When to use ITR-2
ITR-2 is the next step up from ITR-1. Use ITR-2 if any of these apply:
- Total income exceeds ₹50 lakh
- Capital gains (sold stocks, mutual funds, property, bonds, gold)
- More than one house property (you own 2+ houses, regardless of let-out or self-occupied)
- Foreign assets, foreign income, or signing authority on foreign accounts
- Agricultural income over ₹5,000
- NRI / RNOR / Resident with foreign income
- Lottery winnings, race horse income, online gaming winnings
- You're a director in any company (must use ITR-2 minimum)
- You hold unlisted equity shares (private company shares)
If none of above and you're salaried, use ITR-1 (simpler).
If you have business or professional income (freelancing, consulting), use ITR-3 or ITR-4 Sugam.
Documents you'll need
- PAN card (for login)
- Aadhaar card (linked to PAN)
- Bank account details (all accounts; one for refund)
- Form 16 / Form 16A (from employer + any TDS deductors)
- Form 26AS (auto-populated; cross-check it)
- AIS (Annual Information Statement) (auto-populated; broader than 26AS)
- Capital gains statements:
- - Mutual fund CAS (Consolidated Account Statement) from CAMS / Karvy
- - Broker statement for direct equity (Zerodha, Groww, Upstox)
- - Sale deed for property + indexed cost calculations
- Bank passbook for FD/RD interest income
- Rental income documentation (rental agreement, tenant PAN if rent > ₹2.4L/year)
- Foreign bank statements + Schedule FA disclosure (NRIs)
Step-by-step ITR-2 filing online
### Step 1: Login
1. Visit incometax.gov.in 2. Login with PAN + password + OTP 3. Click "e-File" → "Income Tax Returns" → "File Income Tax Return"
### Step 2: Select assessment year + form
1. Assessment Year: 2026-27 (for FY 2025-26 income) 2. Mode of Filing: Online 3. Status: Individual / HUF (whichever applies) 4. ITR Form: ITR-2
### Step 3: Personal Information
Auto-filled from PAN. Verify: - Name, DOB, gender - Address, contact details - Aadhaar (must be linked) - Bank account for refund (must be validated; if not, validate via "My Bank Accounts") - Tax regime selection: New (default for FY 2025-26) or Old
Old regime opt-in: If you choose old, ensure Form 10-IEA is filed first (mandatory step).
### Step 4: Income from Salary
Auto-populated from Form 16: - Gross salary - Allowances exempt under Section 10 (HRA exemption, LTA exemption, gratuity, leave encashment) - Deductions (Standard ₹75K new regime / ₹50K old regime, professional tax, entertainment allowance for govt) - Taxable salary
Cross-check with your Form 16 Part B. If mismatch, fix in Form 16 first via your employer.
### Step 5: Income from House Property (Schedule HP)
For EACH property (self-occupied, let-out, or deemed let-out):
- Address, ownership %
- Annual rent received
- Property tax paid
- Standard deduction 30%
- Interest on home loan (Section 24b)
- Net income / loss
For self-occupied: Rent = ₹0; you can claim ₹2L Section 24b interest deduction (old regime).
For let-out: Full interest deductible; loss capped at ₹2L offset against other income; rest carries forward 8 years.
Common error: People file second house as "self-occupied" — only one can be self-occupied; second is "deemed let-out" with notional rent.
### Step 6: Capital Gains (Schedule CG) — the big one
This is where ITR-2 differs from ITR-1.
For listed equity / mutual fund (Schedule 112A): - Pre-fill from broker's statement of capital gains (most discount brokers provide this) - LTCG above ₹1.25L exemption taxed at 12.5% + cess - STCG taxed at 20% (FY 24-25 onwards)
For property (Schedule 112): - Sale price - indexed cost - improvement cost - LTCG (held 24+ months) at 12.5% without indexation OR 20% with indexation (pick lower) - STCG (held <24 months) at slab rate
Capital gains exemptions (claim if applicable): - Section 54 (residential to residential) - Section 54F (other assets to residential) - Section 54EC (NHAI/REC bonds)
Read Capital Gains Exemption Section 54 vs 54F for details.
### Step 7: Income from Other Sources
- FD interest (must report all, even if no TDS deducted — Form 15G/15H submitted doesn't exempt from declaring)
- Savings account interest (if > ₹10K, claim Section 80TTA in old regime)
- Dividend income (taxable at slab rate from FY 2020-21)
- Lottery / online gaming winnings (Section 115BB, flat 30% — not slab)
### Step 8: Deductions (Chapter VI-A)
If old regime selected: - Section 80C: ₹1.5L (PPF, ELSS, LIC, EPF, principal repayment) - Section 80D: ₹25K-₹1L (health insurance) - Section 80CCD(1B): ₹50K (NPS Tier 1 voluntary) - Section 80E: Education loan interest (no cap, 8 yrs) - Section 80G: Donation deductions - Section 80TTA / 80TTB: Interest deduction
If new regime: only Standard Deduction ₹75K + Section 80CCD(2) (employer NPS contribution).
### Step 9: Schedule FA — Foreign Assets (CRITICAL for NRIs)
Mandatory disclosure of: - Foreign bank accounts - Foreign equity / mutual funds - Foreign property - Foreign trust beneficiary status - Foreign annuity / pension
Penalty for non-disclosure: ₹10 lakh under Black Money Act, plus prosecution. Even ₹0 income from foreign asset = mandatory to disclose.
### Step 10: Schedule AL — Assets and Liabilities (if income > ₹50L)
Mandatory if total income exceeds ₹50 lakh. Disclose: - Land, building, jewellery, vehicles, cash in hand - Loans / liabilities - Bank account balances at year end
This is a disclosure schedule, not a tax calculation. Lying = penalty.
### Step 11: Tax Computation
Auto-calculated from above. Includes: - Slab-rate tax on regular income - Special-rate tax on capital gains, lottery, etc. - 4% Health & Education Cess - Surcharge if income > ₹50L (10%, 15%, 25%, 37%) - TDS already deducted (from 26AS / AIS) - Self-assessment tax payable (if any) OR refund
If self-assessment tax owed: pay before submitting via "e-Pay Tax" → Challan 280.
### Step 12: Verify
- Review entire ITR-2
- Confirm bank account for refund
- Click "Submit"
- Choose verification method:
- - Aadhaar OTP (fastest, < 1 min)
- - Net banking
- - Demat account EVC
- - Sending physical signed ITR-V to CPC Bengaluru (last resort)
Verify within 30 days of filing (else return becomes invalid, treat as not filed).
Common ITR-2 mistakes
1. Using ITR-1 when capital gains exist. ITR-1 doesn't allow capital gains; you'd need to refile.
2. Not declaring foreign assets in Schedule FA. Black Money Act penalty.
3. Mismatched data with AIS / 26AS. Tax officer flags any inconsistency. Cross-check before submitting.
4. Filing without paying self-assessment tax. Defective return notice; rectify with payment + acknowledgement.
5. Forgetting capital gains exemptions. Sections 54, 54F, 54EC, 54B all need explicit claim — they don't auto-apply.
6. Reporting indexed cost incorrectly for property. Use Cost Inflation Index from incometax.gov.in for the sale year and acquisition year.
7. Ignoring AIS pre-fill. AIS shows transactions banks/brokers reported. Mismatching it = scrutiny risk.
Deadlines (FY 2025-26 / AY 2026-27)
- 31 July 2026: ITR filing deadline for individuals not requiring tax audit
- 31 October 2026: ITR filing for tax-audit cases
- 31 December 2026: Belated return filing (with ₹5K-10K late fee)
- 31 March 2027: Last date for belated return
After 31 March 2027, return cannot be filed; forced to wait for assessment notice.
Tax-saving last-minute tips before March 2026
1. Maximize 80C investments: PPF, ELSS, NPS Tier 1 2. Claim 80D: Buy/renew health insurance 3. 80CCD(1B): ₹50K NPS Tier 1 (old regime) 4. 80E education loan interest: Claim if applicable 5. Tax-saving FD or 5-yr bank FD: ₹1.5L deduction within 80C 6. Donations: 80G to PM CARES, etc.