ITR-2 Return
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Documents Required
- PAN Details
- Invoice Details
- Bank Statements
- Form 26AS
ITR-2 Return
ITR-2 is an income tax return form applicable to individuals and Hindu Undivided Families (HUFs) who do not have income from business or profession. This form is suitable for those with income from salary, house property, capital gains, and other sources, and it is also used by those who have foreign income or own foreign assets.
Eligibility Criteria for ITR-2
Who Can File ITR-2:
Individuals and HUFs who do not have income from business or profession.
Taxpayers with income from salary or pension.
Individuals with income from more than one house property.
Taxpayers with income from capital gains (short-term and long-term).
Income from other sources, such as interest, dividends, etc.
Individuals with foreign income or holding foreign assets.
Agricultural income exceeding ₹5,000.
Individuals with income from winning the lottery or racehorses.
Who Cannot File ITR-2:
Individuals who have income from business or profession (they should use ITR-3 or ITR-4).
Those eligible to file ITR-1 (Sahaj) should not use ITR-2 unless they have additional income sources like capital gains.
Documents Required
PAN Card:
Permanent Account Number for identity verification and tax filing.
Form 16:
Salary certificate issued by the employer detailing income and TDS deducted.
Form 16A/16B/16C:
Certificates for TDS on income other than salary, such as interest, rent, or property sales.
Form 26AS:
Annual Tax Statement showing TDS, TCS, and advance tax paid.
Bank Statements:
Statements reflecting interest income, dividend income, and other financial transactions.
Capital Gains Statements:
Details of sale or purchase of equity shares, mutual funds, property, or other capital assets.
House Property Documents:
Details of rental income, municipal taxes paid, and home loan interest certificates.
Investment Proofs:
Proof of investments for claiming deductions under Chapter VI-A, such as Section 80C, 80D, etc.
Foreign Income and Assets Details:
Information on foreign income earned and foreign assets held, along with the corresponding tax paid.
Aadhaar Card:
Mandatory for linking with the PAN and for e-verification purposes.
Process of Filing ITR-2
Collect Necessary Documents:
Gather all documents related to income, deductions, investments, and taxes paid during the financial year.
Download or Access ITR-2:
Download the ITR-2 form from the Income Tax Department’s e-filing portal or use the online filing option provided on the website.
Fill in Personal and Income Details:
Provide personal information, including PAN, address, and bank details. Enter income details from salary, house property, capital gains, and other sources.
Report Capital Gains:
Provide detailed information about capital gains, including the sale of property, stocks, mutual funds, and other assets.
Claim Deductions:
Enter details of deductions under Chapter VI-A, such as Section 80C, 80D, etc., to reduce taxable income.
Declare Foreign Income and Assets:
If applicable, provide information on foreign income, assets held abroad, and taxes paid in foreign jurisdictions.
Compute Tax Payable:
The form will auto-calculate tax payable based on the income and deductions entered.
Pay Any Additional Tax:
If there is any additional tax liability, pay it using Challan ITNS 280 and enter the details in the ITR-2 form.
Verify and Submit:
Review all details for accuracy and submit the ITR-2 online through the Income Tax e-filing portal.
E-Verify the Return:
Complete the process by e-verifying the return using Aadhaar OTP, net banking, or by sending a signed copy of the ITR-V to the Centralized Processing Center (CPC).
Advantages
Comprehensive Reporting:
Suitable for individuals with multiple income sources, including capital gains and foreign income.
Tax Compliance:
Ensures compliance with tax laws, especially for individuals with complex financial situations.
Accurate Tax Calculation:
Allows for precise tax calculation, including capital gains tax and foreign tax credits.
Ease of Claiming Deductions:
Facilitates claiming deductions under various sections, reducing taxable income.
Avoid Penalties:
Timely and accurate filing prevents penalties for non-compliance or under-reporting of income.
Disadvantages
Complexity:
The form is more complex compared to ITR-1, making it challenging for individuals with limited tax knowledge.
Time-Consuming:
Gathering all required documents and filling out detailed information can be time-consuming.
Not Suitable for Business Income:
Individuals with income from business or profession cannot use this form, limiting its applicability.
Requires Accurate Reporting:
Inaccurate reporting of capital gains or foreign assets can lead to scrutiny or penalties.
Need for Professional Help:
Taxpayers with complex financial situations may need professional assistance to file ITR-2 accurately.
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