New ITR Update! Income Tax Dept Unveils ITR-2 Online Filing with Auto-Filled Forms: Are You Eligible?

The Income Tax Department on Friday rolled out online filing for ITR‑2 through its e-filing portal, a move set to simplify tax compliance for individuals with multiple income streams. Previously, taxpayers with capital gains, rental income from more than one property, or foreign assets had to endure a convoluted process using Excel utilities and JSON files. Now, they can file their returns directly online with pre‑filled data.

With this update, the e-filing portal now auto-populates data from Form 26AS, AIS (Annual Information Statement), PAN, and TIS, vastly reducing manual effort. Taxpayers no longer need to generate JSON files via Excel utilities, accelerating filing and significantly reducing errors.

Who Can File ITR-2 Online?

The ITR-2 form is specifically designed for individuals and Hindu Undivided Families (HUFs) who have income from sources other than business or professional activities. With the Income Tax Department now enabling online filing for ITR-2, it has become significantly easier for this category of taxpayers to file their returns directly on the portal with pre-filled data.

Eligibility for ITR-2

Salaried individuals or pensioners: Those who earn income through a regular job or retirement pension and do not have business income can use ITR-2.

Property owners with multiple houses: Taxpayers owning more than one residential or commercial property and earning rent from them fall under this category.

Capital gains earners: Individuals who have earned short-term or long-term capital gains from the sale of shares, mutual funds, real estate, or other capital assets are required to file ITR-2.

Foreign asset holders: Those who have income from foreign sources or own foreign assets (such as bank accounts, stocks, or property outside India) must report it under ITR-2.

Not Eligible to Use ITR-2

• Individuals who have income from business or professional services, such as freelancers, consultants, shop owners, or self-employed professionals, cannot use ITR-2.
• Those who are partners in a firm and receive income in the form of salary, interest, or commission from the partnership must also use ITR-3, not ITR-2.

Impact on Taxpayers

The introduction of ITR‑2 online filing is expected to be a game-changer for salaried individuals and investors. With pre‑filled forms, the filing process is not only faster but also less prone to mistakes. It is also poised to reduce dependence on professional tax consultants and improve overall taxpayer compliance.

What About ITR‑3?

Taxpayers earning from business, professions, or trading-such as freelancers, consultants, or crypto traders-must continue using the Excel-to-JSON route to file ITR‑3. The pre-filled online option is not yet available for ITR‑3, keeping the longer process in place for these groups.