Capital Gains – Starter

ITR-2 Form Filing refers to the process of submitting the Income Tax Return (ITR) Form 2 for individuals and Hindu Undivided Families (HUFs) who earn income from sources such as salary, property, capital gains, or foreign assets. It is primarily for taxpayers who do not have income from business or profession.

Key Features of ITR-2 Form:

• Eligibility: ITR-2 is applicable for individuals and HUFs who:
  • Earn income from salary or pension.
  • Have income from house property, capital gains, or other sources (like interest income, dividends, etc.).
  • Hold foreign assets or income.
  • Are not engaged in any business or profession (for that, ITR-3 or ITR-4 is used).
• Income Sources: This form accommodates multiple income sources, such as:
  • Salary/Pension Income.
  • Income from House Property (rental income, etc.).
  • Capital Gains (from the sale of assets like property, shares, etc.).
  • Income from Other Sources (bank interest, dividends, etc.).

Benefits of Filing ITR-2:

• Tax Compliance: Filing ITR-2 ensures you’re in compliance with the Income Tax Department’s regulations, avoiding penalties for non-filing.
• Claim Deductions: You can claim deductions under sections like 80C (for investments), 80D (for insurance), and other eligible sections to reduce your taxable income.
• Carry Forward Losses: If you have capital losses or other eligible losses, you can carry them forward to future years to offset taxable income.
• Transparent Reporting: ITR-2 provides clear details about all sources of income, deductions, and taxes paid, helping in accurate assessment of your tax liability.

Process of ITR-2 Filing:

1. Collect Documents: Gather necessary documents like Form 16 (salary income), TDS certificates, bank statements, details of capital gains, and proof of deductions.
2. Fill Out the Form: Input accurate details of income, deductions, and taxes paid in the ITR-2 form. Ensure all sources of income are declared.
3. Verification: After filling out the form, verify all entered information for correctness and ensure that there are no discrepancies.
4. Submit the Return: Submit the ITR-2 form online via the Income Tax Department’s e-filing portal.
5. Acknowledgment: After submission, you will receive an acknowledgment (ITR-V) which must be signed and sent to the Income Tax Department if not e-verified.

Documents Required for ITR-2 Filing:

1. Form 16: Salary income details from your employer.
2. TDS Certificates: Proof of tax deducted at source (TDS) on income from other sources.
3. Capital Gains Details: Documents related to the sale of assets like property or stocks.
4. Bank Statements: For interest income or other sources of income.
5. Investment Proofs: Proof for deductions under sections like 80C, 80D, etc.
6. Foreign Assets Information (if applicable): Details of foreign income, assets, and liabilities.