How to File ITR 2 Form with Capital Gains

Income Tax Return 2 Form is a form meant for Individuals and HUFs not having income from business or profession. The rule applies to those earning salary, as well as properties, and income from capital gains on the sale of assets such as stocks, bonds, and real estate. While it may look complicated to fill the ITR 2 Form with capital gains, once you know the parameters well, then filling them correctly is not a problem. This article provides information on how to file ITR 2 form with capital gains compliantly.

• ITR 2 is used by individuals for income from salary, multiple house properties, and capital gains, among others.
• Capital gains can be short-term or long-term depending on how long you hold the asset.
• When you file ITR 2, you need to declare your salary and property income, capital gains, and deductions eligible.
• Collect all your documents - form 16 and capital gains statements before filing.
• Before submitting the form, please check your total tax liability.

You need to know who should file the ITR 2 Form first, before getting into more process. You have to submit this form if:

• Your total income exceeds Rs 2.5 lakh (basic exemption limit)
• You sold stock, bonds, mutual funds or property and you have capital gains.
• You receive a steady salary or pension.
• You receive income from more than one property.
• You hold foreign property or have an overseas income
• If you are a HUF having no income from business or profession.

If any of these apply to you, filing ITR 2 is mandatory.

Another thing you should know about filing the ITR 2 form with capital gains is the types of capital gains you can earn. There are two types of capital gains:

• Short-term capital gains (STCG): When you sell an asset in a particular period, the earnings are known as short-term gains. Less than 12 months for stocks and equity mutual funds.
• Long-term capital gains (LTCG): When you hold an asset for more than a specified period, then whatever profit is made on such an asset is referred to as long-term capital gains. Over 12 months for equities or at least within 36 months in the case of property.

If you earn income from capital gains through equity shares, mutual funds, or house property, you must report it in your income tax return. For the assessment year 2024-25, taxpayers with capital gains should choose ITR-2 while filing their returns. To file ITR-2 online for income from capital gains for FY2023-24, ensure accurate details and follow the step-by-step e-filing process provided by the Income Tax Department.

1. Prepare all relevent documents

• Form 16 from your employer.
• Stock, Bond and Mutual Fund Capital Gains Statements from Brokers or Banks
• Purchase and sale documents of any property (in case any).

2. Download ITR 2 form: Visit the official income tax department e-filing website and download the form or use their online e-file portal.

3. Enter personal information: First, you need to enter your individual information - Name, PAN number, Address, and email.

4. Report income from salary or pension: Form 16 must be used to detail your salary or pension income in an accurate manner.

5. Declare income from house property: Show information on all house properties in the respective section of the return if you have income from more than one house property.

6. Disclose Capital Gains:

• For short-term capital gains, you have to be under the head of section 111A.
• Compute long-term capital gains under section 112A and ensure you disclose the value of assets sold/purchased correctly along with adjustment for cost indexation if applicable.

7. Provide details of foreign assets (If applicable): Please indicate all foreign assets and the income from them are required.

8. Deductions and exemptions: Claim deductions under section 80C, section 80D, and others as applicable to you. Also, mention all exemptions related to capital gains, e.g. sale of residential property which has resulted in LTCG and you used this money to buy another house – Sec 54.

9. Review tax liability: After the applicability of the deductions and exemptions, calculate the total tax liability.

10. Submit and verify: After completing the form, submit it online. The ITR can then be e-verified with Aadhaar OTP, bank account, or digital signature.

1. Type of income: Individuals or Hindu Undivided Families (HUFs) with income from capital gains, investments, or foreign assets but no income from business or profession.
2. Residential status: Applicable to residents, non-residents, and residents not ordinarily resident (RNOR).
3. Other income: Includes income from salary, pension, house property, or other sources exceeding basic exemption limits.
4. Agricultural income: Applicable if agricultural income exceeds Rs. 5,000.
5. Foreign assets: Mandatory for taxpayers owning foreign income, assets, or holding directorship in a foreign company.

1. PAN card: Essential for taxpayer identification.
2. Aadhaar card: Required for verification purposes.
3. Form 26AS: For verifying tax deductions and advance tax paid.
4. Capital gains statement: Provided by brokers or mutual fund houses, detailing transaction data.
5. Purchase and sale deed: For property-related transactions to calculate gains or losses.
6. Bank account details: For refund credits and validation of returns.
7. Interest certificates: For deductions related to savings or fixed deposits.
8. Challan receipts: Proof of any self-assessment or advance tax payments.
9. Investment proofs: To claim deductions under Chapter VI-A like Section 80C.

1. Accurate classification: Segregate gains into long-term and short-term categories.
2. Indexation benefits: Apply indexation for long-term gains on specified assets.
3. Exemption claims: Utilise Sections 54, 54EC, or 54F for reinvestment-related exemptions.
4. Form 26AS validation: Cross-verify taxes paid and TDS details with Form 26AS.
5. Income bifurcation: Ensure income from salary, house property, or other sources is accurately reported.
6. Mandatory disclosures: Report foreign assets and income, if applicable.
7. Updated documentation: Maintain accurate purchase/sale records and capital gains reports for easy filing.
8. E-verification: Complete e-verification of the return after submission to validate the filing process.

When you file ITR 2 Form with capital gains, it needs to be done carefully since it has multiple income sources and claims for deductions. Follow all the steps carefully to ensure that you submit your tax returns in a timely manner. Bajaj Finserv Mutual Fund platform provides a bunch of financial tools that allow traders of all kinds to manage and plan their taxation and finances better. You can choose from various mutual fund schemes and resources that make investing in mutual funds easy and hassle-free.