Key takeaways
What this article covers, in order:
- Who should file ITR-2
- Who cannot file ITR-2
- What is inside ITR-2
- Capital gains rules you will apply in ITR-2
- Worked example: a Gurugram product manager with RSUs and two share sales
- How to file ITR-2 online
ITR-2 is the return form for individuals and HUFs who have no income from business or profession but cannot use ITR-1. In practice that means you file ITR-2 if you have capital gains beyond a small tax-free equity gain, more than two house properties, foreign assets or foreign income, a directorship or unlisted shares, total income above ₹50 lakh, or if you are a non-resident. There is no income ceiling on ITR-2.
This guide covers who should file ITR-2 for AY 2026-27 (income earned in FY 2025-26), who cannot, what is in the form, a worked example with capital gains and foreign shares, and the filing steps.
Who should file ITR-2
You need ITR-2 if you have no business or professional income and any of these apply:
- Capital gains other than section 112A long-term gains of up to ₹1.25 lakh. That includes any short-term gain on shares or funds, any gain on property, gold, unlisted shares or debt funds, and gains on crypto and other virtual digital assets.
- More than two house properties. From AY 2026-27, ITR-1 allows two, so the third property is what moves you to ITR-2.
- Foreign assets or foreign income. Shares or RSUs of an overseas employer, a foreign bank account, signing authority over a foreign account, or income from a source outside India.
- A directorship in any company, or unlisted equity shares held at any time during the year.
- Total income above ₹50 lakh.
- Non-resident or "resident but not ordinarily resident" status.
- Agricultural income above ₹5,000.
- Losses brought forward from earlier years or to be carried forward.
- TDS under section 194N on cash withdrawals, or income tax deferred on start-up ESOPs.
ITR-2 also works for HUFs, which can never use ITR-1.
Who cannot file ITR-2
ITR-2 is not for anyone with income from business or profession. That includes a partner who receives salary, interest, bonus, commission or remuneration from a partnership firm, because that is taxed as business income. Those taxpayers file ITR-3, or ITR-4 if they qualify for presumptive taxation. Freelancers and consultants, even part-time ones, are in the same position.
What is inside ITR-2
ITR-2 is longer than ITR-1 because it has schedules for each kind of income. The ones that catch people out:
- Schedule CG (capital gains) for every sale, split between short-term and long-term. For AY 2026-27 the separate reporting of sales before and after 23 July 2024, needed last year, has been removed.
- Schedule 112A for long-term gains on listed equity shares and equity mutual funds, reported scrip-wise or fund-wise.
- Schedule FA for foreign assets, which must be disclosed even if they earned nothing.
- Schedules FSI and TR for foreign source income and the relief claimed for tax paid abroad.
- A schedule for virtual digital assets such as crypto.
- Loss schedules for set-off and carry-forward.
Capital gains rules you will apply in ITR-2
For transfers on or after 23 July 2024, which covers all of FY 2025-26:
- Holding period: listed securities are long-term after 12 months; other assets, including property and unlisted shares, after 24 months.
- Short-term gains on listed equity and equity funds (section 111A): 20%.
- Long-term gains on listed equity and equity funds (section 112A): 12.5% on the amount above ₹1.25 lakh a year.
- Other long-term gains (section 112): 12.5% without indexation. Resident individuals and HUFs selling land or a building bought before 23 July 2024 can instead pay 20% with indexation if that works out lower.
Worked example: a Gurugram product manager with RSUs and two share sales
Rohan, 41, is a product manager in Gurugram, resident and ordinarily resident. For FY 2025-26 he has:
- Salary of ₹32,00,000, including the value of RSUs from his employer's US parent company
- Those RSU shares, held in a US brokerage account
- A short-term gain of ₹1,20,000 on listed Indian shares held for eight months
- A long-term gain of ₹2,10,000 on equity mutual fund units held for three years
Why not ITR-1? Three separate reasons, any one of which is enough: the foreign shares, the short-term gain, and the section 112A gain above ₹1.25 lakh. He has no business income, so ITR-2 is his form.
Tax on his capital gains:
- Short-term gain under section 111A: ₹1,20,000 × 20% = ₹24,000.
- Long-term gain under section 112A: ₹2,10,000 minus the ₹1,25,000 exemption = ₹85,000; ₹85,000 × 12.5% = ₹10,625.
- Total special-rate tax: ₹34,625, plus surcharge if applicable and health and education cess. His salary is taxed separately at slab rates.
What else goes in: the US shares are reported in Schedule FA. If they paid dividends with US tax withheld and he wants credit for that tax, he has to file Form 67 by the end of the assessment year (31 March 2027), provided the return itself is filed within the time allowed under section 139(1) or 139(4), and report the income in Schedules FSI and TR.
The common error in a case like Rohan's is leaving the RSU shares out of Schedule FA because the income was "already in Form 16". The salary is reported; the asset still has to be disclosed.
How to file ITR-2 online
- Log in to incometax.gov.in and go to e-File, then Income Tax Returns, then File Income Tax Return.
- Choose assessment year 2026-27, online mode, status Individual (or HUF), and ITR-2.
- Check the pre-filled data: salary from Form 16, interest and dividends from AIS, TDS from Form 26AS. Your broker's capital gains statement is the main source for Schedule CG and Schedule 112A.
- Fill in the schedules that apply: house property, capital gains, foreign assets, other sources, deductions.
- Choose your tax regime. The new regime is the default; a non-business taxpayer can opt for the old regime in the return, provided it is filed by the due date.
- Pay any balance tax through e-Pay Tax as self-assessment tax and enter the challan.
- Submit and e-verify within 30 days.
ITR-2 due date and late filing
For AY 2026-27 the due date for ITR-2 was 31 July 2026. A belated return can be filed until 31 December 2026, with a late fee under section 234F of up to ₹5,000 (₹1,000 if total income does not exceed ₹5 lakh). Late filing has a further cost for ITR-2 filers in particular: a capital loss can be carried forward, for up to eight years, only if the return for the year of the loss was filed by the due date.
Common ITR-2 mistakes
- Using ITR-1 because the gain was small. A short-term gain of a few hundred rupees still requires ITR-2.
- Missing Schedule FA. Foreign assets held as a resident must be disclosed even if they produced no income.
- Mixing up holding periods. Listed shares become long-term after 12 months; unlisted shares and property need 24.
- Not matching the broker statement to AIS. Sale values in AIS come from brokers and fund houses; differences invite questions.
- Filing ITR-2 with freelance income. Any business or professional income, even a single consulting invoice, means ITR-3 or ITR-4.
hellobooks< / a > -fits-in">Where HelloBooks fits in
HelloBooks does not file ITRs, and if your income is salary plus investments, your Form 16, AIS, Form 26AS and broker statements are the records you need.
Where HelloBooks helps is when your affairs include a business: a side consultancy, a family firm you are a partner in, or a company you direct. That income moves you to ITR-3, and those forms run on a profit and loss account and balance sheet. HelloBooks keeps those books with bank feeds and reconciliation, records TDS deducted by your clients and reconciles it against Form 26AS, and gives your CA a clean P&L, balance sheet and general ledger to prepare the return from.
This is general information as of November 2026, not tax or legal advice. Check the official source or a qualified CA for your situation.
