The income tax department has categorised taxpayers based on income, source of income and many other factors to ensure easy compliance. Taxpayers with incomes from different categories, thus, have to download and fill out 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.
Who is eligible to file ITR-2 for AY 2022-23?
ITR-2 form is for individuals and HUF receiving income other than income from ‘Profits and Gains from Business or Profession’. Thus, individuals with income from the 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)
Agricultural income of more than Rs 5,000
Resident not ordinarily resident and a non-resident
The total income from the above sources may exceed Rs 50 lakh.
Further, if you are a Director of any company and an individual invested in unlisted equity shares of a company, you must file returns in ITR-2.
Who cannot file ITR-2 for AY 2022-23?
Any individual or HUF having income from business or profession
Individuals who are eligible to fill out the ITR-1 form (Sahaj)
Major changes introduced in ITR-2 for AY 2022-23
Foreign assets schedule (Schedule FA): The term’ accounting period’ is replaced with ‘calendar year ending as on 31st December 2021’. It means the taxpayer shall furnish the details of all foreign assets held between 01.01.2021 and 31.12.2021. This change will clarify the taxpayers for the reporting period of the foreign assets.
Capital gains schedule (Schedule CG):
Disclosure of Fair Market Value (FMV) of capital assets and consideration received in a slump sale transaction
Year-wise details of the improvement cost of land/building
Acquisition cost and indexed cost of acquisition to be disclosed separately
Other sources schedule (Schedule OS):
Reporting of interest accrued on the provident fund, which is taxable
Separate disclosure of deemed dividend income (Section 2(22)(e))
The taxpayer has to choose from descriptions related to different clauses of the Income Tax Act to determine residential status.
New ‘Schedule Tax Deferred on ESOP’ is inserted: Details related to ESOPs of employees received from eligible start-ups are required to keep track of the amount of tax deferred and the year it should be taxed.
What is the structure of ITR-2?
ITR-2 is divided into:
Part A: General information
Schedule S: Details of income from salaries
Schedule HP: Details of income from house property
Schedule CG: Computation of income under capital gains
Schedule 112A- From the sale of equity share of a company or a unit of equity oriented fund /business trust on which STT is paid
Schedule 115AD (I)b(b) (iii) proviso- For non-residents -From the sale of equity share of a company or a unit of equity oriented fund/business trust on which STT is paid
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 lakh)
Schedule tax deferred on ESOP: Information of tax-deferred on ESOPS received from eligible start-ups referred to in Section 80-IAC
Part B-TI: Computation of total income
Part B-TTI: Computation of tax liability on total income
Tax payments- Details of payment of advance tax and self-assessment tax
Declaration by the taxpayer
Details to be filled if a tax return preparer has prepared the return
How to file ITR-2 on ClearTax?
You can file your income tax return (ITR) on the ClearTax platform. Here is a guide on filing ITR-2 if you have income from the sale of shares or redemption of mutual fund units.
Step1: Go to the ClearTax portal and click ‘Get Started’.
Step 2: Click on ‘Login’ to file ITR.
Step 3: After logging in, the first step is to link your PAN by entering your PAN and Date of Birth. Complete OTP verification using ‘IT Department registered mobile number’ or ‘Aadhaar registered mobile number’.
Step 4: Enter the OTP received on your mobile number.
Step 5: You can have all your personal and salary details pre-filled. Click on ‘Proceed’ and enter the OTP received.
Step 6: You will see a screen as shown below with all your personal details. Please review them to ensure they are correct.
Step 7: You can also verify the pre-filled information in the ‘Personal Information’ tab. You can modify any information if required.
Step 8: In the income sources tab, fill in all your income details. Your salary income section is also pre-filled by us. If you want to upload your Form -16, you can do the same by clicking on the button ‘Upload form 16’.
Step 9: To enter capital gains details, go to the ‘Capital Gain’ tab.
ClearTax has partnered with various brokerage firms to capture the capital gains transaction details in the schedule automatically.
We support importing capital gains data directly from platforms like 5paisa, Paytm Money and Groww. Click on their icons. For any other broker, click on the ‘Click here if you sold any assets’ tab.
Step 9(1): If you have an account with the platforms like 5paisa, Paytm Money and Groww. Click on their icons and you will be redirected to a new page where you can log in to your broker’s account, and after successful login, all your capital gains details will be fetched automatically.
Step 9(2): You will be redirected to a new tab where you can log in to your broker’s account, and after successful login, all your capital gains details will be fetched automatically.
Step 9(3): You can upload the capital gain statement for other platforms like ClearTax, CAMS, Groww, ICICI direct, Fintech, Zerodha, Kfintech, and Karvy. We will capture the details from the uploaded file. To start with, click on the upload file button, and you will be directed to upload your capital gains report.
Step 9(4): For platforms supported by ClearTax, we also provide guides on how to import capital gain statements or Profit & Loss statements from the broker’s platforms for easy download.
Step 9(5): Now, choose the report provider from the given dropdown and upload your capital gains report. If your capital gains statement is password-protected, you can enter the password in the given text box.
Once you proceed, we will bulk upload your transaction data and auto-calculate your capital gains tax.
Step 9(6): If your brokerage or fund houses are not supported, you can import data in bulk using ClearTax Excel Template.
I am supposed to file ITR-2 and not ITR-1 if my maximum exempted income exceeds Rs.5,000. I am confused – what qualifies as exempt income?
Incomes that are not taxable are specified under Section 10 of the Income Tax Act. Such incomes are excluded from the total income while calculating the taxes. The income can be partly or fully exempt depending on the guidelines or conditions prescribed in Section 10. Allowances that may be exempt to a certain extent include HRA, LTA, transport allowance, etc. Gratuity, leave encashment, and pension may be exempt under Section 10 of the Act.
Major changes introduced in ITR-2 for AY 2021-22
ITR forms have been updated to include a declaration of choosing between the old or new tax regime introduced by the Finance Act 2020 under section 115BAC. Form 10IE must be submitted to the ITR department before filing ITR if the assessee chooses to pay tax according to the new tax regime. ITR forms seek the acknowledgement number of Form 10IE in case the assessee is opting for the new tax regime.
Finance Act 2020 allowed to defer the payment or deduction of tax on ESOPs allotted by an eligible start-up covered under Section 80-IAC. If an employee receives ESOPs from an eligible start-up as mentioned under Section 80-IAC regarding which the tax has been deferred, the Part B of Schedule TTI (Computation of tax liability on total income) seeks the disclosure of this deferred tax.
Finance Act 2020 shifted the taxability of dividend income from the company’s hands to the investor’s hands. Sections 10(34), 10 (35), 115-O, 115-R, and 115BBDA have been amended. A new row has been added in Schedule OS to allow the deduction of expenses like interest from the dividend income. Also, a new row has been added under schedule OS to incorporate details of dividend income taxable in the hands of the unitholders of business trust.
All ITR forms prompt the return filers to provide a quarterly breakdown of the dividend income for interest calculation under section 234C.
The ITR forms have been updated to include the effect of marginal relief by showing ‘surcharge calculated ‘before marginal relief’ and ‘after marginal relief’. Previous to this, no separate effect was required to be shown in the ITR Forms.
Schedule DI inserted in the previous ITR forms for any investment made for the extended period allowed, i.e. 1st April 20 to 31st July 20, is now removed from all the ITR Forms.
Section 50C governs the determination of the value of the sale consideration in the case of land or building, or both. If the sale consideration is less than the stamp duty value, then the stamp duty value will be considered the full value of consideration except for 5%. Finance 2020 increased the tolerance limit from 5% to 10%, and the changes have been made in the ITR.
Separate disclosure of cash donation under schedule 80GGA and date is required in the ITR Form.
ITR form has been updated with a new column under schedule 112A and 115AD (1)(b)(iii) proviso to be able to provide the details of the nature of securities transferred. Also, both the schedules have been updated to give the ‘grandfathering clause’ effect by allowing to mention the details like Sale price, FMV and COA of the securities.
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 a total income exceeding Rs 50 lakh.
Any individual taxpayer having income from business or profession cannot use ITR-2.
If 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 the sale of land or building or both, the buyer’s details (s), i.e. name, PAN or Aadhaar, percentage share of ownership and address, have to be given.
A separate schedule 112A calculates long-term capital gains on the sale of equity shares or units of a business trust that are liable to STT.
Under ‘income from other sources’, a taxpayer should provide the details of ‘any other income’.
The deductions against ‘income from other sources’ should be provided.
The ‘Schedule VI-A’ for tax deductions is amended to include deductions 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, payments, or expenditures made between 1 April 2020 and 30 June 2020.
While providing bank account details, if a taxpayer selects multiple bank accounts for refund credit, the income tax department may choose an account to process the refund.
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 go with ITR-2 for filing their return of income necessarily.
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 residential status has been categorised into “Residential status in India (for Individuals)” and “Residential status in India (for HUF)”. In the case of “Residential status in India (for Individuals)”, the three 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 a 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 four preceding years (in days).
In a case where a representative assessee files the ITR, additional information about the capacity of the representative assessee (by way of choice in a dropdown 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 the 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 the case of TDS under section 194-IA or when the buyer in the documents quotes PAN.
Interest income like pass-through income must be disclosed under “Income from other sources”.
Information about accrual/receipt of income from other sources quarterly regarding dividend income and income by way of lotteries, crossword puzzles, races, games etc., for calculation of interest under section 234C.
Under the carried forward and set off of loss: Categorisation 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 citizens.
Bifurcation of donation qualifying for deduction under section 80G into cash and other modes.
Details of donations for scientific research and development under section 80GGA with details of name, address, PAN, cash and other modes of donation and eligible amount.
Schedule AMT – computation of Alternate minimum tax payable under section 115JC and Schedule AMTC – tax credit computation under section 115JD is introduced.
While disclosing the 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 gains. 2. Any other income is chargeable at special rates. 3. Other sources of income are chargeable at special rates. 4. Other sources of income are chargeable at special rates in India as per DTAA5. Pass-through income like long term and short term capital gains. 6. through income like income from other sources
Under Schedule EI, the following disclosures are required in case of agricultural income exceeds Rs. 5 lakh:
Name of the district along with pin code in which agricultural land is located
Measurement of agricultural land in Acre
Whether the agricultural land is owned or held on the lease (drop down to be provided)
Whether the agricultural land is irrigated or rain-fed (drop down to be provided)
The above disclosure is 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 are not chargeable to tax.
Under schedule FA, under the details of foreign assets and income from any source outside India below details are required:
Details of Foreign Depository Accounts held (including any beneficial interest) during the relevant accounting period.
Details of Foreign Custodial Accounts held (including any beneficial interest) during the relevant accounting period.
Details of Foreign Equity and Debt Interests held (including any beneficial interest) in any entity during the relevant accounting period.
Details of Foreign Cash Value Insurance Contract or Annuity Contract held (including any beneficial interest) 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 gives details about the head of income and Gross income in the case of income for which TDS credit is claimed.
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 featured under Part B – TI, has now been removed.
Following this, Schedule-IF (Income from Firm) and Schedule-BP have also been removed. This means that anyone earning income from a partnership firm must 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 been made.
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