What is ITR-2 form and How to File ITR-2 is a leading question among people who have just heard about it. And here in this article you will find all the details about it along with Step by Step process to file your ITR-2.
Think of your financial situation as a thali: varied, tasty, and rather daunting. Like a thali combines many dishes, your earnings could arise from wages, rental payments, investments, or that side gig selling homemade candles.
In that case, the government has introduced Income Tax Return Form 2 (ITR-2), a tool for people managing several sources of income.
Let's examine the importance of ITR-2 and who is required to file it.
An Overview of ITR-2 Form.
If you're an individual or HUF with income from multiple sources—aside from income from a business or profession that you own—this is your income tax return form. 'Multi-tasker form' is how you may describe it.
If you're juggling salary, rent, investments, and more, ITR-2 is your go-to option.
Why bother with ITR-2?
Because it's the law! But also, it's your financial superpower. Here's why it matters:
- Keeps you legal: File on time, and avoid penalties. Simple.
- Applying for loans: Lenders love ITR as income proof.
- Visa victory: Many embassies need it for visa processing.
- Refund retrieval: Get back any extra tax you paid. Free money!
- Carry Forward Losses: Offset future gains with current losses.
Multiple Income Sources & Taxes: Untangling the Web
Let’s face it—taxes can feel like deciphering a Rubik’s cube. But understanding how different incomes are taxed is half the battle won.
1. Salary Income: Your regular paycheck, the classic source
Your monthly paycheck isn’t just about the number in your bank account. Components like HRA, allowances, and perks (e.g., company car) are taxable unless exempt.
Tax Tip: Submit rent receipts to claim HRA exemptions.
2. House Property: The Landlord’s Ledger
Renting out a property? You can deduct municipal taxes and a standard 30% for maintenance. Even if your second home is vacant, you’ll pay tax on its deemed rental income.
Fun Fact: This “ghost income” rule is like paying tax on a tenant who doesn’t exist!
3. Capital Gains: The Stock Market Rollercoaster
Profits from selling assets (stocks, gold, property) fall under:
- Short-Term Gains (STCG): Held for <12 months (stocks) or <24 months (property). Taxed at 15% (equity) or slab rate (others).
- Long-Term Gains (LTCG): Held longer. Taxed at 10% (equity over ₹1 lakh) or 20% with indexation (property).
4. Other Sources: The Catch-All Category
- Interest from FDs, and savings accounts (up to ₹10,000 exempt under Section 80TTA).
- Lottery wins (flat 30% tax—no deductions!).
- Freelancing gigs (declared as ‘income from other sources’ if unregistered).
Here's how the taxation works:
Income Aggregation: All income sources (salary, rent, gains, interest) are added up. This is your Gross Total Income.
Deductions: Claim deductions (80C, 80D, etc.) to reduce your taxable income. Tax-saving tools in action to save you money.
Taxable Income: Gross Income minus deductions = Taxable Income. Your base amount for tax calculation.
Slab Rate Tax: Taxable income is taxed based on income tax slabs. The rates vary by income level and taxpayer category.
Tax Liability vs. Paid Tax: Calculate total tax based on slabs, and subtract any tax already paid (TDS, advance tax). The remainder is either payable tax or refund due.
Also Learn: What Are Different Types of ITR FORMS?
Filing ITR-2 Online: Step-by-Step
Ready to file? Here's your fast-track guide to online ITR-2 filing. Think of it as online shopping, but for taxes – let's go!
Step 1: Gather Documents – Your Tax Toolkit
Pre-game prep is key. Get your tax docs ready:
- PAN Card: Essential ID.
- Aadhaar Card: Verification booster.
- Form 16: Salary, TDS details from the employer.
- Form 16A (if any): TDS on non-salary income (interest). Get from TRACES or bank portal download.
- Bank Details: Account, IFSC for refunds.
- Investment Proofs: 80C, 80D, etc. deductions.
- Capital Gains Statements: Broker/fund house statements.
- Rental Income Details: Agreements, property tax info.
- Interest Certificates: Bank/post office interest earned.
- Form 26AS: Your consolidated tax statement. Your tax report card – check it! Income tax portal download.
Step 2: Income Tax e-Filing Portal – Your Digital Tax Office
Head to: incometax.gov.in. Official site only – avoid scams! The URL check is crucial!
Step 3: Login/Register – Tax World Entry
"Login" if registered (previous filings). Use PAN, password, captcha. "Register" if new, using PAN.
Step 4: ITR Filing Navigation – Form ITR-2 Finder
"e-File" tab -> "Income Tax Returns" -> "File Income Tax Return."
Step 5: Year & Mode – Setup
- Assessment Year: Correct year (e.g., 2024-25 for FY 2023-24 income).
- Filing Type: "Online."
- Status: "Individual" or "HUF."
- ITR Form: Select "ITR-2".
Step 6: Form Filling – Detail Entry
Fill in ITR-2 schedules.
General Info: PAN, Aadhaar, address, bank details.
Schedule S - Salary: Form 16 salary details.
Schedule HP - House Property: Rental income, property info, loan interest.
Schedule CG - Capital Gains: Investment profits. Short/long-term details. Potentially complex – use statements carefully.
Schedule OS - Other Sources: Interest, dividends, lottery winnings.
Schedule 80C, 80D, etc.: Deduction claims. Proofs needed.
Schedule TDS 1 & 2: TDS details (pre-filled from 26AS). Verify.
Tax Paid: Advance, self-assessment tax details.
Step 7: Verify & Calculate – Math Check
Portal auto-calculates tax. Review calculations, ensure accuracy. Online tax calculators for cross-check.
Step 8: Tax Payment (if needed) – Dues Settled
If tax is due, pay online via e-payment (net banking, card). Pay before filing.
Step 9: Preview & Submit – Final Act
"Preview" to review the entire ITR-2. Check for errors. "Submit" when satisfied.
'Are you sure?' moment – double-check!
Step 10: Verification – Seal the Deal
Verify your ITR(One of these methods):
- Aadhaar OTP: Easiest, OTP to Aadhaar mobile.
- Net Banking: Bank portal verification.
- EVC: Electronic Verification Code generation.
Step 11: Acknowledgement – Filing Proof
Verification success = Acknowledgement. Download, and save. Your tax filing receipt – keep it safe!
Conclusion: ITR-2 – Mission Accomplished!
Boom! You submitted your online ITR-2. Although taxes may not be exciting, managing them efficiently involves wise financial decision-making. With these steps and a little attention, filing an ITR-2 online becomes manageable, even with numerous incomes and capital gains. Be methodical, collect paperwork, and be organised.
If you're ever unsure, tax consultants can help. Professional guidance can save money and save lives.
Don't wait! Get your documents and start filing ITR-2 right away. Visit the income tax portal to streamline your tax filing process. Let's work together to make tax season easier!
Useful links from the official Income Tax Department pages:
- File ITR-2 Online User Manual
- File ITR 2 VIDEO Below.
Also Learn: How to File ITR-1 ONLINE
FAQ: How to File ITR-2 for Individuals with Multiple Sources of Income
1. What Are the Short-Term Capital Gains in ITR-2?
Profits from the sale of assets such as stocks, mutual funds, or real estate during a relatively brief holding period—usually less than 12 months for investments involving equity and less than 36 months for other investments like real estate—are known as short-term capital gains. If securities transaction tax (STT) is applicable, these profits are taxed at 15% (with appropriate cess and surcharge); if not, they are taxed per your income slab.
2. Is ITR-2 for Salaried Employees Who Earn Side Hustle Income?
Yes, ITR-2 is appropriate for salaried people who make extra money from side projects as long as it doesn't come from professional or business services. In ITR-2, side income from interests or freelancing falls under the "Income from Other Sources" category.
3. How Does ITR-2 Handle Capital Losses?
Capital losses can be carried forward for up to eight years to offset future gains, or they can be set off against capital gains of the same kind (long-term with long-term, short-term with short-term). Make sure you appropriately disclose these losses on your ITR-2.