Synopsis: The Income Tax Department has enabled ITR-2 filing for AY 2026-27. Taxpayers with capital gains, foreign assets, multiple properties, or income beyond ITR-1 eligibility may need to file this form. Here’s what taxpayers should check before filing returns for FY 2025-26.
The Income Tax Department has started the ITR filing season for AY 2026-27 by enabling online filing and Excel utility for ITR-2 on the e-filing portal. The form is meant for taxpayers with complex income structures, including capital gains, foreign assets, and multiple properties. Experts say many salaried individuals mistakenly continue filing ITR-1 despite being ineligible due to stock market or mutual fund investments. Even small capital gains can make ITR-1 invalid. With increasing participation in equities and global investments, understanding ITR-2 eligibility has become more important for salaried employees, investors, NRIs, and HUFs.
Who Should File ITR-2?
ITR-2 is applicable to individuals and Hindu Undivided Families (HUFs) that do not have business or professional income but earn income beyond the scope of ITR-1. Taxpayers who may need to file ITR-2 include:
- Individuals with capital gains from stocks, mutual funds, property, or gold
- Taxpayers owning more than one house property
- Individuals holding foreign assets or earning overseas income
- NRIs and RNOR taxpayers with taxable Indian income
- Taxpayers with agricultural income above ₹5,000
- Salaried employees receiving RSUs or ESOPs from foreign companies
Who Cannot File ITR-2?
Individuals/HUFs having income from their business or profession cannot file ITR-2. Individual, consultant, freelancer, or other taxpayers opting for presumptive taxation schemes of Sections 44AD, 44ADA, and 44AE will have to choose ITR-3.
Key Checks Before Filing ITR-2
Taxpayers should carefully reconcile AIS, Form 26AS, Form 16, bank statements, and broker statements before filing returns. Any mismatch in income, TDS entries, or investment details may trigger notices or delay refunds later.
Important Documents Needed Before Filing ITR-2
- PAN and Aadhaar
- Form 16
- AIS and Form 26AS
- Bank statements
- Capital gains statements
- Home loan certificates
- Foreign asset details
- Dividend and interest income records
Basic Steps to File ITR-2
- Download AIS, Form 26AS, and Annual Information Statement
- Collect broker and bank statements
- Compute capital gains correctly
- Choose old or new tax regime
- Verify all TDS entries
- File and e-verify the return
Select the Correct Tax Regime
Before preparing a tax return, taxpayers must compare the two tax regimes, old and new. The old regime suits those who have exemptions under Sections like 80C, HRA, home loan interest, and NPS, whereas the new one provides reduced tax rates and fewer deductions.
Common Mistakes Taxpayers Should Avoid
- The other mistake frequently made by taxpayers is that even if they have capital gains, foreign assets, or multiple properties, they use the ITR-1 form for their tax return. Even small capital gains obtained through investments in shares may lead to being ineligible to use the ITR-1 form.
- Taxpayers often believe that any exempt long-term capital gain, which does not exceed the tax exemption limit, does not necessitate the submission of their tax return using the ITR-2 form.
- The consequences of submitting a tax return using the wrong forms include getting defective return notices under Section 139(9) and even delays in receiving tax refunds.
- In addition, experts have recommended that taxpayers avoid rushing to file their tax return right when the utility services get active, as further information may become available.
Why More Taxpayers Are Now Filing ITR-2
The growing trend of investments in stocks, mutual funds, overseas investments, and real estate has seen more salaried people eligible for filing ITR-2 returns. Additionally, overseas investment in shares, multiple sources of income, and ESOPs have also made tax-filing complicated. The due date for filing ITR-2 for non-audit taxpayers is expected to be July 31, 2026, unless extended by the Income Tax Department
Final Thoughts
As ITR-2 filing is available for AY 2026-27, those who have capital gains, foreign assets, and multiple incomes should start preparing their documentation now. It is recommended that they take time and ensure accuracy while filing, as it is better late than having to face penalties or notices in the future.
Written By Ameet S
