Changes in the ITR-2 Form for the Current Assessment Year

Changes in the ITR-2 Form

On February 10, 2023, Notification No. 04/2023 was issued by the Central Board of Direct Taxes (CBDT), unveiling revised versions of the Income Tax Return (ITR) forms and the ITR Acknowledgement for the Assessment Year 2023-24. These updated forms, including ITR-1 SAHAJ, ITR-2, ITR-3, ITR-4 SUGAM, ITR-5, ITR-6, ITR-V, and ITR Acknowledgement, became accessible starting April 01, 2023. Let’s delve into the key modifications introduced in the new ITR forms for AY 2023-24.

The ITR-2 form is one of the income tax return forms that can be used by individuals and Hindu Undivided Families (HUFs) who do not have income from profits and gains of business or profession. The ITR-2 form covers income from salary, house property, capital gains, other sources, foreign income and assets, etc. The ITR-2 form for the assessment year 2023-24 has been notified by the Central Board of Direct Taxes (CBDT) on March 31, 20231. The due date for filing the ITR-2 form for the assessment year 2023-24 is September 30, 2023.

What Is the ITR-2 Form? 

In India, taxpayers are categorised based on their income, and specific Income Tax Return (ITR) forms are assigned to individuals according to their sources of income. Among these forms, ITR-2 is designated for individuals and Hindu Undivided Families (HUFs) who do not generate income from professional or business activities.

Who Should Use the ITR-2 Form? 

The ITR-2 form is tailored for individuals and Hindu Undivided Families (HUFs) whose income originates from sources other than ‘Profits and Gains from Business or Profession.’ If your income is derived from any of the following sources, you are required to file ITR-2:

• Income from Salary/Pension
• Income derived from house property, which may involve multiple properties
• Income from Capital Gains or losses incurred from the sale of investments or property, encompassing both long-term and short-term gains/losses
• Income from Other Sources, including winnings from lotteries, bets on racehorses, and other legally recognised forms of gambling
• Payments exceeding Rs 5,000 from agricultural activities
• Foreign Income or ownership of Foreign Assets
• Status as a Resident Not Ordinarily Resident (RNOR) or a Non-Resident
• Holding the position of a Director in both listed and unlisted companies

Who Cannot File ITR-2?

Individuals or Hindu Undivided Families (HUFs) with income from business or profession. Individuals who are eligible to fill out the ITR-1 form (Sahaj).

Structure of the ITR-2 Form The ITR-2 Form is divided into two main parts, each containing specific sections and schedules:

Part A: This section collects general information, including your Name, Address, Date of Birth (DOB), PAN, Aadhar card, Contact Number, and Email Address.

Part B: This section focuses on computing your total income and calculating the tax payable on your earnings.

Additionally, the form includes various schedules that detail different types of income and deductions:

• Schedule S: Income from Salary
• Schedule HP: Income from House Property
• Schedule CG: Income from Capital Gains (both long and short-term)
• Schedule OS: Income from Other Sources (e.g., gifts, interest)
• Schedule CYLA: Information on losses incurred in the current year
• Schedule BFLA: Income remaining after setting off losses from previous years
• Schedule CFL: Carry forward losses to the next financial year
• Schedule VIA: Tax-saving deductions under various sections (e.g., 80C, 80E)
• Schedule 80G/80GG: Donations and deductions for scientific research or rural development
• Schedule AMT: Alternate Minimum Tax computation (section 115JC)
• Schedule AMTC: Tax credit computation under section 115JD
• Schedule SPI: Income arising from your spouse, minor child, or son’s wife
• Schedule SI: Special tax rates for specific income sources
• Schedule EI: Details of exempt income
• Schedule PTI: Income from business trust or investment fund
• Schedule FSI: Income outside India
• Schedule TR: Taxes paid outside India
• Schedule FA: Foreign assets and income from sources outside India
• Schedule 5A: Portuguese Civil Code, allocation of income to spouse

Part B-TI – Computation of Total Income: This section calculates your Gross Total Income from salary, house property, and other sources. Total tax-saving deductions are then subtracted from your Gross Total Income to determine your Total Income.

Part B-TTI – Computation of Tax Liability: Tax liability is calculated based on the Total Income.

Documents Required for ITR 2 Filing Before starting the filing process, gather the following documents and information:

• Form 16/16A: These documents contain details about your salary and tax deductions (TDS).
• Form 26AS/AIS/TIS: This statement provides information on tax credits, TDS, and other relevant data.
• Bank Statements: Collect statements reflecting income from interest, dividends, or other financial transactions.
• Capital Gains Details: Gather the necessary transaction documents if you’ve sold assets like property or stocks.
• Details of Foreign Assets and Income (if applicable): Collect relevant documents if you have foreign assets or earned income abroad.
• Aadhaar Card, PAN Card, and Other Identification and Contact Information: Ensure you have these documents readily available.

Instructions for Completing the ITR-2 Form When filling out the ITR-2 Form, follow these instructions and guidelines:

1. Fill out the form in the following sequence: Part A, all the schedules, Part B-TI, Part B-TTI, and the verification section.
2. Strike out any schedules that do not apply with ‘NA’ (Not Applicable).
3. Use ‘NA’ against any item that does not apply to you.
4. Round off all figures to the nearest one rupee, except for total income/loss and tax payable, which should be rounded off to the nearest multiple of ten.
5. Select ‘ Government ‘ for individuals under the Employer Category if you are a Central/State Government employee. Choose ‘PSU’ if working in a public sector company of the Central/State Government.
6. If you claim double taxation relief under section 90/90A/91, ITR-2 cannot be used.
7. ITR-2 is an annexure-less form; no documents must be attached during submission.

Modes of Submission for ITR 2 There are two primary methods for filing ITR 2: offline and online.

Filing ITR-2 Offline: If you are 80 or older, you can file ITR-2 offline by submitting a physical paper return or using a bar-coded form. The Income Tax Department will issue an acknowledgement upon submission.

Filing ITR-2 Online: For online filing of ITR 2, transmit all necessary information electronically, with or without a digital signature. After online filing, verify the return using Return Form ITR-V. If you submit ITR 2 electronically with a digital signature, you will receive the acknowledgement via email.

Procedure to File ITR 2 Online

1. Login with Your Credentials: Visit the official Income Tax India website and log in using your login credentials.
2. Select the Correct Assessment Year: Choose the appropriate assessment year and filing mode (Online/Offline).
3. Select the Assessee Status: Indicate your status as the assessee, primarily individuals and HUFs.
4. Choose the ITR-2 Form: Select the ITR-2 form from the dropdown menu and provide details such as the reason for filing, personal information, bank account, employment details, and more.
5. Provide Income Details: Provide comprehensive information about your income from various sources, including salary, capital gains, rental income, and other sources. Complete the schedules if applicable.
6. Deductions and Taxable Income: Specify eligible deductions under various sections of the Income Tax Act and calculate your taxable income after applying them.
7. Calculate Your Tax Liability: The form will automatically calculate your tax liability based on the income details provided, considering various deductions and exemptions available. Ensure the correct TDS/TCS/Advance Tax details are imported from Form 26AS.
8. Validate, Verify, and Generate the JSON File: Validate the ITR-2 form using the validation criteria on the income tax website to ensure it is error-free. Generate the JSON file for online filing.
9. Verify the Return: After successfully filling out the JSON file, verify your return using an electronic verification code (EVC), Aadhar OTP, digital signature, or by sending a signed physical copy to the Centralized Processing Centre (CPC) if electronic verification is not done.
10. Acknowledgement and Verification: Upon successful verification, the Income Tax Department will issue an acknowledgement receipt to your registered email address. Keep this acknowledgement for future reference.

Changes to the ITR-2 Form

The ITR-2 form for the assessment year 2023-24 has some changes as compared to the previous year’s form. Some of the major changes are as follows:

• Option to choose the new tax regime under section 115BAC: 

The Finance Act 2020 introduced a new tax regime under section 115BAC, which offers lower tax rates but with fewer deductions and exemptions. The taxpayers can choose between the old and the new tax regime while filing their return. The ITR-2 form for the assessment year 2023-24 has a field to indicate whether the taxpayer is opting for the new tax regime. The option can be exercised only until the due date of return filing under section 139(1)3.

• Disclosure of dividend income: 

The Finance Act 2020 abolished the dividend distribution tax (DDT) and made dividends taxable for the shareholders at their applicable slab rates. The ITR-2 form for the assessment year 2023-24 has separate fields to report dividend income from domestic companies, mutual funds, foreign companies, etc. The dividend income has to be reported under Schedule OS (Other Sources) and Schedule FSI (Foreign Source Income)4.

• Disclosure of interest income from Indian and foreign sources: 

The ITR-2 form for the assessment year 2023-24 has separate fields to report interest income from Indian and foreign sources. The interest income from Indian sources has to be reported under Schedule OS (Other Sources) and Schedule HP (House Property). In contrast, the interest income from foreign sources has to be reported under Schedule FSI (Foreign Source Income)4.

• Disclosure of TDS details on cash withdrawal: 

The Finance Act 2019 introduced a provision to deduct tax at source (TDS) at 2% on cash withdrawals exceeding Rs. 1 crore in a financial year from one or more accounts maintained with a bank, cooperative bank or post office. The ITR-2 form for the assessment year 2023-24 has a field to report the TDS details on cash withdrawal under Schedule TDS2.

• Disclosure of exempt income: 

The ITR-2 form for the assessment year 2023-24 has a field to report exempt income, such as agricultural income, interest on PPF, etc., under Schedule EI (Exempt Income)4.

• Disclosure of details of specified persons: 

The ITR-2 form for the assessment year 2023-24 has a field to report details of specified persons such as spouse, minor child, etc., whose income is clubbed with that of the taxpayer under Schedule SPI (Income of Specified Persons)4.

• Disclosure of details of unlisted equity shares: 

The ITR-2 form for the assessment year 2023-24 has a field to report details of unlisted equity shares held by the taxpayer at any time during the previous year under Schedule FA (Foreign Assets)4.

• Disclosure of details of virtual digital assets: 

The Finance Act 2021 introduced a provision to tax income from transferring virtual digital assets, such as cryptocurrency, tokens, etc., at normal rates. The ITR-2 form for the assessment year 2023-24 has a field to report details of virtual digital assets held by the taxpayer at any time during the previous year under Schedule VDA (Virtual Digital Assets).

Conclusion

These are some of the changes in the ITR-2 form for the current assessment year that taxpayers should be aware of while filing their returns. The taxpayers can file their returns online through the e-filing portal of the Income Tax Department or any authorised e-return intermediary. The taxpayers can also use offline utilities or third-party software to prepare and file returns. The taxpayers should ensure they have all the relevant documents and information before filing their return and verify it using Aadhaar OTP, EVC or digital signature. The taxpayers should also check their Form 26AS to verify their TDS and other tax credits. Taxpayers can avoid penalties and interest by filing their returns correctly and timely and claiming their refunds faster.