How to file ITR-2 online with salary income, capital gains for FY22

Individual taxpayers not having business or professional income can use this form for Income Tax Returns

Filing Income Tax Returns (ITRs) is both easy, and complicated. Easy as the forms are online and partially pre-filled and complicated as the number of mandatory disclosures have increased over the years. The ITR forms a taxpayer has to use will depend on her residential status and the total income earned from various sources during a financial year (FY). Salaried individuals use the ITR-1 or ITR-2 form to file their tax returns. The ITR-1 form is also called the Sahaj form (meaning simple). ITR 2 is slightly complex as it requires more disclosures and details. Here are a few things to keep in mind while filing the ITR-2 form.

Who can file the ITR-2 form: Individual taxpayers who do not have a business or professional income can use Form ITR-2. Maneet Pal Singh, partner, I.P. Pasricha & Co says, "ITR-2 can be filed by individuals or HUF [Hindu Undivided Family] who, don’t have income from business or profession." "ITR-2 cannot be filed by an individual or HUF whose total income includes income Profits and Gains from Business or Profession and also includes income from interest, salary, bonus, and commission. " (See box)

Note while filing: Choose the appropriate salary exemptions on the form (e.g., house rent allowance, leave travel allowance, etc.) or the ITR form will also capture the exemption details directly from Form 16. Check the pre-filled data for accuracy, and edit if needed.

The breakdown of salary into various components, such as basic salary, house rent allowance, etc. must be included in this schedule. Verify that details of the rental income, self-occupied house property, and interest on the housing loan will be pre-filled based on Form 16.

You can select the eligible deductions (e.g., life insurance premiums, medical insurance premiums, etc) or the ITR form will capture the deductions directly from Form 16. If your employer hasn't mentioned these in form 16, you can claim them while filing. Verify the pre-filled data, for instance, personal information, contact details, filing status, bank details etc.

Verify that the information related to rental income, ownership of a self-occupied home, and interest on the housing loan will be filled out automatically according to Form 16.

If not already filled out, provide all details of let-out and self-occupied properties. Choose the capital asset sold/transferred and provide the necessary details in the scheduled capital gains section.

Any losses carried forward from earlier years should be set off against the taxpayer's current year income to the extent possible, and the remaining losses should be carried forward. Lastly, report all other sources of income, such as interest from savings and fixed deposits, recurring deposits, dividends, etc.

Here are a few rules or common questions taxpayers have while filing returns.

Two houses as self-occupied property (SOP): If you own two houses, many taxpayers wonder if both houses can be treated as SOP. Rohit Arora, an advocate at Uttarakhand High Court, says, "Yes, the changes were made in the Income Tax Act from A.Y. 2020–21. A person can claim two properties as self-occupied house properties. Earlier, the SOP benefit was available only when the property was occupied by the owner for his residence or if it was not occupied by the owner owing to employment, business, or professional activity at any other place. If a person had more than one such property, then the SOP benefit was granted only in respect of any one property as selected by him, and the other property/properties were treated as "deemed to be let out"."

Mix bag: How to compute income from a property that is self-occupied for part of the year and let out for part of the year? Himesh Thakur, senior associate, PSL Advocates & Solicitors, says, "In such cases, the property will be considered and treated as' let-out 'throughout the year." However, it is significant to note that the actual rent will be considered only for the let-out period. "

Section 87A of the Income Tax Act: Section 87A provides for the rebate and applies to every resident individual, provided that the total income in an FY under Chapter VI-A does not exceed the amount of INR 5 lakhs. Section 87A provides a tax rebate of up to Rs 12,500 or 100 per cent of the tax, whichever is lower. Pratyush Miglani, managing partner, Mignali Verma & Co, says, "Apart from the deductions under Section 80C, 80D, 80CCD, and 80G, Section 87A provides for a rebate which is very fruitful for individuals having an income of up to Rs 5 lakh. A Section 87A rebate can be claimed on normal income and even on long-term and short-term capital gains. However, the rebate does not apply to super seniors.

Provisions regarding the carry forward and set-off of capital losses: Unadjusted capital losses can be carried over to the following year if losses under the heading "Capital gains" incurred during a year cannot be adjusted in that year. Only income subject to taxation under the "Capital Gains" heading may be used to offset such a loss in the following year. However, only long-term capital gains may be used to offset long-term capital losses. Both long-term and short-term capital gains might be offset by a short-term capital loss.

Miglani says, "Both short-term and long-term losses can be carried forward for eight assessment years following after the assessment year in which they were originally computed if you are unable to offset your whole capital loss in the same year."

The income tax department has established that losses for a year cannot be carried over unless that year's return has been filed before the due date, to maintain track of your losses.

Advice from experts: While filing, keep all the necessary documents like Form 16/16A, deduction details, interest certificates, etc., handy and reconcile the details with the annual information statement (AIS) / taxpayer information summary (TIS) and Form 26AS. Singh says, "Choose the correct ITR before filing it; else filed return will be treated as defective and you will need to file a revised ITR using the correct form." Before filing one’s ITR-2, taxpayers are required to choose between the old and the new tax regime as introduced by the Finance Act 2020.

Siddharth Joshi, senior associate, SKV Law Office, says, "There has been an update in the ITR forms to include a declaration of choosing between the Old Tax Regime or the New Tax Regime, introduced by the Finance Act, 2020 under Section 115BAC. It is to be noted that if the individual or HUF chooses to pay tax as per the new tax regime, then Form 10IE must be submitted to the IT Department before filing the same. All ITR forms prompt the return filers to provide a quarterly breakdown of the dividend income for interest calculation under section 234C. "

Who is eligible to file ITR-2 for AY 2022-23

• ITR-2 form is for individuals and HUF receiving income other than income from ‘Profits and Gains from Business or Profession’.
• Thus, individuals with income from the following sources are eligible to file Form ITR-2:
• Income from salary/pension
• Income from house property (income can be from more than one house property)
• Income from capital gains/loss on sale of investments/property (both short term and long term)
• Income from other sources (including winning from lottery, bets on race horses and other legal means of gambling)
• Foreign income
• Agricultural income of more than Rs 5,000
• Resident not ordinarily resident and a non-resident

(Source: Cleartax.in)