ITR -2 Return Filings
Main objectives of ITR -2 Return Filings
The primary objectives of filing Income Tax Return (ITR) using the ITR-2 form are centered around providing a comprehensive and accurate account of an individual or Hindu Undivided Family (HUF)’s financial transactions, income sources, and investments to the tax authorities. ITR-2 is specifically designed for individuals and HUFs who do not qualify for ITR-1 Sahaj due to the complexity of their financial affairs. The main goals of ITR-2 return filings include ensuring thorough disclosure of income, facilitating compliance with tax regulations, and enabling the calculation of accurate tax liabilities.
One key objective is to capture and report income from various sources, such as salary, house property, capital gains, and income from other investments. ITR-2 requires individuals or HUFs with diverse income streams to provide detailed information, ensuring that the tax authorities have a comprehensive understanding of their financial profile.
Additionally, ITR-2 facilitates the disclosure of foreign assets and income earned abroad by individuals or HUFs. This includes details of foreign bank accounts, foreign investments, and any income generated outside the country. The objective is to enhance transparency and compliance regarding global financial activities.
Another crucial goal is to allow taxpayers to claim deductions and exemptions applicable to their financial situation. ITR-2 provides sections for individuals or HUFs to avail benefits under various provisions of the Income Tax Act, reducing their taxable income and overall tax liability.
Furthermore, ITR-2 return filings contribute to the verification and validation of financial transactions, investments, and income details. By requiring individuals or HUFs to disclose extensive information, the form helps ensure the accuracy of reported data and promotes accountability in tax reporting.
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The Advantages of ITR -2 Return Filings
Filing Income Tax Return (ITR) using the ITR-2 form offers several advantages for individuals and Hindu Undivided Families (HUFs) with complex financial situations. Here are key benefits associated with ITR-2 return filings:
Comprehensive Income Reporting: ITR-2 allows individuals and HUFs to provide a comprehensive account of their income from various sources, including salary, house property, capital gains, and income from other investments. This ensures thorough reporting, meeting the diverse requirements of taxpayers with complex financial affairs.
Foreign Asset and Income Disclosure: ITR-2 specifically caters to individuals and HUFs with foreign assets or income earned abroad. The form requires detailed disclosure of foreign bank accounts, foreign investments, and income generated outside the country. This facilitates compliance with global taxation norms and enhances transparency regarding international financial activities.
Deduction and Exemption Claims: Individuals and HUFs using ITR-2 can claim deductions and exemptions applicable to their financial situation. This includes benefits under various sections of the Income Tax Act, such as deductions for investments, medical insurance premiums, and contributions to specified funds. Claiming these deductions helps in reducing the taxable income and overall tax liability.
Accurate Tax Calculation: ITR-2 supports the accurate calculation of tax liabilities by taking into account the complexities associated with diverse income sources and investments. The form considers the details provided by taxpayers to determine the correct amount of tax owed. This ensures a fair and precise assessment of tax liabilities.
Verification of Financial Transactions: ITR-2 contributes to the verification and validation of financial transactions, investments, and income details. By requiring individuals and HUFs to provide extensive information, the form helps in ensuring the accuracy of reported data. This promotes accountability in tax reporting and reduces the likelihood of errors.
Process of ITR -2 Return Filings
The process of filing Income Tax Return (ITR) using the ITR-2 form involves several steps. Here is a general overview of the process:
Gather Documents: Collect all relevant documents, including Form 16, details of salary income, income from house property, capital gains, income from other sources, and documentation related to foreign assets and income.
Register on the Income Tax e-Filing Portal: If you are not already registered, create an account on the official Income Tax e-Filing portal.
Select ITR-2 Form: Log in to the portal and select the ITR-2 form for the relevant assessment year.
Download and Fill the ITR-2 Form: Download the ITR-2 form and fill in the required details. Provide accurate information about your income, deductions, foreign assets, and other financial transactions.
Compute Taxable Income and Tax Liability: Use the information provided in the form to compute your taxable income and tax liability. Ensure that you include all eligible deductions to reduce your taxable income.
Validate Details: Validate the details entered in the ITR-2 form to ensure accuracy. Cross-check the information with your supporting documents.
Generate XML File: After filling the form, generate an XML file using the ‘Generate XML’ button on the form. Save this XML file on your computer.
Upload XML File on the Portal: Log in to the Income Tax e-Filing portal and select the ‘Upload XML’ option. Upload the XML file generated from the ITR-2 form.
Verification of ITR: After uploading the XML file, you need to verify your ITR. You can do this using any of the available options, including Electronic Verification Code (EVC), Aadhaar OTP, or by sending a signed physical copy (ITR-V) to the Centralized Processing Center (CPC).
Electronic Verification Code (EVC): If you choose EVC, you will receive a code on your registered mobile number or email. Enter this code to verify your ITR.
Aadhaar OTP: If you choose Aadhaar OTP, you will receive a one-time password on your linked Aadhaar-registered mobile number. Enter this OTP to verify your ITR.
Physical Verification (ITR-V): If you choose physical verification, download the ITR-V, print it, sign it in blue ink, and send it to the CPC address mentioned in the acknowledgment email within 120 days of e-filing.
Acknowledgment: Once the verification is successful, you will receive an acknowledgment on your registered email. This acknowledgment serves as confirmation that your ITR has been successfully filed.
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