Important updates in ITR 2:

-          Taxpayers must determine their eligibility for ITR 2 based on their category and source of income.

-          HUFs and individuals without income from business/profession are eligible to file ITR 2.

-          Taxpayers can choose to file ITR 2 using either the excel utility or e-filing platforms.

-          Senior citizens are now exempt from filing ITR 1 as per the Union Budget 2021.

-          For senior citizen taxpayers, pension and interest income are their only sources of income.

-          Financial institutions are now required under Section 194P to deduct taxes from elderly citizens over 75 with pension or interest income from the bank.

-          The IRS has launched a new e-filing website on June 7, 2021, which has replaced the old portal. This new platform is extremely user-friendly and will make e-filing process simple and quick. To make this process even easier, the website offers ITR-1, ITR-2, and ITR-4 forms, both online and offline.

-          This new e-filing portal promises speedy income tax refunds. Finally, all tax-related interactions will be readily available on a single dashboard, providing a comprehensive view of all your tax-related activities.

Eligibility criteria to file form ITR-2:

- ITR-2 is filed by individuals and HUFs who cannot file ITR-1

- Eligible sources of income for ITR-2 filing include:

  - Profits and gains from business or profession

  - Income from salary/pension

  - Income from house property (more than one property)

  - Income from capital gains

  - Income from other sources (lottery, gambling, etc.)

  - Foreign assets/foreign income

  - Agricultural income over Rs. 5000

- Non-ordinary resident and NRIs can file ITR-2

Who is ineligible to submit Form ITR-2?

- Form ITR-2 cannot be filed by individuals or Hindu Undivided Families with business or professional income.

- Only individuals eligible for ITR-1 can file that form.

- Partners in a Partnership Firm are not eligible to file Form ITR-2.

Important updates have been introduced in the ITR-2 for AY 2022-23 with regards to schedules FA and CG. The following changes have been made:

Schedule FA:

- The term "accounting period" has been replaced with "calendar year ending on December 31, 2021."

- Taxpayers are now required to report all foreign assets owned from January 1, 2021, to December 31, 2021.

- These changes have been made to simplify foreign asset reporting for the taxpayers.

Schedule CG:

- It is mandatory to disclose the fair market value (FMV) of capital assets and consideration received in a slump sale transaction.

- Land/building upgrade cost is now required to be reported on a year-by-year basis.

- The purchase cost and indexed acquisition cost must be stated separately.

Taxpayers are strongly advised to take note of these updates and ensure that their ITR-2 for AY 2022-23 is accurate and up-to-date.

- The interest earned on the provident fund has been listed in Schedule OS. It is classified as dividend income as per Section 2(22) (e) and should be reported separately.

- The Income Tax Act provides taxpayers with a comprehensive list of criteria to determine their residence status.

- An additional section "Schedule Tax-Deferred on ESOP" has been incorporated. Its objective is to monitor the tax-deferred amount and year of tax payment and specifically for particulars regarding ESOPs of qualifying start-ups' employees must be provided.

- Directors of any company and individuals invested in unlisted equity shares of a company should file ITR-2.

Do you want to know how to file Form ITR 2?

To file Form ITR 2, taxpayers have the option to choose between filling out Form ITR-2 online or offline.

·         For efficient offline filing, make use of the JSON tool (available on the tax department's e-filing portal) to input the necessary information before submitting it to the income tax website.

·         Download the ITR-2 Form from either the income-tax e-filing portal or other tax filing websites in online mode. Its pre-filled details include the taxpayer's personal information, salary income, dividend income, interest income, and capital gains.

·         To modify the pre-filled XML, download it from the income-tax website and import it into the JSON tool. Keep in mind that due to technical glitches with the government's income tax website, it is important to verify pre-filled information online and offline.

When filing the ITR 2 form, it is important to adhere to the following instructions and guidelines:

-          Follow the sequence of filling out the form, starting with Part A, all the schedules, Part B-TTI, and ending with Verification.

-          If a schedule does not apply to the assessee, strike it out and indicate "NA" (Not Applicable).

-          Round off all figures to the nearest one rupee, except for total income/loss and tax payable, which should be rounded off to the nearest multiple of ten.

-          If the individual falls under the employer category, choose "Government" if they are currently employed by the Central or state government, or "PSU" if they work for a Public Sector Company.

-          Do not use ITR 2 if claiming double taxation relief under Section 90/90A/91.

-          The ITR 2 form does not require any annexures, or any documents to be attached during submission.

ITR 2 Form’s Structure:

The ITR 2 Form's structure has two parts - Part A and Part B, each with its own specific functions. Part A acquires general information while Part B calculates the tax due on total earnings. Additionally, multiple schedules are included, such as income from a house or property, payment data, revenue from capital gains, and income from other sources.

The ITR-2 form is conveniently divided into multiple parts and schedules, each catering to a specific aspect of income computation. Here's what you need to know about each schedule:

- Part A: General information

- Schedule S: Income from salaries

- Schedule HP: Income from house property

- Schedule CG: Computation of income under capital gains

- Schedule OS: Computation of income under other sources

- Schedule CYLA: Statement of income after setting off current year's losses

- Schedule BFLA: Statement of income after setting off unabsorbed loss brought forward from earlier years

- Schedule CFL: Statement of losses to be carried forward to future years

- Schedule VIA: Statement of deductions under Chapter VIA

- Schedule 80G: Statement of donations entitled for deduction under section 80G

- Schedule 80GGA: 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: income of spouse/minor child/son's wife or any other person to be included in assessee's income in Schedules HP, CG, OS

- Schedule SI: income chargeable to tax at special rates

- Schedule EI: details of exempt income

- Schedule PTI: pass-through income details from business trust/investment fund as per Section 115UA, 115UB

- Schedule FSI: income arising outside India

- Schedule TR: taxes paid outside India

- Schedule FA: foreign assets/income from outside India

- Schedule 5A: apportionment of income between spouses governed by Portuguese Civil Code

- Schedule AL: asset and liability at year-end (applicable for total income over Rs 50 lakhs)

- Schedule DI: tax-saving investments/deposits/payments for deduction/exemption in extended period from 1 April - 30 June 2020.

-  Part B-TI: Computation of Total Income

- Part B-TTI: Computation of tax liability on total income

- These details are only relevant if the tax return has been prepared by a Tax Return Preparer.