Filing your Income Tax Return (ITR) can be straightforward if you follow the correct steps. This guide will walk you through filing ITR-2 online for the Financial Year 2023-24 (Assessment Year 2024-25), especially if you have salary income, capital gains, and other types of income. Whether you’re a salaried individual or a Hindu Undivided Family (HUF) with multiple sources of income, understanding the process of e-filing ITR-2 will help ensure compliance and avoid penalties.
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Who Should Use ITR-2?
ITR-2 is used by individuals and Hindu Undivided Families (HUFs) who do not have income from business or profession. You should file ITR-2 if:
- You are a non-resident or not ordinarily resident.
- Your total income exceeds Rs 50 lakh.
- You have income from multiple house properties.
- You have capital gains.
- You have foreign assets or income from foreign sources.
Steps to E-File ITR-2 Online
Step 1: Access the E-Filing Portal
Visit the Income Tax Department’s e-filing portal at https://www.incometax.gov.in/iec/foportal. Log in using your PAN/Aadhaar and password.
Step 2: Start Filing Your Return
Navigate to E-File > Income Tax Returns > File Income Tax Return.
Step 3: Select the Assessment Year and Filing Mode
Choose the assessment year 2024-25 for income earned between April 1, 2023, and March 31, 2024. Select ‘online’ as the mode of filing and click ‘Continue’. You can also select offline filing if you prefer to upload a JSON file generated from the tax department’s utilities.
Step 4: Select Your Status
Choose ‘Individual’ and click ‘Continue’.
Step 5: Choose the ITR Form
From the ‘ITR Form’ dropdown, select ‘ITR-2’.
Step 6: Reason for Filing
Select the reason for filing the income tax return and click ‘Continue’. This is mandatory even if your total income does not exceed the maximum exemption limit.
Step 7: Select Applicable Schedules
On the next page, select the applicable schedules based on your income sources. Mandatory schedules will be pre-selected. For example, if you have income from the sale of cryptocurrency, select the ‘Schedule VDA’.
Filling in the ITR-2 Form
Part A – General Information
Most information here is pre-filled. However, note that from FY 2023-24, the new tax regime is the default. If you want to opt for the old tax regime, you must select ‘Yes’ for the question about opting out of the new tax regime under section 115BAC (6).
Additionally, report if you are a director in any company or held unlisted equity shares during the year. For refunds over Rs 50 crore, provide details of the Legal Entity Identifier (LEI).
Step 8: Reporting Salary Income (Schedule S)
If you switched jobs during the year, report salary income from all employers. Obtain Form 16 from each employer. Enter the employer’s name, TAN, address, and salary components like basic salary, allowances, and perquisites.
Example:
- Basic Salary: Rs. 7,00,000
- House Rent Allowance (HRA): Rs. 3,50,000
- Leave Travel Allowance (LTA): Rs. 1,80,000
- Children Education Allowance (CEA): Rs. 5,000
- Work from Home Allowance (WFH): Rs. 45,000
- Gift Vouchers: Rs. 1,40,000
Report exempted portions separately if opting for the old tax regime:
- Exempted HRA: Rs. 2,40,000
- Exempted LTA: Rs. 1,00,000
- Exempted CEA: Rs. 1,200
Under the new tax regime, claim the standard deduction of Rs 50,000. Additionally, deductions for entertainment allowance and professional tax can be claimed.
Step 9: Reporting Capital Gains (Schedule CG)
Report any profit or gain from the sale of capital assets. Specify the type of capital assets sold. For instance, if you sold listed equity shares, provide details like sale price, cost of acquisition, and gains/losses.
Example:
- Sale of listed equity shares: Rs. 10 lakh
- Long-term shares: Rs. 6 lakh (cost: Rs. 4 lakh)
- Short-term shares: Rs. 4 lakh (cost: Rs. 3.5 lakh)
Report short-term capital gains at 15% tax if subject to STT. Long-term gains over Rs 1 lakh are taxed at 10%.
Step 10: Reporting Income from Other Sources (Schedule OS)
Include all other incomes not classified under other categories, such as:
- Interest from savings accounts, deposits, and income tax refunds.
- Dividends, family pensions, gifts.
- Winnings from lotteries (taxed at a specified rate).
Example:
- Interest on savings deposits: Rs 20,000
- Interest from term deposits: Rs 34,000
- Interest on income tax refund: Rs 7,500
- Lottery prize: Rs 2 lakh
Report quarterly breakdowns for specific incomes like dividends.
Claiming Deductions
After reporting all income, claim deductions for eligible tax-saving investments under sections like 80C, 80D, 80G, etc. Note the new Schedule 80GGC for donations to political parties, requiring detailed contribution information.
Taxes Paid
Report taxes paid, including TDS from salary and other sources, TCS, advance tax, and self-assessment tax.
Submit and Verify
Preview the return and ensure all information is accurate. Submit the ITR and verify it within 30 days. Verification can be done via Aadhaar OTP, EVC, or by sending a signed physical copy to the Centralized Processing Centre (CPC).
Detailed Walkthrough for Salary Income Reporting
When you report salary income in ITR-2, gather Form 16 from all employers if you’ve switched jobs. Here’s an example of how to fill in the details:
1. Enter the employer’s name, TAN, and address.
2. Break down the salary into components like basic salary, allowances, and perquisites.
3. If you’re opting for the old tax regime, manually report allowances exempt under Section 10.
For instance, if Mr. A has a salary with the following components:
- Basic Salary: Rs. 7,00,000
- HRA: Rs. 3,50,000
- LTA: Rs. 1,80,000
- CEA: Rs. 5,000
- WFH Allowance: Rs. 45,000
- Gift Vouchers: Rs. 1,40,000
The exempted portions might be:
- HRA: Rs. 2,40,000
- LTA: Rs. 1,00,000
- CEA: Rs. 1,200
Detailed Walkthrough for Capital Gains Reporting
Reporting capital gains can be complex, especially if you have multiple transactions. Here’s a simplified approach:
1. Determine whether your gains are short-term or long-term.
2. For each asset sold, enter the sale price, cost of acquisition, and resulting gain or loss.
For example, if Mr. A sold listed equity shares worth Rs. 10 lakh:
- Long-term shares: Rs. 6 lakh (cost: Rs. 4 lakh)
- Short-term shares: Rs. 4 lakh (cost: Rs. 3.5 lakh)
- Tax Rates: Short-term gains are taxed at 15%, while long-term gains over Rs. 1 lakh are taxed at 10%.
Detailed Walkthrough for Other Income Reporting
Income from other sources includes interest, dividends, and lottery winnings. Report these as follows:
1. Report interest from savings accounts, deposits, and tax refunds.
2. Include dividends from shares and mutual funds.
3. Report family pensions, gifts, and winnings from lotteries.
Example:
- Interest on savings deposits: Rs 20,000
- Interest from term deposits: Rs 34,000
- Interest on tax refund: Rs 7,500
- Lottery prize: Rs 2 lakh
Ensure you break down specific incomes quarterly to qualify for tax relief.
Final Steps
Once you’ve filled in all the schedules:
1. Enter eligible deductions for tax-saving investments.
2. Include TDS, TCS, advance tax, and self-assessment tax details.
3. Preview your return, submit it, and verify within 30 days using Aadhaar OTP, EVC, or by sending a physical copy to CPC.
Conclusion
Filing ITR-2 online can be straightforward if you follow these steps and report all income accurately. Remember to keep all necessary documents, such as Form 16, investment proofs, and bank statements, handy for reference. Timely and accurate filing ensures compliance and avoids any legal complications.
Filing ITR-2 online for FY 2023-24 (AY 2024-25) is manageable with proper preparation. By accurately reporting all sources of income and claiming eligible deductions, you can ensure compliance and avoid penalties.
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