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Complete Instructions in Filing Salary Details in New ITR 2 Form

Narendra Kumar

| Updated: Aug 24, 2019 | Category: Startup

ITR 2 Form

Income Tax Department has categorized different taxpayers as per their income, sources of income & certain other factors for ensuring proper compliance. Different taxpayers with different income file Income Tax Returns depending upon the nature of their income.

Eligibility to File ITR 2 Form

ITR 2 Form is filed by Individual & HUFs having Income from the sources other than “Income from Business or Profession”. Individuals having income from the following source of income are required to file form ITR-2:

  • Income from Salary/Pension
  • Income from more than one House property
  • Long Term or Short Term Capital gain Income from the sale of Investments or Property
  • Income from other sources such as income from winning of Lottery, bets on Horse Race & other legal sources of Gambling.
  • Income from foreign assets or Foreign Income
  • Agriculture Income of more than INR 5000
  • A director of listed & non-listed company

What are the Major Changes in ITR 2 Form for AY 19-20?

The following are the major changes applicable for assessment year 19-20 in filing ITR-2:

  • ITR-1 is not applicable to non-residents & residents & thus they are required to file their return of income in Form ITR-2
  • Applicability of this form is made more clear now, that it is applicable for individual & HUF having income from the source other than business or profession.
  • In case of an individual’s residential status has been categorized into three sub-categories and they need to tick the one specific category to which they belong:
  • Resident
  • Resident but not-ordinarily residents
  • Non- residents

Also, the taxpayer has to mention a number of days they reside in India. In case of non-residents taxpayer has to specify the jurisdiction of their residence during the previous year providing Taxpayer’s Identification Number of the relevant jurisdiction.

  • In case an individual is a citizen of India or a person of Indian origin, the taxpayer has to mention the duration of stay in India in the previous year along with the duration of stay in four preceding years.
  • Additional information about the capacity of the representative assessee has to be mentioned in the drop-down box, in case the ITR is filed by the representative assessee.
  • An individual taxpayer has to mention the details about its directorship in any Company in the preceding year along with the details whether shares of such companies are listed or non-listed.
  • An individual taxpayer has to report the information about any investment made in unlisted equity shares.

Also, Read: Salaried? You need to file Income Tax Return!.

What are the steps involved in Filing ITR 2 Form?

This form of return is not filed online. It is uploaded through java utility. Detailed steps as follows:

  • Visit the website www.incometaxindiaefiling.gov.in[1] for filing of Income Tax Return online.
  • Login to the taxpayer account using PAN as its user-id & saved password.
  • Income Tax Department has released software utility in Excel format for filing of ITR 2 Form.
  • Download Java utility or XML sheet.
  • Fill and complete the sheet and verify the same
  • Upload the XML sheet by clicking the “File Income Tax Return” option
  • The portal is open with details of the Assessment year, ITR form Number, & submission mode. Select AY as 19-20, then select form ITR-2 in drop-down option of ITR form Number select “Upload XML” for uploading XML sheet.
  • Then it has to be posted through speed post to “Centralized Processing Center” office in Bangalore within 120 days of e-filing.
  • Also, the return can be filed electronically under digital signature. An acknowledgment is sent to the registered mail id once the form is submitted.

Break-Up of Salary Components for Reporting ITR 2 Form

For the Assessment Year 2019-20, while filing return in ITR 2 form, the taxpayer is required to provide a complete break-up of the components of the salary.

Following are the components of the salary for which information is required:

Allowances:

Basic components of salary including all the allowances provided to the employee such as Basic Salary, House rent allowances, Leave Travel Allowances, Gratuity, etc. Every allowance has to be mentioned and filed separately. Various allowances are provided by employers who are exempted in the hands of employees. Following is the list of allowances & their exempted parts which has to be reported separately in return filing:

HOUSE RENT ALLOWANCE: Exempted up to INR 120000
LEAVE TRAVEL ALLOWANCE: LEAVE TRAVEL ALLOWANCE:
GRATUITY: Exempted up to INR 350000
LEAVE ENCASHMENT: Exempted up to INR 80000

Perquisites:

Employers provide perquisites to an employee like any benefits or amenities to an employee. These benefits are either free of cost or at concessional rates. Every benefit falling under the head of perquisites has to be reported and filled separately.

Compensation:

Any amount received by an employee in lieu of salary, i.e. compensation received by an employee on account of termination of employment, the amount receives under a key man insurance policy, etc.  Profit in lieu of salary is an amount received over & above the salary.

FAQs

Who cannot file ITR 2 Form?

Following persons need not file ITR-2 for filing their income tax return:

  • Income from business or profession of an individual or HUF.
  • The individual is required to file ITR-1 for filing their income tax return

What is the summary of details to be filed in ITR-2

Following components of salary are required to be filed in detail in Form ITR 2 form:

  • Allowances like Dearness allowances, conveyance allowances, house rent allowances, children education allowances, employer’s contribution to a pension scheme, contribution to employee provident fund, Annuity or pension, gratuity, leave encashment, etc.
  • Perquisites like provisions of accommodation, car, sweeper, gardener, gift vouchers, transfer of assets to employees, etc.
  • Profit in lieu of salary that is compensation received by an employee in connection with the termination of his employment, any amount received from employer from a provident fund or pension fund, bonus, etc.

What is the reason for such a breakup of salary in new ITR-2 for the AY 2019-20?

ITR 2 form seeks to furnish the details of all the salary, compensation, bonus, perquisites or allowances received by an employee along with its exemption claimed. The intention behind the detailed requirement is to cross verify the claims made for exemption under section 10 made by the employees as against the allowance received as a component of salary.

See Our Recommendation: Income Tax Refund for Salaried – A Comprehensive Guide.

Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

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