May 06, 2025
Individuals with salary or pension income, or those earning income from more than one house property, can file their income tax return using ITR-2. Notably, any income from capital gains or losses from property or other investments, whether long-term or short-term, must be reported in this form.
The recent update by CBDT specifies that the new ITR-2 is applicable only if the total income exceeds Rs 1 crore. This change will provide relief to individuals with annual incomes between 50 lakh and 1 crore, as they will no longer be required to prepare a schedule of assets and liabilities.
"CBDT notifies ITR-Form 2 for AY 2025-26 vide Notification No. 43/2025 dated 03.05.2025. Key updates:
🖋️ Schedule-Capital Gain split for gains before/ after 23.07.2024 (post changes in Finance Act, 2024)
🖋️Capital loss on share buyback allowed if corresponding dividend income is shown as income from other sources (post 01.10.2024)
🖋️Asset & liability reporting limit raised to ₹1 crore of total income
🖋️Enhanced reporting for deductions [80C,10(13A)], etc.
🖋️TDS section code to be reported in Schedule-TDS," the Income Tax department noted.
Key details of ITR Form 2
> Capital gains bifurcation:
New fields in Schedule-Capital Gains to separately report gains before and after July 23, 2024, in line with changes introduced in the Finance Act, 2024.
> Buyback loss claim allowed:
Capital loss on buyback of shares can now be claimed if the related dividend income is reported under "Income from Other Sources" (applicable for transactions after October 1, 2024).
ITR-1 vs ITR-2
ITR-1 (Sahaj) – For Simple Income Profiles
Eligibility: Resident individuals (excluding Not Ordinarily Resident)
Total income up to Rs 50 lakh
Income sources:
Salary or pension
Income from one house property
Other sources (e.g., interest)
Agricultural income up to Rs 5,000
Ineligible if:
You are a director in a company
Held unlisted equity shares during the year
Have foreign assets or income
Income includes capital gains (except LTCG up to Rs 1.25 lakh from listed equities)
Total income exceeds Rs 50 lakh
Key Updates for AY 2025–26:
Now allows reporting of long-term capital gains (LTCG) up to Rs 1.25 lakh from listed shares and mutual funds, simplifying filing for small investors.
Enhanced reporting for deductions under sections like 80C and 10(13A).
Detailed TDS information required, including section-wise breakdown.
ITR-2
Eligibility:
Individuals and Hindu Undivided Families (HUFs)
Income sources:
Salary or pension
Income from more than one house property
Capital gains (short-term and long-term)
Foreign assets or income
Agricultural income exceeding ₹5,000
Other sources, including lottery winnings
Applicable for residents, Non-Resident Indians (NRIs), and Resident Not Ordinarily Residents (RNORs)
Ineligible if:
You have income from profits and gains of business or profession
Key Updates for AY 2025–26:
Capital gains must be reported separately for transactions before and after July 23, 2024, in line with changes from the Finance Act, 2024.
Capital loss on share buybacks allowed if corresponding dividend income is disclosed as "Income from Other Sources," effective from October 1, 2024.
Asset and liability reporting threshold increased from Rs 50 lakh to Rs 1 crore of total income, reducing compliance burden for many taxpayers.
Mandatory reporting of TDS section codes in Schedule-TDS for better classification.
Enhanced disclosure requirements for deductions under sections like 80C and 10(13A).
