A Detailed Look at the ITR 2 Form

To ensure easy collection of taxes and to ensure that every earning individual is covered under the ambit of taxation, the Income Tax Department has categorised and grouped taxpayers based on their income or earnings, income source, and other distinct factors. This ensures easy compliance and prevents tax evasion. 

Accordingly, the Income Tax Department provides different income tax return forms to cater to every category of taxpayer. One such income tax return form is the ITR 2 form.

The ITR 2 form applies to taxpayers who cannot file ITR 1 form and don’t have any source of income from business or profession.  So, let us check out some more facts about the ITR 2 form.

Who can file ITR 2 form

In general, the individual and/or HUF (Hindu Undivided Family) is eligible for filing ITR 2 form if they do not have any income or earnings under the header “Profits or Gains of Business or Profession” and cannot file ITR 1 form.

Individuals and/or HUF receiving earnings or income from the sources as mentioned below can file ITR 2 form:

• Income or earnings from salary/pension
• Income or earnings from two or more house properties
• Income or earnings from capital gains, or losses, on sale of property or investments (long-term and short-term)
• Income or earnings from other sources, such as winnings from bets on horse races, bets, lottery and different means of legal gambling
• Foreign income/Foreign assets
• Income from agriculture higher than ₹5000
• Non-resident or a resident not ordinarily resident

Plus, an individual, who is the director of a company and has or had invested in Unlisted Equity Shares during the financial year, needs to file ITR 2 form to furnish their income tax returns.

Who cannot file ITR 2 form

• All individuals and HUF who have income under the header “Profits or Gains of Business or Profession”. In simple terms, they have income from profession or business.
• All individuals and HUF who can file ITR 1 form cannot file ITR 2 form.

Structure of ITR 2 form

The structure of the ITR 2 form is as follows:

• Part A: General information
• Schedule S: Details of income from Salary
• Schedule HP: Details of income from House Property
• Schedule CG: Capital Gains (both long term and Short term)
• Schedule OS: Income from Other Sources
• Schedule CYLA: Details of income after set-off of Current Year Losses
• Schedule BFLA: Details of income after set-off of Brought Forward Losses of earlier years
• Schedule CFL: Details of Losses to be Carried Forward to future years
• Schedule VI-A: Details of deductions under Chapter VI-A
• Schedule 80G: Details of donations entitled for deduction under Section 80G
• Schedule 80GGA: Details 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: Income of specified persons (spouse, minor child, etc.) includable in the income of the assessee as per Section 64
• Schedule SI: Income 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: Details of income from outside India and tax relief
• Schedule TR: Summary of Tax Relief claimed for taxes paid outside India
• Schedule FA: Details of Foreign Assets and income from any source outside India
• Schedule 5A: Information regarding apportionment of income between spouses governed by Portuguese Civil Code
• Schedule AL: Assets and Liabilities at the end of the year (applicable in a case where the total income exceeds ₹50 lakhs)
• Schedule DI: Details of Investments
• Part B-TI: Computation of Total Income
• Part B-TTI: Computation of Tax liability on Total Income

Further details should be filled up if a third party tax expert furnishes the ITR 2 return.

How to file ITR 2 form?

The ITR 2 form can be submitted offline as well as online.

Offline

Only individuals who are more than 80 years of age can file the ITR 2 form offline.

The ITR 2 Form is submitted offline in two ways:

• By submitting the ITR 2 form in the physical paper format
• By submitting the ITR 2 form in a bar-coded format

The Income Tax Department will provide an acknowledgement when the ITR 2 form is submitted physically at the regional assessing office.

Online

You can file the ITR 2 form online in two ways:

• By submitting the duly filed returns form electronically with the digital signature
• By submitting the form electronically without the digital signature, and then, completing the verification by sending the signed ITR-V form via regular mail to the CPC Office in Bengaluru, within 120 days of filing the ITR 2 Form.

Major changes made in ITR 2 form for AY 2019-20

• As ITR 1 does not apply to non-residents and RNORs, they must do ITR 2 filing for their income tax returns.
• Now, the ITR 2 Form applies to individuals and HUF who do not have income under the head “Profit or Giants of Business or Profession”.
• The residential status field has been further categorised into “Residential status in India (for Individuals)” and “Residential status in India (for HUF)”. Furthermore, under “Residential status in India (for Individuals)”, there are three sub-categories — “Resident”, “Resident but not ordinarily resident” and “Non-resident”. The individual has to select the right category they belong to. Plus, the individual has to specify the total number of days stayed in India. If the individual taxpayer is a non-resident, then they must specify their residence jurisdiction in the preceding year, and provide the Taxpayer Identification Number (TIN) of that particular jurisdiction. Also, if the individual taxpayer is a Person of Indian Origin (PIO) or Citizen of India, then they must mention the total number of days stayed in India in the preceding year and the total number of days stayed within India in the preceding four years.

• If a third party representative files the ITR 2, then further information about the representative should be given as per the provided dropdown.
•  If the individual was the director of a company in the preceding year, they must provide information about the same. Plus, they must also mention if they held or still hold Unlisted or Listed Equity Shares.
• The individual should provide information about their investments in Unlisted Equity Shares and their movement or status of investment in the given year.

• Under “Income from Salary”, further details are required: 

• • Salary as per Section 17(1)
  • Value of perquisites as per Section 17(2)
  • Profit in lieu of salary as per Section 17(3)

• If the individual receives a salary from more than one employer, then the gross salary income and the break-up as per the above sections should be given for each employment. The following should be deducted from the total gross salary: 

• • Exemption of allowance as per Section 10
  • Deduction as per Section 16

• Under “Income from House Property”, if tax is deducted as per Section 194 IB, then it is mandatory to submit the PAN details of the tenant.  If tax is deducted as per Section 194 I, then it is mandatory to submit the TAN of the tenant.

• In long-term or short-term capital gains on the sale of building or land or both, the buyer’s details are required — name, PAN, percentage share of ownership, address, etc. The PAN number is mandatory, if TDS is as per Section 194 IA, or if PAN details of the buyer are mentioned in the sale document.

Instruction for filing ITR 2 form

These are the important guidelines to remember while filling up your ITR 2 form:

• If any of the schedules do not apply to you, simply strike it across and write NA.
• If any section does not apply to you, write NA in that section.
• Nil figures should be indicated by writing ”Nil”.
• Enter a “-” sign in front of a negative figure.
• Except for tax payable and total income/loss figures, all other figures should be rounded off to the next rupee.
• Tax payable and total income/loss figures should be rounded off to the nearest multiple of 10.
• If you are a Central/State Government employee, then under the “Employer Category”, select “Government”.
• If you are a public sector employee, then you must select “PSU”.

ITR 2 form cannot be utilised for claims of relief for double taxation as per Section 90/90A/91.

This is all the information you need to know about ITR 2 Form. An individual or HUF, who is not qualified to file ITR 1 form and doesn’t receive any income from any business or profession, is qualified to file ITR 2 form.