The Income Tax Return (ITR) form that taxpayers must use depends on their residential status and total income from various sources.

 

Hindu Undivided Families (HUFs) and individuals who earn income other than ‘Profits and Gains from Business or Profession’ are required to file their tax returns using ITR Form 2.

 

Taxpayers eligible to file ITR 2 include those who earn income from:

• Salary or Pension
• House Property
• Capital Gains (Short-term or Long-term)
• Foreign Assets or Foreign Income
• Other Sources (e.g., Interest, Dividends, etc.)

 

Filing ITR correctly ensures compliance, tax benefits, and hassle-free processing of refunds.

What is ITR Form 2, and Who Should File It?

 

ITR Form 2, also known as ITR-2, is an Income Tax Return (ITR) form used by Hindu Undivided Families (HUFs) and individuals in India to file their taxes with the Income Tax Department.

 

This form is for taxpayers who earn income from multiple sources but not from business or profession.

 

Who is Eligible to File ITR-2?

 

Individuals with income from:

• Salary or Pension
• House Property (one or more)
• Capital Gains or Losses (on investments or property – short-term or long-term)
• Other Sources (such as lottery winnings, gambling income, etc.)
• Foreign Income or Assets (Residents earning foreign income, claiming foreign tax credits, or disclosing foreign assets)

 

ITR-2 ensures compliance with tax regulations while allowing taxpayers to claim applicable deductions and exemptions.

 

Steps to File ITR 2 with Capital Gains

Individuals earning capital gains from the sale of equity shares or other capital assets must file their Income Tax Return (ITR) every year. This can be done online via the official Income Tax Department portal. Below is a step-by-step guide to filing ITR-2 with Capital Gains:

 

Step-by-Step Guide to Filing ITR-2

• Step 1: Visit the official Income Tax Department website and log in using your credentials.

 

• Step 2: Navigate through:
  ➡ e-File > Income Tax Returns > File Income Tax Returns

 

• Step 3: Select the assessment year, choose your filing status, and select the appropriate ITR form (ITR-2). Then, select ‘Taxable income is more than the basic exemption limit’ as the reason for filing the ITR.

 

• Step 4: The next page will display five types of schedules.
  ✔ Select ‘General’ and proceed to ‘Income Schedule’.
  ✔ Tap on ‘Schedule Capital Gains’ and choose the relevant type of capital asset from the provided list.

 

• Step 5: Understand Capital Gains Taxation:

 

Capital gains are categorized into:

 

1. Short-Term Capital Gains (STCG):

• STCG on listed equity shares is taxed at 15% under Section 111A.
• If total taxable income (excluding STCG) is below ₹2.5 lakh, the shortfall is adjusted against STCG, and the remaining STCG is taxed at 15% plus 4% cess.

 

2. Long-Term Capital Gains (LTCG):

• LTCG is taxed under Section 112A at 10% on gains exceeding ₹1 lakh in a financial year.
• LTCG up to ₹1 lakh is exempt from tax.

 

• Step 6: Once the necessary schedules are confirmed, review Part B TTI and tap on ‘Preview Return’ to download your ITR.

 

• Step 7: Proceed to the Declaration tab, enter the required details, and tap ‘Proceed to Validation’.

 

• Step 8: After validation, verify your ITR filing using one of the following methods:

 

Electronic verification (EVC) – via Aadhaar OTP, Net Banking, or DSC

 

Physical verification – by sending a signed ITR-V printout to the Income Tax Department

 

Once verified, your ITR filing process is complete!