scorecardresearchHow to file ITR-2 on the income tax portal? A step-to-step guide

How to file ITR-2 on the income tax portal? A step-to-step guide

Updated: 06 Jul 2023, 04:21 PM IST
TL;DR.

For individuals with salary, capital gains, and other income for the Financial Year 2022-23 (Assessment Year 2023-24), ITR-2 can be filed online.

File ITR-2 for income from salaries, capital gains, and other sources

File ITR-2 for income from salaries, capital gains, and other sources

If an individual falls under the category of non-resident, not-ordinarily resident, or if their income exceeds the limits specified in ITR-1 (such as total income exceeding 50 lakh, having multiple house properties, or involving capital gains), they are required to file their income tax return (ITR) using ITR-2. However, ITR-2 cannot be used by individuals with income from a business or profession.

How to file ITR-2 on the income tax portal?

Step 1: To access the official income tax website, go to and log in using your PAN/Aadhaar and password.

Step 2: Navigate to the menu and select E-File > Income Tax Returns > File Income Tax Return.

Step 3: Choose the assessment year as 2023-24 and select the mode of filing as “online”. Click “Continue” to proceed. It is important to note that for filing ITR for the financial year 2022-23, the assessment year 2023-24 should be selected. If you are uploading a JSON file generated from the department's utilities, make sure to select the mode of filing as “offline”.

Step 4: Select your status as an individual and click “Continue”.

Step 5: In the “ITR Form” dropdown menu, select “ITR-2”.

Step 6: Typically, individuals file an ITR when their income exceeds the maximum exemption limit. However, it is important to note that ITR filing is mandatory in certain situations, even if the total income of an individual does not surpass the maximum exemption limit. Choose the appropriate reason for filing the Income-tax Return and proceed by clicking “Continue”.

Step 7: On the following page, you will be presented with the option to select the relevant schedules. The necessary schedules will already be pre-selected for your convenience. You can choose additional schedules based on the type and sources of income that need to be reported in your ITR. For example, if you have income from the sale of cryptocurrencies (Virtual Digital Assets), make sure to select the “Schedule VDA”. Based on your individual circumstances, you have the flexibility to include various schedules as needed.

Step 8: Use “Schedule S” to report your salary income. If you changed jobs during the financial year 2022-23, it is important to disclose the salary income from all employers in this schedule. Make sure to obtain Form 16 from each employer to facilitate the filing of your ITR. When reporting salary income, it is essential to provide specific details for each employer, including the employer's name, Tax Deduction and Collection Account Number (TAN) if applicable, address, and nature of the employer. In order to accurately report your salary income, you will need to provide a comprehensive breakdown of salary components, which includes details about your basic salary, allowances, and any perquisites received.

Apart, it is important to report any profits received in lieu of salary. This includes compensation for termination of employment, payments from provident funds, payments under a keyman insurance policy, and any other relevant earnings of a similar nature. Be sure to include these details when filing your ITR.

For a comprehensive breakdown of the salary components, you can refer to PART B of Form 16 and Form 12BA. These documents provide detailed information about the various elements comprising your salary.

Under the Income-tax Act, there are three deductions available when calculating the income chargeable under the head of salaries:

a) Standard Deduction of 50,000,

b) Deduction for Entertainment Allowance, and

c) Deduction for Professional Tax.

To claim the deduction for Entertainment Allowance, it is crucial to select the nature of the employer as a government employer. This deduction is exclusively available to government employees. If you do not select the appropriate nature of the employer, the portal will not permit you to claim this deduction.

Additionally, professional tax is levied by 23 states in India on individuals earning income within their respective jurisdictions. You can claim a deduction for the amount of professional tax paid during the year.

An employee is entitled to an absolute and unconditional deduction of Rs. 50,000 as a “Standard Deduction”. This deduction does not necessitate any supporting evidence or investment. It can be claimed once per year, irrespective of the number of job changes within that period. However, it is important to note that this deduction can be claimed only if one opts for the old tax regime for the financial year 2022-23.

Step 9: To report capital gains, utilise “Schedule CG”. Any profit or gain resulting from the sale of a capital asset falls under the taxable purview of capital gains. To accurately report capital gains, it is necessary to specify the type of capital assets that have been sold.

The taxation of capital gains from the sale of equity shares is determined by two factors. Firstly, the classification of the capital gains as either long-term or short-term, and secondly, whether the shares are listed or unlisted on the stock exchange. In the case of equity shares listed on Indian stock exchanges, if they are held for a period of not more than a year before the transfer, they are considered short-term capital assets. However, if the shares are held for more than 12 months, they are treated as long-term capital assets.

The capital gain transactions would be reported in ITR-2 as under. Many taxpayers inquire about how to report short-term capital gains from listed equity shares. Short-term capital gains derived from the sale of listed equity shares are subject to taxation at a concessional rate of 15 per cent, along with applicable surcharge and cess, if the transaction is liable for the Securities Transaction Tax (STT). In Schedule CG, enter the pertinent information regarding the full value of consideration and any applicable deductions. The capital gains will be automatically calculated for you.

And, then comes the pain of reporting long-term capital gains from listed equity shares. To report long-term capital gains or losses from the sale of listed equity shares, units of equity-oriented mutual funds, or units of business trusts, you should choose Schedule 112A. It's important to note that long-term capital gains from the sale of listed equity shares are exempt from taxation if the aggregate amount of capital gains during the year does not exceed Rs. 1,00,000. However, any capital gains exceeding Rs. 1 lakh in a financial year will be subject to a tax rate of 10 per cent.

When selecting the details of acquired shares, it is crucial to specify whether they were obtained on or before January 31, 2018, or after that date. This distinction is important to benefit from the grandfathering provision. The Central Board of Direct Taxes (CBDT) has clarified that for shares eligible for grandfathering, scrip-wise details must be provided. If you are entering details for shares acquired on or before January 31, 2018, you need to provide the relevant information for each share. This includes the ISIN code, name, number of shares, sale price, and fair market value per share as of January 31, 2018.

The information entered in “Schedule 112A” will be automatically populated in “Schedule CG”.

Step 10: TTo report income from other sources, you should use “Schedule OS”. Income from other sources is a residual category that encompasses all incomes not classified under the other four categories. However, certain types of income are always taxable under the heading of “income from other sources.” These include winnings from lotteries, gifts, interest in enhanced compensation, and more.

In “Schedule OS”, you should report various types of income, including dividends, interest from savings accounts and deposits, income tax refunds, family pensions, gifts, and more. These incomes are subject to taxation at the normal income tax rates. However, certain types of income such as winnings from lotteries and crossword puzzles are taxed at specified tax rates.

Additionally, you have the option to claim deductions for expenses that can be subtracted from the income taxable under the head of other sources. It is important to note that the deduction of up to 10,000 under Section 80TTA for interest earned on savings bank deposits should be claimed under the “Total Deductions” section and not in “Schedule OS”.

When filling out “Schedule OS”, it is crucial to include the quarterly breakdown of certain incomes, such as dividends and winnings from lotteries. To qualify for relief from interest payments resulting from deferred advance tax payments, it is mandatory to provide the quarterly breakdown of specific incomes, such as dividends and winnings from lotteries, in “Schedule OS”. This relief is offered by the income tax law to address the difficulties in accurately predicting such income.

Once you have finished filling out all the schedules related to income, it is important to claim deductions for eligible tax-saving investments. Additionally, 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 on “proceed” to preview your ITR. If the information provided is accurate, you can proceed to submit your ITR.

Post submission of the ITR, it is crucial to remember to verify the ITR within 30 days of having submitted. Verification is an essential step to complete the filing process and ensure the validity of your ITR.

 

Article
Why should you file ITR even with no taxable income:
First Published: 06 Jul 2023, 04:21 PM IST