ITR-2 Form Update: Income Above ₹1 Crore? Know the Latest Income Tax Changes You Must Follow in 2025

Income tax return filing in India is not just a legal formality—it’s a critical step in maintaining financial transparency and avoiding penalties. For the financial year 2024–25 (assessment year 2025–26), the Income Tax Department has introduced key updates to the ITR-2 form that many taxpayers should be aware of.

Whether you're a salaried professional with multiple income sources, an investor with capital gains, or someone who owns foreign assets, these changes could directly impact your tax return. Here's everything you need to know.

ITR-2 Form Update: Income Above ₹1 Crore? Know the Latest Income Tax Changes You Must Follow in 2025

What Is the ITR-2 Form?

The Income Tax Return Form 2 (ITR-2) is used by individuals and Hindu Undivided Families (HUFs) who:

  • Have income from salary or pension

  • Own more than one house property

  • Earn capital gains from selling shares, property, or mutual funds

  • Earn foreign income or own foreign assets

  • Have income exceeding ₹50 lakh

  • Do not have income from a business or profession

This form is not applicable for those running a business or earning income from freelancing or consultancy (they typically use ITR-3 or ITR-4).

When Does the New ITR-2 Form Come Into Effect?

The Central Board of Direct Taxes (CBDT) has notified the new ITR-2 form on its official website. It will be applicable for filing tax returns from April 1, 2025, for the financial year 2024–25.

The ITR-1, ITR-3, ITR-4, and ITR-5 forms have already been released. Now, with ITR-2 published, most taxpayers can start preparing for the filing season.

Who Should File ITR-2?

You should file ITR-2 if:

  • Your income is from salary or pension

  • You own more than one residential property

  • You have short-term or long-term capital gains

  • Your total annual income exceeds ₹50 lakh

  • You have foreign investments or assets

  • You are earning dividends from shares and mutual funds

  • You receive income from digital assets (like cryptocurrencies)

So, if your finances include investments, high income, property holdings, or foreign connections, ITR-2 is the right form for you.

Major Changes Introduced in ITR-2 for FY 2024–25

Let’s break down the key updates introduced in the new ITR-2 form:

1. Asset and Liability Reporting Limit Increased to ₹1 Crore

Previously, if your income exceeded ₹50 lakh, you had to disclose all your assets and liabilities, such as:

  • Real estate

  • Gold or jewellery

  • Vehicles

  • Loans and debts

Now, this threshold has been doubled to ₹1 crore. This means:

  • You only need to report your asset and liability details if your total income exceeds ₹1 crore.

This change simplifies filing for many upper-middle-income individuals who were earlier covered under the ₹50 lakh limit.

2. New Requirement to Disclose TDS Deduction Sector

Taxpayers must now mention the sector under which Tax Deducted at Source (TDS) has been deducted. This could include:

  • Salaries (under section 192)

  • Interest (section 194A)

  • Rent (section 194I)

  • Professional fees (section 194J)

This step will help the Income Tax Department verify your income sources more accurately and ensure TDS credit matches with actual earnings.

3. Capital Asset Transfer Timing Must Be Disclosed

If you have sold any property or investment, you now need to mention whether the transfer took place before or after July 23, 2024.

Why this matters:

  • The government has introduced different tax implications based on whether the sale was made before or after this date.

  • It helps in calculating accurate capital gains tax.

4. Disclosure of Loss in Share Buyback and Dividend Income

The revised form includes a section where you must:

  • Declare losses incurred due to share buybacks

  • Mention dividend income received from those shares

This helps in adjusting capital losses with dividend income and other gains, offering tax relief to investors.

5. Detailed Foreign Asset and Income Reporting

If you have:

  • Foreign bank accounts

  • Investments in foreign shares or companies

  • Property abroad

  • Income from foreign employment

  • Income in the form of dividends, royalties, or capital gains from abroad

You must declare all such details in the ITR-2 form.

This disclosure is mandatory and non-compliance may lead to penalties under the Black Money Act.

6. Declaration of Digital Asset Transactions (VDA)

Do you own or trade in:

  • Cryptocurrencies (like Bitcoin, Ethereum)

  • Non-Fungible Tokens (NFTs)

Then you are required to report:

  • Date of purchase and sale

  • Value of transaction

  • Profits or losses

  • Wallet details (in some cases)

These digital assets are now being closely monitored under Indian tax laws. Accurate reporting is essential.

How to File ITR-2 Step by Step

Filing ITR-2 is easy if you follow these steps:

Step 1: Gather All Necessary Documents

  • Form 16 from your employer

  • Capital gains statement from broker

  • Bank interest certificates

  • Property sale/purchase documents

  • Foreign asset details

  • TDS certificates (Form 26AS)

  • Digital asset transaction summary

Step 2: Log in to the Income Tax Portal

Visit: https://www.incometax.gov.in

Use your PAN/Aadhaar number and password to log in.

Step 3: Select the Right Assessment Year and Form

Choose AY 2025–26 and select ITR-2.

Step 4: Fill Out the Form

Provide all details under:

  • Personal info

  • Income sources

  • TDS details

  • Asset details (if applicable)

  • Capital gains

  • Foreign and digital asset income

Step 5: Validate and Submit

Once done, validate all entries, submit the form, and verify it digitally using:

  • Aadhaar OTP

  • Net banking

  • EVC method

What If You File the Wrong Form?

Filing an incorrect ITR form can lead to:

  • Your return being marked as defective

  • Possible rejection by the Income Tax Department

  • Delays in refund

  • Penalties or notices under the Income Tax Act

Always choose the correct form based on your income sources and financial profile.

Penalties for Late Filing

If you miss the deadline (July 31, 2025):

  • You could be fined ₹1,000 to ₹5,000.

  • You may have to pay interest on the unpaid tax amount.

  • You lose the ability to carry forward losses (except house property loss).

Conclusion: File Smart, Stay Compliant

The changes in the ITR-2 form reflect the government's push toward more transparency, digital compliance, and better tax tracking, especially for:

  • High-income individuals

  • Capital market investors

  • Cryptocurrency users

  • NRIs and global earners

If you fall under these categories, ensure that you file ITR-2 correctly and disclose all necessary details.

Filing your return not only helps you avoid legal trouble but also builds your financial credibility—especially if you plan to apply for loans, visas, or high-value investments.

Stay informed. File on time. Avoid penalties.
The updated ITR-2 form is your responsibility—and your opportunity—to file taxes the right way.

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