ITR 2 Form Explained: Frequently Asked Questions (AY 2026-27)

ITR-2 is the income tax return form for individuals and Hindu Undivided Families (HUFs) who cannot use the simpler ITR-1 because their income includes capital gains, foreign assets, or more than two house properties. Roughly 1.09 crore taxpayers (14.93% of all filers) chose ITR-2 for AY 2024-25, making it the second most-filed return in India.

Key Takeaways

  • Over 1.09 crore Indians filed ITR-2 for AY 2024-25, representing 14.93% of all ITRs filed.
  • The Section 87A rebate does not apply to STCG (20%), LTCG (12.5%), or VDA income (30%), even if total salary is under ₹12 lakh.
  • From AY 2026-27, ITR-1 allows up to two house properties; taxpayers with three or more properties must file ITR-2.
  • HUFs file ITR-2 under their own PAN. The Karta signs. HUFs cannot claim the Section 87A rebate.
  • Filing after 31 July 2026 triggers a penalty of up to ₹5,000 under Section 234F.

What is ITR-2 form, and who needs to file it?

ITR-2 is the income tax return form for resident and non-resident individuals, and HUFs, whose income includes capital gains, foreign assets, or income from more than two house properties.

You must file ITR-2 if any of the following apply:

  • You earned short-term or long-term capital gains from stocks, mutual funds, property, or other assets
  • You hold or have income from foreign assets
  • You own three or more house properties
  • You are an NRI or RNOR
  • You are a director of a company or hold unlisted equity shares
  • Your total income exceeds ₹50 lakh
  • You received income from VDAs (Virtual Digital Assets, including cryptocurrency)
  • You are an HUF with any of the above income types

Importantly, ITR-2 does not apply if you have business or professional income. Self-employed professionals must file ITR-3 or ITR-4 instead.

What is the last date to file ITR-2 for AY 2026-27?

The due date for filing ITR-2 (non-audit cases) for AY 2026-27 is 31 July 2026. You can file a belated return until 31 December 2026, but penalties and interest will apply. Missing 31 July triggers Section 234F penalties: ₹5,000 if your total income exceeds ₹5 lakh, or ₹1,000 if income is ₹5 lakh or below. Beyond the flat penalty, Section 234A charges interest at 1% per month on unpaid tax.

Important: A belated return filed after 31 July 2026 cannot carry forward capital losses to offset future gains. File on time to preserve this benefit.

What changed in ITR-2 for AY 2026-27?

For AY 2026-27, the ITR-2 form has been revised to reflect Budget 2024 capital gains rate changes, split reporting for gains before and after 23 July 2024, and updated VDA (crypto) disclosure requirements. CBDT formally notified the revised ITR-2 via Notification No. 46/2026.

Key changes:

  • Budget 2024 capital gains rates: LTCG rate increased from 10% to 12.5% (no indexation). STCG rate increased from 15% to 20%. Both changes took effect from 23 July 2024.
  • Split-period reporting: Capital gains before and after 23 July 2024 must be reported separately.
  • VDA disclosure: Virtual digital asset income schedule updated with new fields.
  • ITR-1 eligibility expansion: Some former ITR-2 filers (second house property, small LTCG) can now switch to ITR-1.

How do I report capital gains in ITR-2?

Capital gains in ITR-2 are reported in Schedule CG. The schedule requires you to separately compute:

  • STCG from equity and equity mutual funds (Section 111A) — taxed at 20%
  • LTCG from equity and equity mutual funds (Section 112A) — taxed at 12.5% above ₹1.25 lakh
  • STCG from other assets — taxed at slab rates
  • LTCG from other assets (Section 112) — taxed at 12.5% without indexation (post-Budget 2024)
  • Capital gains from VDAs — taxed at 30%

The 87A rebate trap: Even if your total income is under ₹12 lakh, the Section 87A rebate does NOT reduce tax on STCG at 20%, LTCG at 12.5%, or VDA income at 30%. Many taxpayers discover this only at the portal after submitting — at which point the tax is due regardless.

How does an HUF file ITR-2?

An HUF files ITR-2 under its own PAN, separate from the Karta’s individual PAN. The Karta signs and verifies the return. Key HUF-specific points:

  • HUFs cannot claim the Section 87A rebate under any circumstance
  • HUF income from business or profession goes in ITR-3 or ITR-5, not ITR-2
  • Coparcener salary and interest from HUF are taxable in the individual’s hands, not the HUF’s
  • Partition of HUF requires separate tax treatment and must be disclosed in the return

What are the most common mistakes in ITR-2 filing?

  • Wrong form selected: Having even Re.1 of business income requires ITR-3, not ITR-2
  • 87A rebate incorrectly claimed: Portal may not automatically block this — verify tax computation carefully
  • No split-period reporting for capital gains: Pre and post 23 July 2024 gains must be separated
  • Foreign assets omitted: Schedule FA is mandatory even for small foreign holdings
  • Not e-verifying within 30 days: An unverified return is treated as not filed

Disclaimer: This article is for informational purposes only and does not constitute professional tax advice. Consult a qualified Chartered Accountant for advice specific to your situation. All figures and dates are based on information available as of May 2026.