As we enter the tax filing season, a crucial question arises: ‘Which ITR form should I file?’ This question can confuse many of you as the income tax department has categorised taxpayers based on their income, source of income, and other factors, introducing seven different ITR forms.
Specific income tax return forms are required for taxpayers with different income categories. Among the seven different ITR forms available, ITR 2 and ITR 3 are particularly relevant for crypto investors, addressing their unique tax requirements.
The ITR-2 form is designed for individuals and Hindu Undivided Families (HUFs) who aren’t engaged in any profession or business.
In this article, we’ll cover everything you need to know about ITR-2, including who’s eligible to file it and recent changes. This article will benefit you greatly, whether you are new to taxation or a regular taxpayer.
Who Should File ITR 2?
If you are an individual or come under Hindu Undivided Families (HUF) with income sources other than ‘Profits and Gains from Business or Profession,’ you must use Form ITR-2. This form is tailored for individuals receiving income from the following:
- Salary or pension
- House property (income can come from multiple properties)
- Capital gains or losses from selling investments or property (both short-term and long-term)
- Other sources (such as lottery winnings, racehorse bets, and legal forms of gambling)
- Residents with foreign income who claim foreign tax credits and disclose foreign assets
- Agricultural income exceeding Rs 5,000
- Residents not ordinarily resident and non-residents
- Income from Virtual Digital Assets (Cryptocurrency)
If your total income from these sources surpasses Rs 50 lakh, you must file your returns using Form ITR-2. Additionally, if you’re a director of any company or an individual who has invested in unlisted equity shares, filling out ITR-2 is mandatory.
Significant Changes Made In ITR 2 For AY 2024-25
Form ITR-2 witnessed significant changes in the AY 2023-24, which will also be carried forward to AY 2024-25. These changes are as follows:
Schedule VDA: Computing Income From Transfer Of Virtual Digital Assets
A new schedule has been introduced to facilitate the calculation of income derived from cryptocurrencies or other virtual digital assets.
Relief u/s 89A: Additional Clause For Residents With Foreign Retirement Benefits
An additional clause has been appended concerning relief for residents receiving income from foreign retirement benefits accounts:
- Point No. 1(e)4: Specifies income taxable during the previous year for which relief under section 89A was claimed in any preceding year.
Sec 10(12C): Addition Of New Exemption Under Other Exempt Income
A new exemption has been included under Section 10(12C) about:
- Any payment from the Agniveer Corpus Fund to an individual enrolled under the Agnipath Scheme or their nominee.
Schedule SI: Inclusion Of Point 115BBH For Income From Transfer Of Virtual Digital Assets
Section 80 CCH: Introduction Of New Deduction Clause
Under Chapter VI, A deduction introduced a new clause:
- The entire amount contributed by applicants employed by the Central Government to the Agniveer Corpus Fund is eligible for tax deductions.
ARN Requirement In Schedule 80G
Additional information regarding ARN (Donation Reference Number) is now mandatory in clause D of Schedule 80G.
Check this article to understand how to E-File ITR 2 online for FY 2023-24 (AY 2024-25)
Conclusion
We hope you understand the details of the ITR-2 form. By equipping yourself with this knowledge, you’ll be well on your way to submitting your taxes efficiently and accurately. Remember that if you are earning any form of income from cryptocurrencies, it is vital to disclose it in ITR 2 or ITR 3 based on the source of income. However, manually calculating crypto taxes in India can take time and effort. This is where you can utilise KoinX. It is an automated crypto tax calculating platform that offers an accurate tax report based on the nature of crypto transactions. The platform also connects you with tax professionals for further filing of ITRs at a minimal cost. So, if you are a crypto tax investor, join KoinX today and ease up your tax season.
Frequently Asked Questions
Who Cannot File ITR 2?
Individuals or Hindu Undivided Families (HUFs) who have income from business or profession cannot file ITR 2. Additionally, individuals who are eligible to fill out the ITR-1 form (Sahaj) are also not allowed to file ITR 2.
Do You Need A Balance Sheet For ITR 2?
Salaried individuals filing their income tax return using the ITR 2 form do not need to provide a balance sheet. This form is designed for individuals and Hindu Undivided Families (HUFs) with income from multiple sources, such as salary, house property, capital gains, etc.
Therefore, while a balance sheet is not required for salaried individuals using ITR 2, they must ensure accurate reporting of their various income sources and deductions per the form’s guidelines.
What Is The Deadline Of Filing ITR 2?
The due date for filing Income Tax Returns (ITR) for non-audit cases is July 31, 2024. However, the deadline for cases requiring audit is extended to October 31, 2024. Taxpayers must adhere to these deadlines to avoid penalties or late fees.
Can A Non-Resident Caim A Rebate Under u/s 87A?
No. The rebate under section 87A is exclusively available to individuals in India. Consequently, non-residents are ineligible to claim it.
