How to file ITR-2 online with salary, capital gains and other incomes for FY 2023-24 (AY 2024-25)? This guide outlines the most effective way to file ITR-2 online, including examples of reporting salary, capital gains, and other incomes in the tax return form
Naveen Wadhwa
Vice-President, Taxmann
Tarun Kumar Madaan
Chartered accountant
While ITR 1 is a widely used form for salaried individuals with specific income sources, it cannot be used by everyone. When an individual is a non-resident or not ordinarily resident or his income surpasses the threshold of Rs 50 lakh, involves multiple house properties or consists of capital gains, the ITR has to be filed in Form ITR 2. An individual with income from a business or profession cannot use this form.
#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} One can file ITR-2 using the income tax department’s Excel or Java utilities or online directly through the e-filing portal. This article explains the most efficient method of filing ITR-2 online, with illustrations of reporting salary, capital gains, and other incomes in the tax return form.
Steps to e-file ITR-2 on the income tax portal
Step 1: Go to https://www.incometax.gov.in/iec/foportal and log in with your PAN/Aadhaar and password.
Step 2: Go to E-File > Income Tax Returns > File Income Tax Return from the menu.
Step 3: Select the assessment year 2024-25 for income earned between April 01, 2023 and March 31, 2024 and mode of filing as ‘online’ and click ‘Continue’ to proceed. You can select offline filing mode if you want to upload a JSON file generated from the tax department’s utilities.
Step 4: Select your status as ‘Individual’ and click ‘Continue’.
Step 5: From the ‘ITR Form’ dropdown, select ‘ITR-2’.
Step 6: Usually, people file ITR when their income is above the maximum exemption limit. However, even if the total income of an individual does not exceed the maximum exemption limit, ITR filing is mandatory in certain situations. Select the reason for filing the income tax return and click ‘Continue’.
Step 7: On the next page, you will be provided with the option to select the applicable schedules. The mandatory schedules will be pre-selected. You can choose the additional schedules based on the nature and sources of income you need to report in the ITR. For instance, if you have income from the sale of cryptocurrency (Virtual Digital Assets), you should select the ‘Schedule VDA’. Depending on your specific requirements, you can add various schedules as applicable.
Step 8: Reporting of Part A-General Information
Most of the information in this section is pre-filled. However, it is important to note that from FY 2023-24 (AY 2024-25), the new tax regime is the default regime. If you continue with the new tax regime, your taxes will be computed at lower rates but without the benefit of specified exemptions or deductions. If you want to opt for the old tax regime, you must explicitly opt out of the new tax regime in your tax return. The ITR form asks, "Do you wish to exercise the option u/s 115BAC (6) of Opting out of new tax regime?" An individual must select 'Yes' if they want to file ITR under the old tax regime.
Part-A requires you to report if you are a director in any company or if you held unlisted equity shares during the year.
Starting from assessment year 2024-25, details of the Legal Entity Identifier (LEI) must be provided if income tax refund of Rs 50 crore or more is claimed. The LEI is a 20-character unique alphanumeric code that identifies the parties involved in financial transactions worldwide. It enhances the quality and accuracy of financial data reporting for better risk management.
The following details are to be furnished for LEI:
LEI NumberValid up to date
Step 9: Reporting of Salary Income in ‘Schedule S’.
If you have switched jobs in FY 2023-24, you must report salary income from all employers in this schedule; you should obtain Form 16 from each employer.
For each employer, you need to provide the employer’s name, TAN if TDS is deducted, address, and nature of the employer. To report the salary income, you need to provide a detailed breakup of salary components, including basic salary, allowances, and details about perquisites (such as accommodation, interest-free or concessional loans, free education, gifts, vouchers, employee stock options, etc.).
You also need to report any profits received in lieu of salary, such as compensation for termination of employment, payments from provident funds, payments under a keyman insurance policy, etc.
You can refer to PART B of Form 16 and Form 12BA for a comprehensive breakdown of the salary components. These documents provide detailed information regarding the various elements included in your salary.
To illustrate, let us consider the case of Mr. A, who received a salary from XYZ Private Limited. His salary components are as follows:
Basic Salary: Rs. 7,00,000House Rent Allowance (HRA): Rs. 3,50,000Leave Travel Allowance (LTA): Rs. 1,80,000Children Education Allowance (CEA): Rs. 5,000Work from Home Allowance (WFH): Rs. 45,000Gift vouchers: Rs. 1,40,000.The exempted components of these allowances are as follows:
Exempted portion of HRA: Rs. 2,40,000Exempted portion of LTA: Rs. 1,00,000Exempted portion of CEA: Rs. 1,200When reporting salary income in ITR-2 form, the details should be filled in as follows:
Under the old tax regime, the allowances eligible for exemption under Section 10 should be manually reported separately in ‘Schedule S’. Once we fill in the details of allowances to the extent exempt under Section 10, the exempted component of these allowances will be deducted from the gross salary.
If an individual has opted for the new tax regime, he cannot claim these exemptions; however, from AY 2024-25, he can claim the standard deduction of Rs 50,000 from his salary income.
The Income-tax Act provides three deductions while computing the income chargeable under the head of salaries:
Standard Deduction of Rs 50,000;Deduction for Entertainment Allowance; andDeduction for Professional Tax.The deduction for Entertainment Allowance is allowed only to a government employee.
23 States in India levy professional tax on every individual who earns income in these states. The individual can claim a deduction for the professional tax he has paid during the year.
A Standard Deduction of Rs 50,000 is an absolute and unconditional deduction allowed to an employee, and it does not require any supporting evidence or investment. This deduction can be claimed only once every year, regardless of the number of job changes during that period.
Step 10: Reporting of Capital Gains in ‘Schedule CG’.
Any profit or gain arising from the sale of a capital asset is taxable under the head of the capital gains. To accurately report capital gains, you must specify the type of capital assets you have sold. In the event of the sale of equity shares and having both long-term and short-term capital gains during the year, you should provide the following details:
If there is a loss on selling the capital asset, the same must be reported in the ITR. The capital losses can be carried forward depending on the nature of the capital asset. The reporting of capital loss will be done in a similar manner.
To illustrate, Mr. A has sold listed equity shares of Rs. 10 lakh during the year. Out of this amount, Rs 6 lakh represents long-term shares, with a cost of acquisition of Rs 4 lakh. The remaining Rs 4 lakh represents the sale of shares resulting in short-term capital gains, with a cost of acquisition of Rs 3.5 lakh.
The tax on capital gains arising from the sale of equity shares depends upon two factors: whether the capital gains are long-term or short-term and whether the shares are unlisted or listed on the stock exchange. Equity shares listed on India’s stock exchanges are treated as short-term capital assets if held for not more than 12 months immediately preceding the date of transfer. They are treated as long-term capital assets if held for more than 12 months.
These transactions should be reported in ITR-2 as follows:
Reporting of Short-Term Capital Gains from Listed Equity Shares:
Short-term capital gains arising from the sale of listed equity shares are taxable at a concessional rate of 15% plus surcharge and cess if the transaction is chargeable to the Securities Transaction Tax (STT). In Schedule CG, enter the details of the full value of consideration and deductions. The capital gains shall be auto-computed:
Reporting of Long-Term Capital Gains from Listed Equity Shares:
Long-term capital gain arising from the sale of listed equity shares is not taxable if the aggregate amount of capital gain during the year does not exceed Rs 1 lakh. If the amount of capital gain exceeds Rs 1 lakh in an FY, then the excess amount shall be taxable at 10%. To report long-term capital gains/loss on listed equity shares, units of the equity-oriented mutual fund or units of business trust, you need to select Schedule 112A.
While selecting the details of shares acquired, you must specify whether the shares were acquired on or before January 31, 2018 or after January 31, 2018. This is done to avail of the benefit of grandfathering provision. The CBDT has clarified that the scrip-wise details have to be filled out for those shares that are eligible for grandfathering.
If you have to fill in the details of the shares acquired on or before January 31, 2018, you need to enter the scrip-wise details of each such share. Further, the ISIN Code, name, number, sale price and fair market value per share as of January 31, 2018 need to be entered.
The details in ‘Schedule 112A’ will get auto-populated in ‘Schedule CG’.
Step 11: Reporting of Income from Other Sources in ‘Schedule OS’
Income from other sources is a residual head of income that captures all incomes not classified under the other four categories. However, certain incomes will always be taxable under the head of ‘income from other sources’, inter-alia, winning from lotteries, gifts, interest on enhanced compensation, etc.
In this schedule, one shall report incomes such as dividends, interest from savings accounts, deposits and income tax refunds, family pensions, gifts, etc. These are taxed at normal income tax rates. Income from winning from lotteries, crossword puzzles, etc., is taxed at a specified tax rate. You can also claim deductions for expenses that can be subtracted from the income taxable under the head of other sources. It should be noted that the deduction of up to Rs 10,000 under section 80TTA for the interest earned on savings bank deposits can be claimed under the ‘Total Deductions’ section and not under ‘Schedule OS’.
For instance, Mr. A has received income from various sources, including interest on saving deposits of Rs 20,000, interest from term deposits of Rs 34,000, and interest on income tax refund of Rs 7,500. He has won a lottery prize of Rs 2 lakh. These sources of income should be reported in Schedule OS as follows:
It is essential to report the quarterly breakdown of specific incomes, such as dividends and winnings from lotteries in ‘Schedule OS.’ This quarterly reporting is mandatory to qualify for the relaxation from interest payable due to deferment in advance tax payment. The income tax law provides relief on the payment of interest due to difficulty in predicting such income.
Step 12: After completing all the income-related schedules, it is important to claim deductions for eligible tax-saving investments.
Last year, the Income Tax Department issued notices to taxpayers who donated to political parties. These notices investigate whether such donations were used for tax evasion or money laundering. Therefore, from this year, the ITR form includes a new Schedule 80GGC, which requires detailed information about contributions made to political parties. Unlike previous ITR forms, the new forms require more than just the amount eligible for deduction under section 80GGC. The following additional details must be provided:
Date of ContributionContribution Amount (with a breakdown of contributions made in cash and other modes)Eligible Contribution AmountTransaction Reference Number for UPI transfer or Cheque Number/IMPS/NEFT/RTGSIFS Code of the Bank
Also, provide the necessary information regarding taxes paid, including TDS from Salary/Other than Salary, TCS, Advance Tax, and Self-Assessment Tax. Once all the required details are filled in the form, click “proceed” to preview the return. If the filled-in information is accurate, you can proceed to submit ITR.
Once the ITR is submitted, do not forget to verify the ITR within 30 days of submission. After verification, you will receive an SMS and/or email confirmation that your return has been successfully filed. It is important to note that the ITR cannot be revised unless verified.
(Naveen Wadhwa is chartered accountant, DGM and R&D, Taxmann.com. Tarun Kumar Madaan is a chartered accountant.)
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This story originally appeared on: India Times - Author:Faqs of Insurances
