The Central Board of Direct Taxes (CBDT) has officially notified the Income Tax Return (ITR) Form 2 for the Assessment Year 2025-26. This form applies to individuals and Hindu Undivided Families (HUFs) who do not earn income from business or profession. However, it covers income from salary, house property, capital gains, foreign assets, and other sources.
Here’s a detailed look at the key changes introduced in the ITR-2 Form for the new assessment year:
1. Capital Gains Segregated Based on Date – Before and After 23.07.2024
A significant update has been made to the Schedule Capital Gains, now requiring taxpayers to report gains separately for transactions made before and after 23rd July 2024. This change aligns with the amendments introduced in the Finance Act, 2024, impacting the way capital gains are taxed for different time periods.
2. Mandatory Disclosure of TDS Section Codes in Schedule TDS
Taxpayers must now report the specific section code under which Tax Deducted at Source (TDS) was made. This helps in precise tracking and verification of TDS claims, ensuring better transparency and reducing mismatches during processing.
3. Asset and Liability Schedule for Individuals with Income Over Rs. 1 Crore
If your total income exceeds Rs. 1 crore, you are now required to declare details of your assets and liabilities in the ITR-2. This is aimed at increasing tax transparency and curbing tax evasion among high-income taxpayers.
4. Capital Gains from Unlisted Bonds and Debentures
The form now specifically requires reporting of capital gains from the sale of unlisted bonds and debentures. Taxpayers must classify such gains as Short-Term Capital Gain (STCG) or Long-Term Capital Gain (LTCG) based on the actual period of holding and date of transfer.
5. Buy-back Proceeds to be Reported as Deemed Dividend from 01.10.2024
Starting 1st October 2024, any proceeds received from buy-back of shares by shareholders are to be reported as deemed dividend. This change aligns with the updated tax treatment under the Finance Act and impacts those holding shares in companies conducting buy-back operations.
6. Disability Certificates Required for Deductions Under Sections 80DD and 80U
Claiming deductions under Sections 80DD and 80U (related to disability and dependent care) now requires mandatory reporting of disability certificates, enhancing compliance and authenticity of deduction claims.
7. Enhanced Reporting for Deductions – Sections 80C, 10(13A), etc.
The new ITR-2 demands more granular details of deductions claimed under popular sections like 80C (LIC, PPF, etc.) and 10(13A) (House Rent Allowance). This move is expected to reduce errors and improve accuracy during assessment.
8. Capital Loss Allowed on Share Buyback (Post 01.10.2024)
Taxpayers can now claim capital loss on share buybacks if the corresponding buy-back proceeds are reported as deemed dividend under “Income from Other Sources”. This adjustment is applicable for transactions from 1st October 2024 onwards and ensures a fair tax treatment.
Conclusion
These changes to ITR-2 reflect the Income Tax Department’s continued focus on better transparency, accurate reporting, and alignment with legal amendments. Taxpayers filing ITR-2 should carefully go through these updates and gather necessary documents and disclosures before filing their returns for AY 2025-26.