The Central Board of Direct Taxes (CBDT) has released the new Income Tax Return Form-2 (ITR-2) for the financial year 2024-25. This form, effective from April 1, 2025, brings several important changes that salaried employees, pensioners, and investors need to know. If you’re wondering whether you need to use ITR-2 and what’s different this year, here’s a simple guide to help you understand.
Who Should File ITR-2?
ITR-2 is designed for individuals and Hindu Undivided Families (HUFs) who do not have income from business or profession. You should use ITR-2 if you have:
- Income from salary or pension
- Income from more than one house property
- Capital gains from selling assets like real estate, stocks, or mutual funds
- Foreign assets or foreign income
- Total income exceeding Rs 50 lakh
- Agricultural income above Rs 5,000
- Other sources of income, such as lottery winnings
If you have any of these, you cannot use the simpler ITR-1 form and must switch to ITR-2.
Key Changes in ITR-2 for FY 2024-25
1. Asset & Liability Reporting Threshold Raised
Earlier, if your total income was above Rs 50 lakh, you had to report your assets and liabilities. Now, this requirement applies only if your income exceeds Rs 1 crore. This change reduces the paperwork for many taxpayers and brings relief to those earning between Rs 50 lakh and Rs 1 crore.
2. More Detailed TDS Reporting
Previously, you only needed to mention who deducted tax at source (TDS) and how much was deducted. Now, you must also specify the exact section of the Income Tax Act under which TDS was deducted (for example, 194C or 194J). This makes the process more transparent and helps match records more easily.
3. Enhanced Capital Gains Reporting
The new ITR-2 requires you to report whether your capital gains (from selling property, shares, etc.) occurred before or after July 23, 2024. This is important because the tax treatment may differ based on this date, following recent changes in tax laws.
Additionally, if you have a capital loss from a share buyback, you can now claim it, provided you also report any related dividend income as “Income from Other Sources.” This rule applies to transactions after October 1, 2024.
4. Foreign and Digital Asset Disclosure
If you have foreign assets or income, you must fill out detailed schedules (FA for Foreign Assets and FSI for Foreign Source Income). The rules for reporting these have become stricter to ensure full disclosure.
For those dealing in virtual digital assets like cryptocurrencies or NFTs, there’s now a separate section (Schedule VDA) where you must report each transaction. These gains are taxed at 30%, so accurate reporting is crucial.
5. Legal Entity Identifier (LEI) for High-Value Transactions
For certain large transactions, you must now provide a Legal Entity Identifier (LEI). This helps authorities track and verify high-value deals more efficiently.
6. Expanded Deduction Reporting
You’ll now need to provide more detailed information for deductions claimed under sections like 80C (investments in PPF, LIC, etc.) and 10(13A) (House Rent Allowance). This change aims to improve transparency and accuracy.
Why These Changes Matter
The updates in ITR-2 are designed to make tax filing more accurate and to reduce unnecessary burdens for many taxpayers. Raising the asset and liability threshold to Rs 1 crore means fewer people need to prepare detailed asset lists, saving time and effort. More precise TDS and capital gains reporting helps avoid errors and mismatches, which could otherwise lead to notices or delays.
For those with foreign income or investments in digital assets, the new schedules ensure that all income is properly disclosed, aligning with global standards.
Who Should Not Use ITR-2?
You cannot use ITR-2 if you have income from business or profession. In such cases, you’ll need to use other forms like ITR-3 or ITR-4, depending on your situation.
The new ITR-2 form for FY 2024-25 is more detailed but also brings some relief by raising the threshold for asset and liability reporting. If you have multiple sources of income, capital gains, or foreign assets, make sure to review the new requirements before filing. Staying updated with these changes will make your tax filing smoother and help you avoid any last-minute surprises.
If you’re unsure about which form to use or how to fill it, consider consulting a tax expert or using trusted online tax filing platforms. The deadline for filing ITR-2 for FY 2024-25 is July 31, 2025-so get started early and file with confidence!
