ITR-2 Return

ITR-2 Return

To facilitate compliance, the Income Tax Department has divided taxpayers into groups according to their income, source of income, and other criteria. The Income Tax Department of India receives information from taxpayers on their income, deductions, and tax liabilities using Income Tax Return (ITR) forms. India has seven different kinds of Income Tax Return (ITR) forms. IT returns must be filed using ITR Form 2 for HUFs and anyone with income that does not fall under the "Profit and Gains from Business or Profession" head. 

ITR 2 filing is available to taxpayers who receive income from salary, real estate, capital gains, overseas assets, and other sources. Lawgical Adda will cover filing the ITR 2 form for capital gains earners in this blog.

What is the ITR 2 form?

Individuals or HUFs who do not get income from business or professional profits or gains submit an ITR-2; ITR-1 does not apply to them. It includes any agricultural revenue exceeding Rs 5,000 and income from capital gains and overseas sources.

To file the ITR-2 form for AY 2024–2025, taxpayers can now download the Excel-based software and the offline utility. The CBDT has corrected the disclosures for sections 80DD, 80U, and 54D included in ITR Forms 2, 3, and 5.

Who can submit a Form ITR-2?

ITR-2 forms for individuals and HUF having income from the following sources are available for the FY 2022–2023:

1. Income or Pension
2. One or more residential properties Capital gains or losses from the selling of real estate, mutual funds, and shares, among other investments. Both short-term and long-term capital gains are included.
3. Additional resources: This includes dividend income, interest income on FDRs, lottery prizes, racehorse wagers, and earnings from other forms of legal gambling.
4. Foreign Income/Foreign Assets Over Rs 5000 in Agricultural Revenue
5. A non-resident director of a corporation and a resident who is not typically a resident
6. The combined revenue from the sources as mentioned above might be more than Rs 50 lakh.

In addition, you must file an ITR-2 report if you have invested in unlisted equity shares of a company and are a director of any firm.

Who is not eligible to submit an ITR-2 Form?

Form ITR 2 cannot be filed by:

Any individual or HUF qualified to file form ITR-1 who receives income from PGBP, particularly profits and gains from a business or profession.

Steps followed by Lawgical Adda to help you submit the ITR Form 2

1. Contact us through our portal. Our experts will connect with you to know your requirements.
2. Send our professionals all the necessary documentation.
3. Our professionals will file your income tax return online using the registered site. An ITR Filing Form will be chosen based on your category, and professionals will complete all the necessary fields and claim any relevant exemptions.
4. After accounting for all exemptions, our professionals will advise you of any taxes that may be due.
5. Your income tax return will then be easily filed after that.
6. Lawgical Adda keeps you updated throughout the process to maintain transparency. 

What documentation is needed to file an ITR 2?

Documents Essential to File ITR-2 Form

View the necessary files needed to submit the ITR-2 form:

1. PAN (Permanent Account Number) for Aadhaar Card
2. TDS certificates, Form 26AS, Form 16 if you are an employee, AIS/TIS statement from the income tax portal, and a proof of payment for the taxes paid
3. Details of a bank account
4. Details of the initial return (if you are filing a revised return)
5. Information pertaining to notices (should you be submitting in response to any notices)

Documents Needed to File an ITR for Capital Gains:

1. Regarding the Sale of Tangible Property
2. buy and sale agreements, information on improvement costs, and transfer charges that display the buy and sale values as well as any improvement costs.
3. Complete Property Address.
4. Information on the buyer, including Aadhaar and PAN.
5. Documentation required to substantiate your exemption under Section 54 or Section 55EC

Regarding the sale of equity shares or mutual funds:

1. You can create consolidated capital gain statements for the sale of mutual funds.
2. You can obtain a capital gain statement or tax P&L from your broker about the sale of equity shares.
3. You need to have a document with the necessary details of the buying cost and the sale consideration for any other forms of capital.

Consequences of Not Filing an ITR

Now that you understand all of the advantages of submitting an income tax return, think about some potential consequences of not doing so:

1. A notice will be given to the individual if they are required to pay income tax.
2. If someone is unable to file income tax returns for a valid reason, the responsible authority will accept a comprehensive letter and any required supporting proof. They may ask for relief from condonation in this case.
3. If an individual files their ITR after the deadline, the IT Department will penalize them. Generally, there is a ₹10,000 penalty if an individual's income above ₹5 lakhs. If your income is less than this sum, you will be fined ₹1,000.
4. In grave circumstances, such as tax evasion, assesses may be subject to severe detention.
5. On the other hand, some individuals are not required to file an income tax return. As stated by the Finance Minister in the Union Budget for 2021, seniors who are 75 years of age or older are eligible for a complete exemption from submitting ITRs.

If there are any mistakes on your income tax return, you may be penalized or possibly receive a tax notice, so you should file it carefully. Maintaining correct documentation, claiming only allowable deductions, disclosing all sources of income, and other practices guarantee that you pay only the taxes that you are required to pay and assist you in abiding by legal requirements. Lawgical Adda is here to help you out throughout the process!