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Sharanya Radhakrishnan Nair

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From Panic to Profit: ITR-2 Made Easy for Stress-Free Tax Season

Filing your income tax return (ITR) can be a daunting task, but in India, with diverse income sources and deductions, it can feel even more complicated. Fear not, taxpayers! If you fall under the “moderately complex” category, ITR-2 serves as your bridge between the simplicity of ITR-1 and the depth of other forms. This blog delves into the intricacies of ITR-2, equipping you with the knowledge and resources to conquer your tax filing journey with confidence.

Who qualifies for ITR-2?

Unlike ITR-1, ITR-2 caters to a broader range of individuals, including:

  • Residents with income exceeding Rs. 50 lakhs but not exceeding Rs. 10 crores.
  • Individuals with income from multiple sources, such as salary, house property, capital gains, business income, professional income, etc.
  • Individuals having foreign assets or income.
  • People who hold signing authority in any bank account.

Why choose ITR-2?

While ITR-1 offers simplicity, ITR-2 provides flexibility and comprehensiveness, allowing you to:

  • Report diverse income sources: Whether you run a business, earn professional fees, or have multiple house properties, ITR-2 accommodates your multifaceted income streams.
  • Claim various deductions: Beyond basic deductions like medical expenses and education loans, you can claim specific deductions relevant to your income sources, like depreciation on business assets.
  • Choose the new tax regime: ITR-2 allows opting for the new tax regime with lower tax rates but no deductions under Section 80C to 80U.

More power, more responsibility: With greater income complexity comes the option to optimize your tax liability – just be prepared to put in the extra effort.

Understanding the Structure:

The components of ITR-2 are:

  • Part A: General information
  • Schedule S: Details of income from salaries
  • Schedule HP: Details of income from house property
  • Schedule CG: Computation of income under capital gains
    • Schedule 112A- From the sale of equity share of a company or a unit of equity oriented fund /business trust on which STT is paid
    • Schedule 115AD (I)b(b) (iii) proviso- For non-residents -From the sale of equity share of a company or a unit of equity oriented fund/business trust on which STT is paid
  • Schedule OS: Computation of income under income from other sources
  • Schedule CYLA: Statement of income after set off of current year’s losses
  • Schedule BFLA: Statement of income after set off of unabsorbed loss brought forward from earlier years
  • Schedule CFL: Statement of losses to be carried forward to future years
  • Schedule VIA: Statement of deductions (from total income) under Chapter VIA
  • Schedule 80G: Statement of donations entitled for deduction under Section 80G
  • Schedule 80GGA: Statement of donations for scientific research or rural development
  • Schedule AMT: Computation of Alternate Minimum Tax payable under Section 115JC
  • Schedule AMTC: Computation of tax credit under Section 115JD
  • Schedule SPI: Statement of income arising to spouse/minor child/son’s wife or any other person or association of persons to be included in the income of the assessee in Schedules-HP, CG and OS
  • Schedule SI: Statement of income which is chargeable to tax at special rates
  • Schedule EI: Details of exempt income
  • Schedule PTI: Pass through income details from business trust or investment fund as per Section 115UA, 115UB
  • Schedule FSI: Statement of income accruing or arising outside India
  • Schedule TR: Details of taxes paid outside India
  • Schedule FA: Details of Foreign Assets and income from any source outside India
  • Schedule 5A: Statement of apportionment of income between spouses governed by Portuguese Civil Code
  • Schedule AL: Asset and liability at the year-end (applicable in case the total income exceeds Rs 50 lakh)
  • Schedule tax deferred on ESOP: Information of tax-deferred on ESOPS received from eligible start-ups referred to in Section 80-IAC
  • Part B-TI: Computation of total income
  • Part B-TTI: Computation of tax liability on total income
  • Tax payments- Details of payment of advance tax and self-assessment tax
  • Declaration by the taxpayer
  • Details to be filled if a tax return preparer has prepared the return

Filing process demystified:

Similar to ITR-1, you have two options:

  • Electronically: Recommended for its speed and convenience. Use the e-filing portal and follow the on-screen instructions.
  • Offline: Download the ITR-2 form, fill it manually, and submit it to the nearest Income Tax office.

Bonus tips:

  • Don’t wait until the last minute! Start gathering your documents early and organize them for easy reference.
  • Seek help if needed. Consult a tax advisor if you’re unsure about any aspect of your filing.
  • Remember, filing your taxes accurately and on time is important for a smooth financial future.

Conclusion :

Filing your taxes through ITR-2 might seem daunting, but remember, you’re not alone in this financial maze. With the right tools, resources, and a dash of blogging spirit, you can navigate the complexities and emerge victorious. Embrace the flexibility, claim your rightful deductions, and remember, conquering ITR-2 is not just a tax obligation, it’s a badge of financial literacy.

Frequently Asked Questions on ITR-2 Form:

Yes, ITR-2 is perfect for individuals with income from multiple sources, including salary, professional fees like freelance work, and business income.

Absolutely! You can claim various deductions under Section 80D for medical expenses incurred for yourself, your spouse, and dependent parents.

No, attaching physical documents is not required for electronically filed ITR-2s. However, it’s advisable to retain relevant documents for at least seven years for reference or potential verification by the Income Tax department.

You can e-verify your ITR-2 through various methods, including using Aadhaar OTP, internet banking, or your bank Demat account.

Generally, no, depreciation deductions are primarily for business assets.

Yes, as long as they are justifiable business expenses.

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