Tax Filing Season Prep Begins! CBDT Notifies ITR Form 2 for AY 2025-26

Preparations for the tax filing season are underway as the Central Board of Direct Taxes (CBDT) has issued ITR Form 2 for the Assessment Year (AY) 2025-26. Dated May 5, 2025, this notification (No. 43/2025) has been released early, allowing taxpayers and professionals sufficient time to become acquainted with the form for income earned during the Financial Year (FY) 2024-25 (April 1, 2024 - March 31, 2025).

This advance announcement is a positive move, helping to facilitate smoother compliance and planning. Let's explore what ITR-2 entails, who is required to file it, the importance of this notification, and what taxpayers can expect.

What is ITR Form 2? Who Should Submit It?

ITR Form 2 is an Income Tax Return form specifically intended for Individuals and Hindu Undivided Families (HUFs) who meet the following criteria:

• Do NOT earn income from Profits and Gains of Business or Profession. This is the key distinguishing factor. Those with business or professional income will likely need to use ITR-3 or ITR-4.
• Are NOT eligible to submit ITR-1 (Sahaj). Generally, you become ineligible for ITR-1 if:
  • Your total income exceeds ₹50 lakh.
  • You possess income from more than one house property.
  • You generate income from Capital Gains (either short-term or long-term).
  • You have unlisted equity shares at any point during the financial year.
  • You hold a Director position in any company.
  • You have foreign assets or foreign income (including having signatory authority in any account located outside India).
  • Your agricultural income is greater than ₹5,000.
  • You receive income from winnings related to lotteries, racehorses, or other legal gambling activities.
  • You need to claim relief under sections 90/90A/91 for taxes paid abroad.
  • You have carried forward losses or losses set to be carried forward under the category of 'Income from House Property'.
  • You claim deductions under Section 80QQB or 80RRB (Royalty income).

In summary, ITR-2 serves individuals and HUFs with diverse income sources like salary/pension, multiple house properties, capital gains, and additional sources (including foreign income), but without any income generated from business or professional activities.

The early notification of tax forms before the peak filing season (which typically ramps up as the July 31st deadline for non-audit cases approaches) presents numerous benefits:

• Adequate Preparation Time: Taxpayers and tax consultants have increased time to grasp the form's structure, schedules, and any possible changes from the previous year.
• Proactive Tax Planning & Document Organization: Individuals can begin compiling essential documents (such as capital gains statements, foreign income details, rent receipts, investment proofs) relating to FY 2024-25 with the specific criteria of the notified form in mind.
• Quicker Utility Availability: Tax preparation software providers and the Income Tax Department's respective utility developers can commence updates to their tools sooner, easing the actual filing process once the utilities are made available.
• Decreased Last-Minute Rush: Familiarization with the form can help minimize errors and lessen the anxiety associated with filing just before the deadline.

What’s New or Altered in ITR-2 for AY 2025-26?

While the CBDT has announced the form, a comprehensive review will require consulting the specific form along with its related instructions or schema, which will be provided on the official income tax portal (https://www.incometax.gov.in/).

Nevertheless, based on prevailing trends and legislative modifications from the Finance Act relevant to FY 2024-25, taxpayers utilizing ITR-2 should be attentive to possible adjustments or clarifications in areas such as:

• Capital Gains Schedules: There may be minor revisions to the reporting requirements for equities, debts, properties, and virtual digital assets (VDAs) for improved clarity or to reflect new regulations.
• Schedule FA (Foreign Assets): Updates are frequently made to the reporting of foreign assets and income to enhance transparency.
• Deductions and Exemptions: Adjustments should align with any updates in limits or conditions pertaining to deductions for the fiscal year 2024-25.
• Section 115BAC (New Tax Regime): The fields concerning the choice to opt in or out are included (although for ITR-2 filers without business income, the decision is made within the tax return itself each year) along with calculations under the standard new regime.
• Reporting of Specific Incomes: Any new obligations regarding the reporting of particular kinds of income or transactions may arise.

It is essential to consult the officially released ITR-2 form and accompanying instructions for AY 2025-26 once they become available on the e-filing portal for precise information about the changes.

1. Confirm Eligibility: Ensure that ITR-2 is indeed the appropriate form for your sources of income and circumstances for the fiscal year 2024-25.
2. Gather Documents: Begin collecting all necessary financial documents for the period from April 1, 2024, to March 31, 2025. This includes Form 16/16A, bank statements, investment statements, capital gains summaries from brokers, property records, details regarding foreign assets/income, and evidence for any deductions you intend to claim (if choosing the old regime), among others.
3. Stay Updated: Monitor the income tax portal for the launch of the ITR-2 utility/schema and guidelines.
4. Consult if Needed: If your financial situation is intricate (for example, substantial capital gains, foreign earnings, multiple properties), it may be beneficial to seek advice from a chartered accountant or tax consultant soon. They can assist with navigating the form and ensuring full compliance.

The CBDT's announcement of ITR Form 2 for AY 2025-26 on May 5, 2025, marks a positive advancement in promoting timely and accurate tax adherence. Eligible individuals and HUFs should take advantage of this early information to commence their preparations, gather required documents, and remain aware of the specific demands of the form once the utilities and instructions are completely available. Taking proactive steps is crucial for a seamless tax filing experience.

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