ITR-2 e-filing opens: what's new in AY 2025-26, who needs to use form

Online tax form was delayed due to revisions that match legislative changes, say experts

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The Income Tax department on Friday enabled online filing for ITR-2, cheering taxpayers who were waiting for the functionality to file their returns for Assessment Year (AY) 2025-26. Though the activation was delayed, it brings several significant changes that taxpayers must understand before proceeding.

 

Why the delay

 

The rollout of ITR-2 utility was delayed due to extensive updates in forms. "The main reasons supposedly are the comprehensive revisions made to the ITR forms for AY 2025-26,” said Ritika Nayyar, partner, Singhania & Co.

 

“The CBDT needed additional time to update systems, including backend utilities and validation checks, to accommodate the new structures and ensure seamless integration," she said, referring to the Central Board of Direct Taxes.

 

This programming and testing phase ensured that the updated forms would work without glitches on the e-filing portal.

 

What’s new in ITR-2?

 

ITR-2 is to be used by " taxpayers with income from salary, pension, capital gains, or foreign assets, but no business income, the changes are substantial,” said Simarjeet Singh, assistant professor of finance and accounting at Great Lakes Institute of Management, Gurgaon. 

 

Key updates in ITR-2 include:

 

Capital gains bifurcation: Transactions must now be reported separately based on whether they occurred before or after July 23, 2024. After this date, a flat 12.5 per cent tax rate (without indexation) applies, introducing added complexity for property and equity sales.

 

Share buyback losses: Losses post-October 1, 2024, can be claimed only if the related dividend income is reported in Schedule OS.

 

Higher threshold for Schedule AL: Taxpayers need to report assets and liabilities only if total income exceeds Rs 1 crore (up from Rs 50 lakh). 

 

Detailed TDS and deduction reporting: Specific section codes for TDS (e.g., 192 for salary) and sub-category details for deductions like 80C and 80G are now mandatory.

 

Foreign assets: Expanded reporting requirements under Schedule FA and FSI.

 

"ITR-2 for AY 2025-26 is no longer a mere compliance form — it demands a financial self-audit, especially for those with complex income profiles," said Singh.

 

Who should file ITR-2?

 

"ITR-2 applies to individuals and HUFs (Hindu Undivided Families) not having income from business or profession but having income from salary, multiple house properties, capital gains, foreign income or assets, and agricultural income exceeding Rs 5,000," said Naveen Wadhwa, vice-president of Taxmann.

 

Such taxpayers include:

 

-Salaried individuals with capital gains above Rs 1.25 lakh

 

-Pensioners with foreign assets

 

-Those earning dividend income or having multiple deductions under Chapter VI-A

 

Start early

 

Given the changes, experts advice self-filing taxpayers to organise documentation, Form 16/16A, AIS/TIS reports, capital gains statements, and cross-verify details with pre-filled data. Errors in reporting could lead to notices or disallowances.

 

Taxpayers with complex situations, such as foreign assets or multiple capital gains, should consider consulting professionals to avoid pitfalls.