New ITR-2 Form for FY2024-25 (AY2025-26) Unveiled: Key Changes Taxpayers Must Know
The Income Tax Department has finally released the Excel-based utilities for ITR forms 2 and 3, after a notable delay attributed to significant revisions in the utility forms for the Financial Year 2024-25. This release, following ITR forms 1 and 4, makes all major utilities available on the income tax portal. In light of these updates, the deadline for tax filing for FY2024-25 (Assessment Year 2025-26) has been extended to September 15, 2025, from the usual July 31.
ITR-2 is essential for salaried individuals, those with non-business or professional income, and those earning from sources like crypto assets, capital gains, and other investments. CA Suresh Surana highlighted six crucial changes in the ITR-2 Excel utility that taxpayers should be aware of:
- Reporting Capital Loss on Share Buybacks: A new row has been introduced in Schedule CG – A(A) to specifically account for capital losses incurred from a company’s buyback of its own shares, as per Section 68 of the Companies Act, 2013. These losses are now permissible, provided the corresponding dividend income is reported under ‘Income from Other Sources’.
- Explicit Disclosure of Dividend Income from Buybacks: Form ITR-2 now includes a dedicated row to capture dividend income arising under Section 2(22)(f), which refers to proceeds received by shareholders from share buybacks. This ensures clear reporting of such income.
- Bifurcation for Real Estate Transfers: Resident individuals are now required to provide separate details for the cost of acquisition and improvement for transfers of land and buildings. This distinction is crucial for transactions executed before and on or after July 23, 2024, enabling the correct application of indexation benefits based on revised tax rules.
- Raised Asset and Liability Reporting Threshold: The requirement to report all assets and liabilities as of the last day of the financial year has been relaxed for certain taxpayers. Previously applicable to those with total income exceeding Rs 50 lakh, this threshold has now been increased to Rs 1 crore. This aims to simplify compliance for a broader range of taxpayers.
- Segmented Capital Gains Reporting: With changes in capital gains tax rates effective from July 23, 2024, due to the Finance Act 2024, Form ITR-2 now features separate columns. These columns differentiate between capital gains realized before and on or after July 23, 2024, ensuring accurate tax calculation based on the applicable rates for each period.
- Detailed TDS Schedule Update: A new column has been added to Schedule TDS in Form ITR-2. This column mandates the specification of the relevant Section code under which tax has been deducted at source for the assessee, enhancing the precision and reconciliation of TDS claims.
Taxpayers are advised to familiarize themselves with these changes to ensure accurate and timely filing of their income tax returns for the current assessment year.