The Income Tax Department has announced the ITR-2 form for Assessment Year (AY) 2025-26, applicable for filing Income Tax Returns for Financial Year (FY) 2024-25. This updated form comes with several key changes and specific eligibility criteria.
Who Should Use ITR-2?
ITR-2 is designed for individuals and Hindu Undivided Families (HUFs) who do not have income from “Profits and Gains from Business or Profession.”
You are eligible to file ITR-2 if your income sources include:
- Salary or pension.
- Income from house property (even from multiple properties).
- Long-term and short-term capital gains (e.g., from the sale of shares, mutual funds, property).
- Income from other sources like lottery winnings, horse racing, interest income, or family pension.
- Agricultural income exceeding ₹5,000.
- You hold the status of a Resident Not Ordinarily Resident (RNOR) or a Non-Resident.
- Your total income exceeds ₹50 lakh (as ITR-1 has a ₹50 lakh income limit).
- You are a director in any company.
- You have invested in unlisted equity shares.
- You have foreign income or assets, or signing authority in any foreign account.
- You have deferred income tax on ESOPs from an eligible start-up employer.
- You need to carry forward or bring forward losses from house property.
- Your income falls under clubbing provisions.
- Your income is subject to tax deduction under Section 194N.
While ITR-1 eligible taxpayers can also use ITR-2, the latter is typically more complex. It’s advisable to opt for ITR-1 if you meet its simpler criteria, unless specific circumstances (like higher capital gains or other listed income sources) necessitate ITR-2.
Key Changes in ITR-2 for AY 2025-26
The updated ITR-2 form for AY 2025-26 introduces several notable changes:
- Split Capital Gains Reporting: A new requirement in the Schedule-Capital Gain mandates taxpayers to differentiate between long-term or short-term asset sales made before or after July 23, 2024. This distinction is crucial due to varying taxation rates based on the transaction date as per the Finance Act, 2024.
- Capital Loss on Share Buyback Now Allowed: Effective for share buybacks on or after October 1, 2024, taxpayers can now claim capital loss if the corresponding dividend income is reported under “Income from Other Sources.” This addresses a previous limitation.
- Increased Asset and Liability Reporting Threshold: The obligation to fill Schedule AL (Assets and Liabilities) has been raised. Previously required for incomes over ₹50 lakh, this schedule is now only mandatory if your total income exceeds ₹1 crore. This provides relief to a significant number of taxpayers.
- Enhanced Deduction Reporting: Users of ITR-2 may be required to furnish more detailed information for various deductions claimed under Section 80 (e.g., 80C, 80D, 80 CCD). Specific details, such as policy numbers for 80C or detailed rent/lender information for HRA and home loan interest, are expected to be required once the final utility is released.
- TDS Section Code in Schedule-TDS: In addition to reporting details of the deductor and the deducted amount, ITR-2 now mandates specifying the exact section under which TDS has been deducted. This will provide greater clarity and traceability.
The online e-filing for ITR-2 for AY 2025-26 is already available on the Income Tax Portal since July 18, 2025. The extended due date for filing ITR for FY 2024-25 for non-audit taxpayers is September 15, 2025.