1. Threshold Change in Schedule AL (Assets & Liabilities)
- Old Rule: Mandatory if total income > Rs 50 lakh
- New Rule: Now applicable only if total income > Rs 1 crore
Impact & Benefit
- Reduces compliance burden on upper-middle-income taxpayers.
- Schedule AL is complex, requiring details of real estate, movable assets, vehicles, jewellery, liabilities, etc.
Example
A salaried individual earning Rs 70 lakh per annum was earlier required to fill Schedule AL, but no longer needs to do so under the new ITR-2.
2. Mandatory Reporting of TDS Section in Schedule TDS
- Old Rule: Only TAN, Name of Deductor, and amount were required.
- New Rule: Now you must mention under which section TDS was deducted (e.g., 194C for contractors, 194J for professionals).
Purpose
- Reduces mismatches in AIS/Form 26AS and pre-filled data.
- Helps the Department in automated cross-verification.
Example
If Rs 50,000 was deducted by a bank under Sec 194A (interest), it must now be disclosed with section 194A clearly mentioned.
3. Capital Gains Reporting Enhanced - Based on Transfer Date
New Rule: For each capital gain transaction, it must now be disclosed whether the transfer occurred:
- Before July 23, 2024
- On or after July 23, 2024
Why it matters
The LTCG rate changes post-July 23, 2024:
- 20% with indexation (before 23 July 2024)
- 12.5% without indexation (after 23 July 2024) for specified assets like land/building.
Example
Sale of house property on:
- June 30, 2024 - Report in LTCG section with indexation at 20%.
- August 1, 2024 - You have option to use 12.5% without indexation if more beneficial.
4. Treatment of Capital Loss on Share Buyback
- Old Rule: Capital loss on buyback not allowed if dividend income was taxed under deemed dividend (Sec 2(22)(f)).
- New Rule (from Oct 1, 2024): Capital loss on buyback allowed, if dividend income u/s 2(22)(f) is reported under "Income from Other Sources".
Benefit
Avoids double taxation. Allows proper offsetting.
Example
- You tender shares in a buyback on Oct 15, 2024.
- Report dividend income under Sec 2(22)(f) → then you can also report any capital loss.
5. Classification of Capital Gains on Unlisted Bonds/Debentures
Now clarified:
- Short-Term or Long-Term depends on holding period, not just asset class.
- Aimed at consistent treatment and preventing tax arbitrage.
6. Enhanced Reporting Under Schedule FA and FSI
- FA = Foreign Assets
- FSI = Foreign Source Income
Purpose
- Full transparency on global income.
- Applicable to Residents, ROR (Resident & Ordinarily Resident) only.
Compliance Risk
-
Non-disclosure can attract penalties under the Black Money Act.
7. Schedule VDA for Virtual Digital Assets
- Introduced in earlier years but now has transaction-wise mandatory reporting.
- Taxed at 30% flat under Sec 115BBH, with no deduction allowed (except cost of acquisition).
Example
If you traded Bitcoin on 5 dates, you need to list each date, gain/loss separately.
8. Mandatory Disclosure of LEI (Legal Entity Identifier)
- Applies for high-value financial transactions (Rs 50 crore+).
- Primarily for HNIs, entities, trusts, and family offices.
9. Detailed Deduction-wise Reporting
Expanded drop-downs expected under:
- Sec 80C - e.g., PPF, ELSS, LIC separately
- Sec 80D - Health insurance split by family members
- Sec 80CCD(1B) - NPS, voluntary contributions
Purpose
- Streamlines validation and pre-filling.
- Helps track and prevent duplicate claims.
Common Mistakes to Avoid While Filing ITR-2
- Not reporting foreign bank accounts (Schedule FA)
- Missing interest income on savings or FDs
- Incorrect TDS section reporting - may lead to mismatch
- Omitting minor child's income clubbed with parent
- Failing to disclose small crypto trades under VDA
Essential Documents for Filing ITR-2
| Document | Purpose |
|---|---|
| Form 16 | Salary income details |
| Form 16A | TDS on other income (FDs, rent, etc.) |
| Form 26AS & AIS | Cross-verify TDS & income sources |
| Rent receipts | If claiming HRA under old regime |
| Capital Gains Statement | For shares, mutual funds, property |
| Bank passbook, FDRs | For interest income |
| Donation / Insurance Receipts | For 80C, 80D, 80G etc. deductions |
| Home loan interest cert. | For house property income/loss |
| VDA Transaction Report | For crypto gains/losses |
| Foreign Asset documents | For FA schedule, if applicable |
Conclusion: What Does This Mean for You?
The new ITR-2 is more data-rich, with clearer classification and intent to:
- Simplify legitimate reporting
- Reduce tax evasion in high-value categories (foreign assets, crypto, unlisted shares)
- Offer flexibility on capital gains treatment
However, it also requires greater care and documentation, especially for:
- Multiple property owners
- HNIs
- Crypto investors
- NRIs with ROR status
- Taxpayers claiming capital loss offsets
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