ITR-2 for FY2024-2025 notified by Income Tax dept: There’s good news for Rs 50 lakh to Rs 1 crore income-earners, know other changes and more

The Central Board of Direct Taxes (CBDT) notified the Income Tax Return form-2, or ITR-2, for FY2024-2025 on May 5, 2025. ITR 2 is relevant for the majority of taxpayers, especially salaried employees and pensioners. The form will be effective retrospectively from April 1, 2025, i.e., since the beginning of the current financial year.

Notably, individuals who have salary or pension income or earn income from more than one house property are eligible to file their income tax return using ITR-2. Importantly, any income from capital gains or losses on the sale of property or other investments, either long-term or short-term, is to be reported in this ITR.

ITR 2 is used by salaried taxpayers who are also investors in equity shares and mutual funds. Salaried persons are required to use ITR 2 instead of ITR 1, if he/she owns more than one house property, if any asset is located outside India, if their total income exceeds Rs 50 lakh, etc.

What changes have been introduced in ITR-2 form this time?

According to CA Ashish Niraj, Partner, ASN & Company Chartered Accountants, many changes have been introduced in the recently notified ITR-2.

“Earlier, Schedule AL regarding assets and liabilities had to be provided in case the total income of the assessee exceeded Rs 50 Lakh. However, in the new ITR-2, it is only applicable if the total income exceeds Rs. 1 crore. This will give relief to those having annual income between 50 lakh and 1 crore, as they will not have to prepare a schedule of assets and liabilities.“

The Income Tax Department also notified the changes made in ITR-2 via an X-post.

The newly notified ITR also incorporates mandatory quoting of the section under which TDS has been deducted for a particular transaction.

Previously, “ only details of the entity deducting the TDS and the consequent amount were required to be reported. However, that has changed with this ITR-2. Now, it will be mandatory to report under which section the TDS is deducted, like 194C, 194J”, continues Niraj.

Also, two major changes have been made under the capital gains (CG) schedule in the recently notified ITR-2. Notably, details of capital gains transactions that were undertaken during the year are filled in Schedule CG, which is present in Part A of the ITR-2 form.

“Now, assesses would be required to specify whether the transfer of assets, which led to long/short-term capital gains/losses, took place before July 23, 2024, or after July 23, 2024.

Notes Mihir Tanna, SK Patodia and Associates LLP, “While filing ITR-2, it’s important to check whether the asset was transferred before or after 23rd July 2024, as this will impact the tax rate, and accordingly, changes have also been made in ITR-2.”

Sujit Sudhakar Bangar, founder of TaxBuddy.com, says that the ITR 2 form for the assessment year 2025-26 (FY 2024-25) allows taxpayers to calculate long-term capital gains (LTCG) either 20% with indexation benefit or 12.5% without indexation for properties transferred after 23rd July 2024. This change offers flexibility in determining the most beneficial tax treatment, especially for land and building transfers.”

“Capital gains from the sale of unlisted bonds and debentures will now be categorized as either short-term or long-term capital gains, depending on the transfer date. This adjustment simplifies the treatment of these transactions,” he adds.

“Taxpayers will now be expected to provide some additional details related to deductions like Sec 80c, Sec 80d, Sec 80ccd, etc. But as and when the utility to file ITR will be available, we will come to know about the exact details asked in the drop-down related to the above-mentioned section,” says Tanna.

Niraj also highlights that if now, respective dividend income u/s 2(22)(f) is offered to tax under the head of income from other sources, then capital loss on buyback of shares on or after 01st October 2024 can be claimed. This is a significant departure from the previous ITR-2, since earlier capital loss on buy-back of shares was not allowed to be adjusted in ITR-2.

This means that starting from 1st October 2024, proceeds from share buybacks will be treated as deemed dividends and taxed accordingly. Additionally, taxpayers can now offset capital losses on buybacks, provided the corresponding dividend income has been declared.

“The newly notified ITR-2 also introduces enhanced reporting for foreign assets via schedules FA (Foreign Assets) and FSI (Foreign Source Income). Additionally, Schedule VDA requires transaction-wise reporting of virtual digital assets, taxed at 30% under Section 115BBH. There is also the inclusion of disclosures of Legal Entity Identifier (LEI) for specified high-value transactions.

“For high net-worth individuals, mandatory disclosures like Schedule FA and LEI ensure accountability, reducing non-compliance risks,” says Sharanya Tripathi, Associate Advocate, Jotwani Associates

On what mistakes should taxpayers avoid while filing ITR-2, Deepak Kumar Jain, founder and CEO of TaxManager.in, explains that taxpayers often ignore or skip disclosing income from foreign transactions or ownership of foreign assets, including foreign bank accounts, in Schedule FA, which can lead to notices from the Income Tax Department. “Another mistake taxpayers often make is ignoring reporting income from interest or a minor’s income from various sources, which leads to notices and penalties from the Department of Income tax, he adds.

What documents will be required to file ITR-2?

According to the official website of the Income Tax Department, a taxpayer will require the following documents to be able to successfully file ITR-2:

• Form 16, in case of salary income
• Form-16a issued by TDS deductors. If you have earned interest on fixed deposits and TDS has been deducted on the same, you need TDS certificates
• Form 26AS to verify TDS on salary as well as TDS other than on salary. Form 26AS can be downloaded from the e-filing portal.
• If you are living in rented premises, you need rent-paid receipts for the calculation of HRA (in case you have opted for the old tax regime and have not submitted the same to your employer)
• In case you have any capital gains transactions in shares, you will need a summary or profit / loss statement of capital gain transactions of shares or securities during a year, if any, for computation of capital gain.
• Bank passbook, Fixed Deposit Receipts (FDRs) to calculate the amount of interest income
• If you have received rent from your rented house property, then you will need your tenant / local tax payment / interest on borrowed capital details (if any) to calculate income from house property.
• In case you want to claim any loss incurred during the current year, then you will need the relevant documents proving the loss.
• you will also need documents or proofs for claiming tax saving deductions u/s 80c, 80D, 80G, 80GG such as life and health insurance receipts, donation receipts, rent receipts, receipts for tuition fees etc., if the same were not considered in your Form 16.

You need to verify the submitted ITR via online e-verify or offline, through ITR-V as usual.