ITR-2 Notified for FY2024-25: Relief for ₹50 Lakh–₹1 Crore Income Earners

The Central Board of Direct Taxes (CBDT) notified the Income Tax Return Form 2, or ITR-2, for the financial year 2024-2025 on the 5th of May. The ITR-2 is incredibly important for the majority of taxpayers, especially salaried employees and pensioners. The form will be effective retrospectively from April 1, 2025, i.e., since the beginning of the current financial year.

Individuals who have salary or pension income or earn income from more than one house property are eligible to file their income tax return using ITR-2. Any income from capital gains or losses on the sale of property or other investments, either long-term or short-term, is to be reported in this ITR.

Salaried taxpayers, who also invest in equity shares and mutual funds, use ITR 2. Salaried persons are required to use ITR-2 instead of ITR-1 if they own more than one property, if any asset is located outside India, if their total income exceeds Rs.50 lakh, etc.

The recently notified ITR-2 has undergone numerous changes. Previously, if the assessee's total income exceeded Rs.50 lakhs, they had to provide Schedule AL regarding assets and liabilities. But, in the new ITR-2, it is only applicable if the total income exceeds Rs.1 crore. This comes off as a huge relief to those whose annual income lies between Rs.50 lakhs and Rs.1 crore, as they are not required to prepare a schedule of assets and liabilities.

The recently notified ITR-2 includes two major changes to the capital gains (CG) schedule. of capital gains transactions that were undertaken during the year are filled in Schedule CG, which is present in Part A of the ITR-2 form.

Now, assessors would be required to specify whether the transfer of assets, which led to long/short-term capital gains/losses, took place before July 23, 2024, or after July 23, 2024.

The ITR 2 form for the assessment year 2025-26 (FY 2024-25) allows taxpayers to calculate long-term capital gains (LTCG) at either 20% with indexation benefits or 12.5% without indexation for properties transferred after July 23, 2024. This change offers flexibility in determining the most beneficial tax treatment, especially for land and building transfers. Capital gains from the sale of unlisted bonds and debentures will now be categorized as either short-term or long-term capital gains, depending on the transfer date. This adjustment simplifies the treatment of these transactions.

Documents required to file ITR-2:

• Form 16 is applicable for individuals with salaried income.
• Form 16a is issued by TDS deductors. If you have earned interest on fixed deposits and TDS has been deducted on the same, you need TDS certificates.
• You use Form 26AS to verify TDS on salary and TDS on other income. Form 26AS can be downloaded from the e-filing portal.
• If you are living in rented premises, you need rent-paid receipts.
• A summary of the profit/loss statement for any capital gains transactions involving shares or securities is required.
• Use the bank passbook and fixed deposit receipts to calculate the amount of interest income.
• You need to verify the submitted ITR via online e-verify or offline through ITR-V, as usual.