New ITR-2 Form Announced for Income Tax Return Filing for Assessment Year
The Central Board of Direct Taxes (CBDT) has introduced an updated ITR-2 form for the assessment year 2025-26, featuring significant changes aimed at simplifying tax reporting for individuals. Key updates include the separate reporting of capital gains, the allowance of capital loss on share buybacks starting October 1, 2024, and an increased threshold for reporting assets and liabilities, now set at Rs 1 crore. Additionally, the revised form requires detailed reporting of TDS section codes and expanded disclosures for deductions under sections like 80C and 10(13A).
Key Changes in the ITR-2 Form
The newly notified ITR-2 form introduces several important modifications. One of the most notable changes is the requirement to report capital gains separately for transactions occurring before and after July 23, 2024. This adjustment aligns with the recent amendments in the Finance Act, 2024. Furthermore, taxpayers can now claim capital losses on share buybacks, provided that the corresponding dividend income is reported as โIncome from Other Sources,โ effective from October 1, 2024.
Another significant update is the increase in the threshold for reporting assets and liabilities, which has been raised from Rs 50 lakh to Rs 1 crore. This change is expected to relieve many non-business taxpayers from the cumbersome task of preparing detailed asset and liability statements. Additionally, the form now includes a new column under Schedule-TDS to specify the section under which TDS was deducted, enhancing clarity in reporting.
Impact on Taxpayers
Tax experts have expressed varied opinions regarding the implications of the new ITR-2 form for taxpayers. CA Ashish Niraj, a partner at A S N & Company Chartered Accountants, highlighted the relief provided to non-business taxpayers due to the increased threshold for asset and liability reporting. He noted that this change reduces the burden of preparing detailed disclosures for those with total incomes between Rs 50 lakh and Rs 1 crore.
Niraj also pointed out that the new TDS reporting requirements aim to address previous inefficiencies. The introduction of a dedicated column for TDS section codes is expected to streamline the reporting process and assist the tax department in cross-verifying details. The changes in capital gains reporting reflect the government’s recent tax policy shifts, requiring taxpayers to differentiate between transactions based on the date of transfer.
Expert Opinions on the New Reporting Requirements
While some experts view the updates as beneficial, others see them as adding complexity to the tax filing process. CA Gopal Bohra from N. A. Shah Associates LLP explained that the split in capital gains reporting is a necessary adjustment given the two applicable tax rates for the financial year 2024-25. He emphasized that these changes will help individual taxpayers accurately compute their tax liabilities.
Sonam Chandwani, Managing Partner at S Legal & Associates, described the new ITR-2 form as a mixed experience for taxpayers. She acknowledged the advantages of the increased asset reporting threshold but expressed concerns about the additional complexities introduced by the expanded deduction reporting requirements. Chandwani noted that while the form aims to balance clarity and compliance, it may inadvertently complicate the filing process for many taxpayers, particularly those with multiple transactions.
Overall, the revised ITR-2 form reflects the government’s ongoing efforts to streamline tax reporting while addressing compliance issues, though it may require taxpayers to seek additional assistance to navigate the new requirements effectively.
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