Income Tax: These Big Changes Have Been Made in ITR-2 Form, New Limit Increased to ₹1 Crore – Taxpayers Must Know

In India, every citizen who earns above a certain limit is required to pay income tax. To do so, they must file an Income Tax Return (ITR). There are various forms available for filing ITR, and each has different rules and criteria. Currently, the Income Tax Department has released the ITR-2 form for the financial year 2024-25, which includes several important changes. Let’s understand what the ITR-2 form is and what modifications have been made in it.

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What Is ITR-2 Form and Who Should Use It?

The ITR-2 form is used by individuals and Hindu Undivided Families (HUFs) who:

• Earn income through salary or pension.

• Have more than one house property.

• Earn capital gains from the sale of shares, mutual funds, property, or other assets.

• Have income from foreign assets or foreign sources.

• Have an annual income exceeding ₹50 lakh.

• Do not have income from business or profession (for which ITR-3 or ITR-4 is applicable).

This form is essential for salaried individuals and pensioners with complex income sources, as well as high-income earners who do not have a business income.

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When Does the New Form Come into Effect?

The Central Board of Direct Taxes (CBDT) has officially notified the ITR-2 form for Assessment Year (AY) 2025–26 (i.e., Financial Year 2024–25). This form will be applicable from April 1, 2025. Along with ITR-2, the department had earlier released ITR-1, ITR-3, ITR-4, and ITR-5 forms.

So, if you’re a taxpayer filing returns for FY 2024-25 (AY 2025-26), and your profile matches the above criteria, you must fill out this new ITR-2 form.

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Major Changes in the ITR-2 Form:

Several updates have been made in the latest ITR-2 form, which are important for taxpayers to understand:

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1. Limit for Disclosing Assets and Liabilities Raised from ₹50 Lakh to ₹1 Crore

Earlier, if your income was above ₹50 lakh, you were required to provide a detailed report of your assets and liabilities. Now, this threshold has been increased to ₹1 crore. This means:

• If your total income exceeds ₹1 crore, you must disclose your assets (such as immovable property, vehicles, jewelry) and liabilities (such as loans) in the ITR-2 form.

This move will benefit many taxpayers who were earlier required to make disclosures at the ₹50 lakh threshold.

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2. Mandatory Disclosure of TDS Sector

In the new form, you now need to specify the sector under which Tax Deducted at Source (TDS) has been deducted. For example:

• Salary

• Rent

• Professional services

• Contract payments

This change is aimed at increasing transparency and making it easier for the Income Tax Department to match TDS entries with the income declared.

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3. Property Transfer Date Must Be Disclosed

You are now required to specify whether the transfer (sale) of any capital asset like land, house, or shares happened before or after July 23, 2024.

Why this matters:

• The date affects the applicable tax rate.

• Tax benefits or exemptions (like under Section 54, 54EC, etc.) may also depend on the timing of the transaction.

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4. Disclosure of Loss in Share Buyback and Dividend Income

According to the new rule:

• If you incurred a loss from share buyback, and

• Also received dividend income from those shares,

Then, you are now required to disclose both entries in the ITR-2 form.

This allows the adjustment of capital loss against other income (to reduce tax liability), and the government can ensure a more accurate reflection of income.

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5. Mandatory Disclosure of Foreign Assets, Income, and Digital Assets

If you hold any of the following, then the ITR-2 form requires you to declare them:

• Foreign Assets (FA): Properties, bank accounts, investments, etc. located abroad.

• Foreign Source Income (FSI): Salary, dividends, interest, etc. earned from outside India.

• Virtual Digital Assets (VDA): Includes cryptocurrencies like Bitcoin, Ethereum, NFTs, etc.

These disclosures ensure better tracking of offshore income and digital transactions, which are under increasing scrutiny globally.

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Why These Changes Are Important

These changes in the ITR-2 form aim to:

• Improve transparency in the tax system.

• Align Indian tax reporting with international standards (especially in cross-border transactions).

• Make the tax filing process more streamlined and accurate.

• Plug loopholes that may have been exploited to hide income or evade taxes.

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How to Fill the ITR-2 Form

If you're eligible to file ITR-2, you can do so by:

1. Visiting the Income Tax e-filing portal.

2. Logging in using your PAN or Aadhaar.

3. Choosing the ITR-2 form.

4. Filling in your income details, TDS, capital gains, and asset disclosures.

5. Submitting and verifying the form digitally.

You can also use utilities like:

• Online filing option on the portal.

• Offline Excel or Java utilities available on the portal.

• Help from a CA or tax consultant, especially if you have complex sources of income.

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Important Deadlines to Remember

• The due date to file ITR for FY 2024-25 (AY 2025-26) is July 31, 2025, unless extended by the government.

• If your accounts are subject to audit, the deadline may extend to October 31, 2025.

• Filing after the deadline may result in a late fee of up to ₹5,000, and interest under Section 234A/B/C.

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What Happens If You Don't File the Right ITR Form?

If you are supposed to file ITR-2, but mistakenly file ITR-1 or any other incorrect form:

• Your return may be considered defective under Section 139(9).

• You might have to refile the return, causing delays.

• Refunds may be held up.

• You could attract penalties for misreporting.

Hence, it is very important to know which ITR form is applicable to you.

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Final Words: Stay Updated, Stay Compliant

The Income Tax Department is continuously making changes in tax laws and forms to ensure better compliance, increased digitization, and a fair tax system. As a taxpayer, you must stay updated and file your returns correctly and on time.

The ITR-2 form is particularly important for salaried individuals with capital gains, high income, and foreign assets. If you fall under this category, study the new form carefully, take help if needed, and ensure you submit complete and accurate information.