ITR Filing: Income Tax Department Releases ITR-2 Form – Know These 5 Major Changes

The Income Tax Department has released the ITR-2 form for the financial year 2024-25 (Assessment Year 2025-26).

This form is meant for individuals and Hindu Undivided Families (HUFs) who do not earn income from any business or profession.

This year, several important changes have been introduced in the form, which could impact lakhs of taxpayers.

Who Should File ITR-2?

ITR-2 is meant for taxpayers who earn income from specific sources, such as:

Salary or pension

Rental income from one or more properties

Capital gains (like from selling shares, bonds, or mutual funds)

Other income sources (such as lottery, horse racing, or legal betting)

Agricultural income above ₹5,000

Individuals who are NRIs (Non-Residents) or RNORs (Resident but Not Ordinarily Resident)

In addition, those with an income of over ₹50 lakh can also file ITR-2. It is also compulsory for company directors and those investing in unlisted companies.

If you earn long-term capital gains above ₹1.25 lakh from listed shares, you must file ITR-2.

Even if you qualify for ITR-1, you may still choose to file ITR-2. But if your case fits ITR-1’s conditions, it’s better to use that simpler form.

What Are the Key Changes in the ITR-2 Form?

1. New Capital Gains Timeline:
   Due to the Finance Act 2024, the form now asks whether you sold your capital asset before or after July 23, 2024. This is because capital gains tax rates have changed from that date onward.

2. Claiming Loss on Share Buyback:
   Earlier, you couldn’t claim losses from share buybacks. But now, if the buyback took place on or after October 1, 2024, and the dividend is reported under ‘Income from other sources’, the loss can be claimed.

3. Schedule AL (Assets and Liabilities) Limit Raised:
   Previously, taxpayers with income above ₹50 lakh had to disclose their assets and liabilities. Now, this limit has been raised to ₹1 crore. This change benefits taxpayers earning between ₹50 lakh and ₹1 crore.

4. Detailed Section 80 Deductions:
   The new form asks for detailed reporting of deductions under sections like 80C, 80D, 80CCD, and 10(13A). This makes it easier for the tax department to verify investments and expenses.

5. Mandatory Section Code for TDS:
   Until now, you only needed to mention who deducted TDS and the amount. From now on, it’s also required to specify the section under which the TDS was deducted. This helps improve tracking by the tax department.

Capital Gains Now Allowed in ITR-1

For the first time, the tax department has allowed reporting of long-term capital gains on shares and mutual funds in ITR-1.

If your capital gain is up to ₹1.25 lakh from these sources, you can report it in ITR-1. But if it exceeds this amount, you must file ITR-2.