Who Files ITR-2
ITR-2 is for resident individuals, non-residents (NRIs), and HUFs who cannot use ITR-1. You must file ITR-2 if you have: capital gains from sale of equity shares, mutual funds, property, or gold; income from two or more house properties; foreign income or foreign assets (bank accounts, investments, property abroad); total income exceeding ₹50 lakh; directorship in any company; or holdings in unlisted equity shares. Agricultural income above ₹5,000 also requires ITR-2.
Key Schedules in ITR-2
- Schedule CG: Capital gains — short-term (STCG) and long-term (LTCG) from equity, debt, property, and other assets. LTCG on listed equity above ₹1.25 lakh is taxed at 12.5% under Section 112A. STCG on listed equity is taxed at 20% under Section 111A.
- Schedule HP: Income or loss from each house property. Loss from house property can be set off against salary income up to ₹2 lakh per year.
- Schedule FA: Foreign assets — mandatory disclosure of all foreign bank accounts, financial interests, and immovable property held outside India. Non-disclosure attracts penalty of ₹10 lakh under the Black Money Act.
- Schedule AL: Assets and liabilities — mandatory if total income exceeds ₹50 lakh.
ITR-2 vs ITR-1: Key Differences
ITR-1 is a 3-page simplified form; ITR-2 is significantly more detailed with schedules for capital gains, foreign assets, and multiple properties. ITR-1 has a ₹50 lakh income cap; ITR-2 has no upper limit. ITR-1 cannot report capital gains at all — even a ₹500 STCG from selling one share requires ITR-2. Both forms are available for online filing on incometax.gov.in and must be verified within 30 days of submission.
Business Income Restriction
ITR-2 cannot be used if you have any income from business or profession — including freelance income, consultancy fees, or income under Section 44ADA/44AD. For business or professional income, ITR-3 (regular books) or ITR-4 (presumptive scheme) is required. If you have both salary and freelance income, you must file ITR-3 or ITR-4, not ITR-2.