AY 2018-19
The applicability of ITR-2 has been made more clear in as much as now it is applicable for individuals and HUF having income other than income under the head “Profits and Gains from Business or Profession”.
The field of “Profits and Gains from Business or Profession” which was earlier featuring under Part B – TI has now been removed.
Following this, Schedule-IF (Income from Firm) and Schedule-BP have also been removed. This now means, anyone earning income from a partnership firm, now has to file ITR-3 and not ITR-2.
Additionally, under Schedule AL, the field pertaining to “Interest held in the assets of a firm or association of persons (AOP) as a partner or member thereof” has been done away with.
This means, a partner in a firm who could file his return in ITR 2 until AY 2017-18 (specifically made available in ITR -2 for AY 2017-18) has to now file his return in ITR 3 form AY 2018-19 onwards.
Similar to ITR-1, even in ITR-2, under the Schedule on TDS, there is an additional field for furnishing details of TDS as per Form 26QC for TDS made on rent. Also, provision for quoting of PAN of Tenant for such rent cases has also been made.
Here are a few general guidelines to keep in mind while filling your ITR-2 form:
If any schedule is not applicable to you, strike it out and write —NA— across it
If any item is not applicable to you, write NA against it
Indicate nil figures by “Nil”
Put a “-” sign before negative figures
All figures are to be rounded off to the nearest one rupee except figures for total income/loss and tax payable. Those are to be rounded off to the nearest multiple of ten.
If you are an individual, under the Employer Category you should tick Government if you are a Central/State Government employee. You should tick PSU if you work in a public sector company of the Central/State Government.
The ITR-2 Form can also not be used if you are claiming double taxation relief under Section 90/90A/91.
Best sequence to fill it out?
The easiest way to fill out your ITR-2 Form is to follow this sequence:
All the schedules
Part B-TI and Part B-TTI
ClearTax automatically selects your ITR form. Upload your Form 16 and get started.
I am supposed to file ITR-2 and not ITR-1 if my maximum exempted income exceeds Rs. 5000. I am confused – what qualifies as exempt income?
Certain income is exempt under section 10 of the Income Tax Act. Exempt income includes – Allowances which may be exempt to a certain extent, for example, HRA, LTA, transport allowance etc. Gratuity, leave encashment, pension may be exempt under section 10 of the Act.
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