The Income Tax Department has announced the activation of online filing for ITR-2 forms, complete with pre-filled data, for the Assessment Year 2025-26. This development follows a recent extension of the tax return deadline to mid-September, a decision prompted by legislative changes introduced in the Finance Act 2024.
ITR-2 is specifically designed for individuals and Hindu Undivided Families (HUFs) who do not have business income. It caters to those earning income from various sources, including:
- Salary
- Capital gains
- Foreign assets
- Digital assets like cryptocurrency
- More than one house property
- Investments in unlisted equity shares during the financial year
- Serving as a director in a company
- Agricultural income exceeding ₹5,000
While ITR-2 is now fully operational for online submissions, the ITR-3 form, intended for individuals with business or professional income, is currently only available via offline Excel utilities. The online pre-filled functionality for ITR-3 is still in development.
Taxpayers filing ITR-2 for the Assessment Year 2025-26 should be aware of six significant updates:
- Reporting Capital Losses from Share Buybacks: A new provision in Schedule CG allows individuals to report capital losses incurred from company share buybacks under Section 68 of the Companies Act, 2013, provided that related dividend income is disclosed separately.
- Disclosure of Dividend Income from Share Buybacks: A dedicated row has been added to mandate the disclosure of dividend income received from share buybacks under Section 2(22)(f).
- Bifurcation of Acquisition and Improvement Costs for Property: For the sale of land or buildings, taxpayers must now separately declare acquisition and improvement costs, distinguishing between transactions that occurred before and after July 23, 2024. This differentiation is crucial for accurate indexation eligibility.
- Increased Asset and Liability Disclosure Threshold: The threshold for mandatory asset and liability disclosure has been raised from ₹50 lakh to ₹1 crore. Taxpayers with an annual income exceeding ₹1 crore are now required to report all their holdings.
- Segregated Capital Gains Columns: Due to updates in capital gains tax effective July 23, 2024, ITR-2 now features separate columns for reporting gains realized before and after this date, ensuring the correct application of old and new tax rates.
- TDS Schedule Section Code: The Tax Deducted at Source (TDS) schedule now includes a field for specifying the section code under which tax was deducted, enhancing the accuracy of tax credit reconciliation.
Taxpayers are strongly advised to thoroughly review and reconcile the pre-filled data with their personal financial records, particularly for capital gains, deductions, and exempt incomes, before submitting their ITR-2.