ITR-2: who should file it

File ITR-2 if you are an individual or a HUF with no business or professional income and you cannot use ITR-1. The usual reasons are capital gains beyond the small ITR-1 limit, more than one house property, total income above ₹50 lakh, foreign assets or income, being a non-resident, or having a loss to carry forward.

The conditions below are the ones TaxCare applies for the tax year 2025-26. The forms for 2026-27 have not been published, so these conditions will be re-checked when the forms and instructions are released.

The reasons that move you to ITR-2

TaxCare starts from the simplest form the rules allow and moves up only when something requires it. These are the facts that rule out ITR-1 and push a person without business income to ITR-2:

In the code that TaxCare uses, tax deducted on cash withdrawals (section 194N) and deferred tax on start-up ESOPs also rule out ITR-1.

What ITR-2 covers

TaxCare's ITR-2 for a resident individual, tax year 2025-26, includes everything ITR-1 does, plus:

• More than one house property.
• Capital gains lot by lot, including the exemptions for reinvestment (sections 54, 54B, 54D, 54EC and 54F).
• Agricultural income above ₹5,000, counted for rate purposes.
• Income of a spouse or minor child that is clubbed with yours.
• Set-off and carry-forward of losses.
• Winnings from lotteries and online games.
• Relief for tax paid abroad (sections 90, 90A and 91).

The section numbers named in this guide are those of the Income-tax Act, 1961. From the tax year 2026-27 the Income-tax Act, 2025 renumbers its sections.

What ITR-2 does not cover

ITR-2 is not for business or profession income. If you have that, even a small side business, you need ITR-3 (books of account) or ITR-4 (presumptive income). A company director or an unlisted shareholder also needs care: TaxCare does not compute those disclosures itself and hands them to a Tax Expert.

Two things to know about hand-offs:

• Foreign assets. A resident who held an asset outside India at any time in the relevant year must report it in Schedule FA, whatever the income. TaxCare does not build Schedule FA. A "yes" goes to a Tax Expert.
• Directors and unlisted shares. The director and unlisted-share disclosures are not computed in TaxCare's self-filing.

Leaving a foreign asset or foreign income out of the return can attract a penalty of ₹10 lakh under section 43 of the Black Money Act. That section does not apply to assets other than immovable property whose total value is ₹20 lakh or less, and foreign bank accounts with a total balance of ₹5 lakh or less are also exempt.

Examples

• A salaried employee who sold equity shares at a profit of ₹3,00,000 after holding them for more than a year: ITR-2, because the long-term gain is above ₹1,25,000.
• A salaried person with a second house that is rented out: ITR-2.
• A retired person who sold a plot of land: ITR-2.
• A salaried person with a foreign stock account: ITR-2 with Schedule FA, handled by a Tax Expert in TaxCare.
• A freelancer who also sold shares: not ITR-2. Business income points to ITR-3 or ITR-4. See our guide on which ITR form to file.

Taxes in ITR-2: a note on capital gains

If the return has long-term gains on listed equity, the first ₹1,25,000 a year is exempt and the rest is taxed at 12.5%. Short-term gains on listed equity are taxed at 20%. See our guide on the long-term capital gains exemption limit on equity.

Which documents to keep ready

• Form 16 if you have salary.
• AIS, TIS and Form 26AS (to 2025-26) or Form 168 (from 2026-27).
• Broker or mutual fund capital gains statements.
• Sale and purchase deeds for property.
• Loan certificates, rent details and proofs for deductions in the old regime.

Due date

The due date for most people is 31-Jul of the year after the tax year, subject to any extension. See our guide on ITR due dates.

How TaxCare helps

TaxCare reads your statements from the Income Tax portal, checks them against the ITR-1 conditions and moves you to ITR-2 only when something requires it. It tells you why, for example "your capital gains move you to ITR-2". It computes the tax under both regimes. Cases that TaxCare does not file itself, such as foreign assets, go to a Tax Expert with your documents. Nothing is submitted without your approval.

This guide gives general information and is not professional tax advice.