The income-tax department has categorized taxpayers on the basis of income, source of income and many other factors to ensure easy compliance.
Taxpayers having incomes from different categories, thus, have to download and fill different Income Tax Return forms.
For instance, the ITR-2 Form is for individuals and HUFs not carrying any profession or business. In this article, we cover the following.
Who is eligible to file ITR 2 for AY 2020-21 and AY 2021-22?
ITR Form 2 is for Individuals and HUF receiving income other than income from “Profits and Gains from Business or Profession”. Thus persons having income from the following sources are eligible to file Form ITR 2:
- Income from Salary/Pension
- Income from House Property(Income Can be from more than one house property)
- Income from Capital Gains/loss on sale of investments/property (Both Short Term and Long Term)
- Income from Other Sources (including winning from Lottery, bets on Race Horses and other legal means of gambling)
- Foreign Assets/Foreign Income
- Agricultural Income more than Rs 5000
- Resident not ordinarily resident and a Non-resident
A Director of any company and an individual who is invested in unlisted equity shares of a company will be required to file their returns in ITR-2.
Who cannot file ITR 2 for AY 2020-21 and AY 2021-22?
- Any individual or HUF having income from Business or Profession
- Individuals who are eligible to fill out the ITR-1 Form
What is the Structure of ITR 2?
ITR-2 is divided into:
- Part A: General Information
- Schedule S: Details of income from salaries
- Schedule HP: Details of income from House Property
- Schedule CG: Computation of income under Capital gains
- Schedule 112A- From sale of equity share of a company or a unit of equity oriented fund /business trust on which STT is paid
- Schedule 115AD (I)b(b) (iii) proviso- For Non-Residents -From sale of equity share of a company or a unit of equity oriented fund /business trust on which STT is paid
- Schedule OS: Computation of income under Income from other sources
- Schedule CYLA: Statement of income after set off of current year’s losses
- Schedule BFLA: Statement of income after set off of unabsorbed loss brought forward from earlier years
- Schedule CFL: Statement of losses to be carried forward to future years
- Schedule VIA: Statement of deductions (from total income) under Chapter VIA
- Schedule 80G: Statement of donations entitled for deduction under section 80G
- Schedule 80GGA: Statement 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: Statement of income arising to spouse/ minor child/ son’s wife or any other person or association of persons to be included in the income of the assessee in Schedules-HP, CG and OS
- Schedule SI: Statement of income which is 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: Statement of income accruing or arising outside India.
- Schedule TR: Details of taxes paid outside India
- Schedule FA: Details of Foreign Assets and income from any source outside India
- Schedule 5A: Statement of apportionment of income between spouses governed by Portuguese Civil Code
- Schedule AL: Asset and liability at the year-end (applicable in case the total income exceeds Rs 50 lakhs)
- Schedule DI: Schedule of tax-saving investments or deposits or payments to claim deduction or exemption in the extended period from 1 April 2020 until 30 June 2020
- Part B-TI: Computation of Total Income
- Part B-TTI: Computation of tax liability on total income
- Tax payments- Details of payment of advance tax and self-assessment tax
- Details to be filled if the return has been prepared by a Tax Return Preparer
How to file ITR 2 Form?
You can submit your ITR-2 Form either online or offline.
Only the following persons can file their ITR offline:
- Individuals who are of the age of 80 years or more.
Return can be filed offline by:
- By furnishing a return in a physical paper form
- By furnishing a bar-coded return
The Income Tax Department will issue you an acknowledgement at the time of submission of your physical paper return.
- By furnishing the return electronically under digital signature
- By transmitting the data electronically and then submitting the verification of the return in Return Form ITR-V
If you submit your ITR-2 Form electronically under digital signature, the acknowledgement will be sent to your registered email id.
You can also choose to download it manually from the income tax website. You are then required to sign it and send it to the Income Tax Department’s CPC office in Bangalore within 120 days of e-filing.
Remember that ITR-2 is an annexure-less form i.e. you do not have to attach any documents when you send it.
Major changes introduced in ITR 2 for AY 2021-22
- ITR forms have been updated to include a declaration of choosing between old or new tax regimes introduced by the Finance Act 2020 under section 115BAC. Form 10IE needs to be submitted to the ITR department before filing ITR if the assessee chooses to pay tax according to the new tax regime. ITR forms seek the acknowledgement number of Form 10IE in case the assessee is opting for the new tax regime.
- Finance Act 2020 allowed to defer the payment or deduction of tax on ESOPs allotted by an eligible start-up covered under Section 80-IAC. If an employee receives ESOPs from an eligible start-up as mentioned under Section 80-IAC regarding which the tax has been deferred, the Part B of Schedule TTI (Computation of tax liability on total income) seeks the disclosure of this deferred tax.
- Finance Act 2020 shifted the taxability of dividend income from the company’s hands to the investor’s hands. Sections 10(34), 10 (35), 115-O, 115-R, 115BBDA have been amended. A new row has been added in Schedule OS to allow deduction of expenses like interest from the dividend income. Also, a new row has been added under schedule OS to incorporate details of dividend income taxable in the hands of the unitholders of business trust.
- All ITR forms prompt the return filers to provide a quarterly break up of the dividend income for the purpose of interest calculation under section 234C.
- The ITR forms have been updated to include the effect of marginal relief by showing ‘surcharge calculated ‘before marginal relief’ as well as ‘after marginal relief’. Previous to this, no separate effect was required to be shown in the ITR Forms.
- Schedule DI inserted in the previous ITR forms for any investment made for the extended period allowed, i.e. 1st April 20 to 31st July 20, is now removed from all the ITR Forms.
- Section 50C governs the determination of the value of the sale consideration in case of land or building or both. If the sale consideration is less than the stamp duty value, then the stamp duty value will be considered the full value of consideration except for a difference of 5%. Finance 2020 increased the tolerance limit from 5% to 10%, and the changes have been made in the ITR.
- Separate disclosure of cash donation under schedule 80GGA along with date is required in the ITR Form.
- ITR form has been updated with a new column under schedule 112A and 115AD (1)(b)(iii) proviso to be able to provide the details of the nature of securities transferred. Also, both the schedules have been updated to give the ‘grandfathering clause’ effect by allowing to mention the details like Sale price, FMV and COA of the securities.
Major changes introduced in ITR 2 for AY 2020-21
- RNORs and non-resident individuals have to file their income tax return in ITR-2 even in case of total income below Rs 50 lakh.
- The taxpayer should disclose (a) the amount of cash deposits above Rs 1 crore in the current accounts with a bank, (b) expenditure incurred above Rs 2 lakh on foreign travel (c) expenditure incurred above Rs 1 lakh on electricity.
- Resident individuals who own more than one house property should also file their income tax return in ITR-2.
- ITR-2 continues to apply to resident individuals who have total income exceeding Rs 50 lakh.
- Any individual taxpayer having income from business or profession cannot use ITR-2.
- In case an individual is a director in a company or holds unlisted equity investments, the ‘type of company’ should also be disclosed
- In case of short-term or long term capital gains from sale of land or building or both, the details of the buyer(s) i.e. name, PAN or Aadhaar, percentage share of ownership and address have to be given.
- A separate schedule 112A for the calculation of the long-term capital gains on the sale of equity shares or units of a business trust which are liable to STT.
- Under ‘income from other sources, a taxpayer should provide the details of ‘any other income’.
- The details of the deductions against ‘income from other sources should be provided.
- The ‘Schedule VI-A’ for tax deductions is amended to include deduction under section 80EEA and section 80EEB.
- In the case of a business trust or investment fund, the details of ‘capital gains’ income and ‘dividend’ income should be provided.
- The details of tax deduction claims for investments or payments or expenditures made between 1 April 2020 until 30 June 2020.
- While providing the details of bank accounts, if a taxpayer selects multiple bank accounts for credit of refund, the income tax department may choose any account for processing the refund.