Summary: The Central Board of Direct Taxes (CBDT) has issued notification no. 43/2025 dated 03/05/2025, notifying the new Income Tax Return (ITR) Form 2 for Assessment Year (AY) 2025-26. This form is applicable to individuals and Hindu Undivided Families (HUFs) who do not have income from business or profession. Key applicability criteria include total income exceeding ₹50 lakhs, ownership of more than one house property, specific capital gains (excluding certain equity-related gains and without brought forward/carried forward losses), foreign income or assets, agricultural income above ₹5,000, directorship or unlisted shareholdings, and income from lotteries or races. Significant changes in the updated ITR 2 include a bifurcated Capital Gains Schedule, requiring separate reporting for gains earned before and after July 23, 2024, reflecting amendments by the Finance Act, 2024. This introduces a 20% tax rate for Short-Term Capital Gains (STCG) on listed equities and equity-oriented mutual funds (previously 15%), and a 12.5% rate for Long-Term Capital Gains (LTCG) (previously 10%) after this date, with Chapter VIA deductions and Section 87A rebate disallowed under the new scheme. Other LTCG will be taxed at 12.5% without indexation, versus 20% with indexation previously. Additionally, capital loss on share buyback is now allowed if corresponding dividend income is reported (effective October 1, 2024), the asset and liability disclosure threshold has been raised to a total income exceeding ₹1 crore, and the TDS Schedule now requires specifying the clause/subsection of deduction.
ITR-2: Applicability for Individuals & HUFs with Specified Income Criteria
ITR 2 applicable to Individual and HUF not earning Income from Business/ Profession but having:
1.Total Income above Rs. 50Lakhs.
2. Owns more than one House property.
3. Capital Gains except from Equity Shares, Units of Equity oriented mutual funds not more than Rs. 1.25lakhs and No BF/ CF of losses.
4. Foreign Income or Assets.
5. Agricultural Income above Rs. 5000.
6. Holding directorship or unlisted shares.
7. Income from Winning of lotteries, races etc
Highlights of Changes in the notified ITR 2 for AY 2025-26
1. Schedule- Capital Gains requires a split between gains earned before and after 23.07.2024 reflecting changes introduced by the Finance Act, 2024
| Capital Assets |
|
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| 111A STCG on
Listed Equity Shares, Units of Equity Oriented Mutual Fund and Units of BT on which STT is paid |
Chapter VIA deductions not allowed and Rebate U/s 87A not allowed under new Scheme. |
||||
| 112A LTCG on
Listed Equity Shares, Units of Equity Oriented Mutual Fund and Units of BT on which STT is paid |
Chapter VIA deductions not allowed and Rebate U/s 87A not allowed under new Scheme. |
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| Other LTCA |
|
2. Capital Loss on Buyback of Shares will now be allowed provided corresponding dividend Income is offered as Income from Other Sources. (effective from 01.10.2024).
3. Threshold for disclosure of Asset and liability revised: Applicable if total Income exceeds Rs. 1 Crore.
4. Schedule Chapter VIA: Disclosure of specific deduction U/s 80C. Sec 10(13A)etc.
5. Schedule TDS : Added a column for specifying the Clause/subsection under which TDS is deducted.
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