ITR-2 Filing for FY 2025-26 (AY 2026-27)

Based on income, source of income, and other factors, the Income Tax Department of India has categorized taxpayers. Considering this, the ITR-2 Form is designed for individuals, HUFs (Hindu Undivided Families), NRIs, and investors who do not have income from business or professions. It is applicable for taxpayers and NRIs earning income in India from capital gains, salary, and properties. 

Filing ITR-2 can be complex, especially when you have multiple income sources in India. However, knowing the eligibility and filing process simplifies this process.

To help you out, this blog provides complete information about ITR-2 AY 2026-27, from eligibility to changes in it and the filing process. So read on and gather all the information. 

What is ITR-2 Form?

In India, as mentioned earlier, taxpayers, whether residents or NRIs, are categorized based on their income and its source. Additionally, according to their income sources, specific income tax return (ITR) forms are assigned to them. Considering this, the ITR-2 form is for individuals and HUFs who earn income from salary, rent, property, capital gains, foreign assets, or foreign income. 

This form does not include income generated from business or professional activities. In simple words, taxpayers who are not eligible to file the ITR-1 form and who do not have any professional or business income, the ITR-2 form is for them.

This was all about the ITR-2 form. Moving ahead, let's know who is eligible to file the ITR-2 form in India. 

Who Can File ITR-2?

The ITR-2 form is for individuals and HUFs who generate income from sources other than "Profits and Gains from Business or Profession." Considering this, if you derive income from any of the sources mentioned below, you are eligible to file the ITR-2 form:

Salaried Individuals

If your total income is more than INR 50,00,000 or if you have salary income along with capital gains, foreign assets/ income, or more than one house property, you should file the ITR-2 form.

If your income is below INR 50,00,000 and you do not have any other source of income, you are eligible to file the ITR-1 form. However, the moment you have capital gains or derive overseas income, you need to switch to the ITR-2 form. 

Capital Gains Income

Sold mutual funds, property, shares, or bonds in FY 2025-26 and derived capital gains or losses? You need to file the ITR-2 form. Across all asset classes, it covers both short-term and long-term capital gains/losses.

Hindu Undivided Families (HUFs)

HUFs with income from capital gains, house property, or other sources but without any professional or business income qualify to file the ITR-2 form.

NRIs and RNORs

NRIs and resident but not ordinarily resident (RNOR) are eligible to file the ITR-2 form if they have any taxable income in India. It includes salary credited in India, rent from Indian property, interest from NRO accounts, or capital gains on Indian investments. 

Additionally, NRIs with only NRE account interest and not other Indian income do not need to file this form. Foreign asset disclosure requirements depend on the taxpayer's residential status and the applicable reporting provisions, and where applicable, they can claim DTAA relief.

Income from Other Sources

Income from other sources includes winning bets on racehorses, the lottery, and other legal means of gambling. Additionally, if you have agricultural income of more than INR 5,000, then you also need to file the ITR-2 form. 

Moreover, if you are a Director in any company or you have invested in unlisted equity shares of a company, you need to file your returns in the ITR-2 form. 

So, this was all about who can file the ITR-2 form in India. Moving further, let's know who cannot file this form. 

Who Cannot File ITR-2?

You are not eligible to file the ITR-2 form if:

• You have earned income from a business or profession.
• You are a partner in a partnership firm.
• Under presumptive taxation (section 44AD, 44ADA, or 44AE), you have claimed income. 

Taxpayers should generally file the ITR form applicable to their income profile. Apart from this, filing ITR-2 when ITR-3 applies to you may result in getting a return notice. So, when filing the ITR, first check your income type and the source from which it was obtained. 

Moving forward, let's know the major changes made in the ITR-2 form for AY 2026-27. 

Major Changes in ITR-2 for AY 2026-27

The key changes introduced in ITR-2 for AY 2026-27 reflect recent legislative amendments and CBDT notifications. The notable updates in the form include:

Revised Capital Gains Reporting

Earlier, taxpayers needed to disclose separately capital gains arising before and after July 23, 2024. Simplifying the reporting structure, this split reporting has been removed. Additionally, capital gains before 23 July 2024, taxed at 15% and 10% rates, are not relevant anymore; these fields have been abolished.

Considering this, under section 111A, now short-term capital gains will be taxed at 20%, and under section 112A, long-term capital gains will be taxed at 12.5%. Since the entire FY 2025-26 comes after July 23, 2024, these unified rates apply to all capital gain transactions. 

New Disclosure Requirements Under Sections 80G and 80GGC

Taxpayers claiming tax deductions under sections 80G and 80GGC now need to provide:

• Donation reference number
• IFSC details
• Donee PAN number
• Details of the political party, where applicable

This additional disclosure in the form aims to strengthen the verification of deduction. 

Representative Assessee Reporting Changes

Previously, if you filed ITR on behalf of a deceased person or someone who is incapacitated as a representative assessee, you needed to mention your name, PAN, and along with your address. However, with effect from AY 2026-27, these requirements are simplified and streamlined. The reporting requirements for representative assessees have been streamlined. Taxpayers should refer to the applicable ITR-2 utility and instructions for the exact information required. 

Foreign Asset and Foreign Income Disclosure Updates

Schedule FA (Foreign Asset) and Schedule FSI (Foreign Source Income) have expanded fields for FY 2025-26. Considering this, where applicable under the Income Tax Act and the taxpayer's Residential Status, details of foreign assets and foreign income must be disclosed in the relevant schedules. Filing these schedules is mandatory even if the foreign income has already been taxed overseas. Non-compliance with these can trigger severe penalties under the Black Money Act. 

Threshold for Asset and Liability Disclosure Increased

For mandatory reporting of assets and liabilities, the income threshold has increased. Taxpayers should refer to the notified ITR-2 instructions for the applicable threshold for reporting assets and liabilities under Schedule AL

Capital Loss on Share Buybacks

Starting from October 1, 2024, capital loss on share buybacks is allowed. However, it is only applicable if the corresponding dividend income you have disclosed under the "Income from other Sources" head.

Expanded Deduction Reporting

Now, the ITR-2 form under sections such as 80C and 10(13A) has expanded the reporting field for tax deductions. It further helps in improving transparency and classification of exemption and tax-saving investments.

New Column in Schedule TDS

A new section has been added to Schedule TDS. It aims to determine the specific section under which TDS was deducted. For instance, section 194I for rent, 194J for professional fees, helps in cross-verification of deducted TDS and improving accuracy. 

These are the several key updates in the ITR-2 introduced by the CBDT. Moving ahead, let's look at the different types of income reported in this form. 

Income Types Reported in ITR-2

Here are the different types of income reported in the ITR-2 form:

• Salary and Pension Income- Salary income reported in Form 16 is mentioned under Schedule S in the ITR-2 form. Additionally, pension income, retirement benefits, gratuity, and leave encashment are also reported in it.
• House Property Income- Taxpayers can report the following house property income:
• Self-occupied property
• Multiple house properties
• Let-out property
• Home loan interest deductions
• Municipal taxes
• Capital Gains- These are the key reasons for filing ITR-2. Considering this, the form allows reporting of capital gains from:
• Shares
• Property sale
• Mutual funds
• Gold
• Bonds
• Foreign securities
• Foreign Income and Foreign Assets- Income derived from overseas employment, interest on foreign accounts, foreign dividends, or overseas rent is stated in Schedule FSI. Additionally, all foreign assets- bank accounts, equity stakes in foreign companies, property, foreign trusts should be listed in Schedule FA, regardless of whether they generate income or not.
• Virtual Digital Asset (VDA) Income: Under section 115BBH, capital gains arising from crypto, NFTs, and other digital assets are taxed at a flat 30% and reported under the VDA schedule. Loss from transfer of a virtual digital asset is generally not allowed to be set off against any other income or carried forward, subject to applicable provisions. 
• Income from Other Sources- It includes the following income:
• Dividend income
• Interest income
• Family pension
• Gifts taxable under section 56
• Lottery winnings

These are the different types of income covered under the ITR-2 form. Moving further, let's know the structure of the form. 

What is the Structure of ITR-2?

To ensure a transparent and comprehensive declaration of financial details of the individual and HUF, the form is divided into two main parts and several schedules. Part A contains general information along with the schedules, and Part B contains the total income and tax liability on it. The table below showcases the structure of the ITR-2 form. 

This was all about the structure of the ITR-2 form. Moving forward, let's know the documents required to fill out this form. 

Documents Required for Filing ITR-2

Here is the detailed list of required documents needed for filing the ITR-2 form:

• PAN card
• Form 16 issued by your employer
• Form 16A if TDS has been deducted on interest income on a savings bank account or fixed deposits
• Annual Information Statement (AIS) showcasing all your transactions reported against your PAN
• Form 26AS for verification of deducted TDS on salary or non-salary income.
• Rent receipts for the calculation of HRA
• Capital gains statement, if you have any capital gains transactions in mutual funds or shares
• Bank Passbook, Fixed Deposit Receipts (FDRs) to calculate the interest income amount.
• Property income documents if you receive rent from a property. It includes tenant details, local tax payments, etc.
• Loss documents if you face losses during the current financial year or want to carry forward the losses of the previous year
• Tax-saving investment proofs to claim under sections 80C, 80D, 80G, and 80GG. 
• Foreign income and tax documents. It includes foreign bank account statements, overseas salary slips or employment contracts, tax paid abroad certificate for DTAA relief. Additionally, details of foreign assets with the date of acquisition and cost. 

These are the documents you generally require to file the ITR-2 form. These documents depend on your income source and deductions or tax exemptions that you want to claim.

Now, moving ahead, let's know the due date for filing this form for AY 2026-27.

Due Date for Filing ITR-2 for AY 2026-27

The due date for filing ITR-2 for AY 2026-27 is generally July 31, 2026, unless extended. It is the generally applicable due date for taxpayers and HUFs who are not subject to audit requirements of those taxpayers and HUFs not under audit. Failure to meet this ITR filing deadline may result in late-filing fees, loss of benefits such as carry-forward losses, and interest. 

This was all about the due date for filing ITR-2 for AY 2026-27. Moving further, let's know how to file ITR-2 online. 

How to File ITR-2 Online for AY 2026-27

Here is how you can file ITR-2 online for AY 2026-27:

• Step 1: Sign in to the income tax portal using your PAN and password. If you are a first-time user, you need to register on the portal.
• Step 2: Select the option to file your ITR return and choose the ITR-2 form as a form of filing your tax AY 2026-27. Before moving forward, recheck the assessment year, as this is where most people make mistakes. 
• Step 3: Verify your own details such as your name, address, PAN, Aadhaar, and bank account details. 
• Step 4: Now fill in your income as per the appropriate categories, such as salary, capital gains, house property, and more. Additionally, when mentioning your income details, keep the relevant documents by your side.
• Step 5: Claim the eligible deductions under sections 80C, 80D, and so on that you qualify for. This will help you in reducing the tax obligations you owe.
• Step 6: Before proceeding, compare your mentioned information with Form 26AS, AIS, and TIS. Additionally, before submitting the return, pay any remaining due taxes. 
• Step 7: Now, preview and submit your return.

So this is how you can simply file the ITR-2 form using the income tax e-filing portal. Additionally, within 30 days of filing, you need to e-verify your return. Without this step, your ITR filing is considered invalid and will not move forward. Here is how you can e-verify after ITR-2 filing:

• Aadhaar OTP
• Net banking
• Bank or demat account EVC
• Digital Signature Certificate (DSC) for companies
• Physical ITR-V posted to CPC Bengaluru

This was all about the e-verification process after ITR-2 filing. Moving forward, let's know the penalties for late filing of the form. 

What Are the Penalties for Late Filing ITR-2?

In case you miss the original deadline, i.e., July 31, 2026, up to December 31, 2026, you can still file a belated return. Under section 234F, a late filing fee will apply:

• INR 1,000- if your total income is not more than INR 5,00,000
• INR 5,000- if your total income is more than INR 5,00,000
• Under section 234A, interest at 1% per month will be imposed on any unpaid tax

These are the penalties for late filing of the ITR-2 form. Moving ahead, let's know the common mistakes to avoid while filing this form. 

Common Mistakes to Avoid While Filing ITR-2

Common mistakes to avoid while filing ITR-2 include:

• Incorrect Capital Gains Calculations: The capital gain reporting is the section where most taxpayers make mistakes. It happens because taxpayers:
• Use incorrect purchase prices.
• Report wrong holding periods.
• Ignore brokerage adjustments.
• Miss reporting of mutual fund switches or SIP redemptions.
• Classify gains incorrectly as short-term or long-term.
• Ignore reinvestment exemptions
• Mismatch in AIS and Form 26AS: Many taxpayers file returns as per Form 16 and bank statements and ignore AIS. Considering this, the department automatically flags the income returns where what's declared does not match the transactions in AIS. Additionally, high-value items like property registrations, large cash deposits, and mutual fund redemptions in AIS that are not mentioned in your ITR result in a tax notice.
• Non-Disclosure of Foreign Assets: Under Schedule FA, foreign asset reporting is extremely sensitive. Additionally, some taxpayers assume that they do not need to report foreign assets if no income was generated from them. However, disclosure requirements generally depend on beneficial interest or ownership, not merely on income earned.
• Errors in Schedule FA and Schedule FSI: Understand this, Schedule FA asks you to mention the foreign assets held at any point during the financial year, not only on March 31. Additionally, in Schedule FSI, you need to mention the country code, income type, tax withheld overseas, and the DTAA article under which relief is claimed. Incomplete disclosures may increase the likelihood of verification or follow-up queries.

These are some of the common mistakes you should avoid while filing the ITR-2 form.

Final Thoughts

Lastly, ITR-2 for AY 2026-27 is an important tax return form for salaried taxpayers, HUFs, NRIs, investors, and individuals with non-business income structures. The AY 2026-27 updated rules have made the process much easier, although close reporting is required.

In case you have confusion about your eligibility, income type, and deduction, rather than make mistakes, it is advisable to consult an expert. At Savetaxs, we have been helping NRIs to file their returns accurately and on time. We have a team of experienced CAs who provide you with personalized guidance as per your tax situation. So connect with us and file your returns without any errors on time.