How to File ITR-2 for AY 2026-27
Key Takeaways
- ITR-2 is for individuals and HUFs who do NOT have business or professional income but do have capital gains, foreign assets, more than two house properties, or total income above Rs 50 lakh.
- The due date is July 31, 2026 (same as ITR-1). Belated and revised returns run up to December 31, 2026.
- Capital gains use the post-23 July 2024 rates: STCG u/s 111A at 20%, LTCG u/s 112A at 12.5% (exemption Rs 1.25 lakh), other LTCG u/s 112 at 12.5%.
- ITR-2 has no business schedules. The moment you have business or professional income, you move to ITR-3.
- The new regime is the default; income up to Rs 12 lakh is effectively tax-free through the Section 87A rebate (the rebate does not apply to special-rate capital gains).
Who should read this: Investors with capital gains, people with two-plus properties, NRIs, those with foreign shares (RSUs/ESPP/US stocks), and salaried filers whose income crossed Rs 50 lakh.
Reading time: ~15 minutes · Last updated: 30 June 2026 · Applicable FY: 2025-26 · Applicable AY: 2026-27
Written by the Tax Garden Compliance Team (Kondapur, Hyderabad). Reviewed by a Chartered Accountant on our practice team. Figures verified against the CBDT AY 2026-27 ITR notification and the Income-tax Act, 1961. See Sources.
ITR-2 is the form for individuals and HUFs whose income is too complex for ITR-1 Sahaj but who still have no business or professional income. If you sold shares, mutual funds, or property; hold foreign assets; own more than two houses; or earned more than Rs 50 lakh, ITR-2 is almost always your form.
Looking for expert help with how to file ITR-2 with capital gains and foreign assets for AY 2026-27? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant end-to-end: filings, notices, and advisory, all in one place.
What is ITR-2?
ITR-2 is one of the seven income tax return forms notified by the CBDT. It is wider than ITR-1 and covers every head of income except profits and gains from business or profession. It carries detailed schedules for capital gains (Schedule CG), foreign assets and income (Schedule FA), virtual digital assets (Schedule VDA), and assets and liabilities (Schedule AL) for high earners.
Why File ITR-2?
- Legal: Filing is mandatory under Section 139 once income exceeds the basic exemption limit, and in specified high-value situations regardless of income.
- Capital gains compliance: Capital gains, foreign income, and crypto gains must be reported with full transaction detail. The Department already has this data from broker statements, AIS, and the foreign-asset exchange of information.
- Carry forward losses: Filing by the due date lets you carry forward capital losses for up to 8 years to set off against future gains.
- Proof and refunds: A verified return is your income proof and the only way to claim excess TDS back.
Who Should File ITR-2 for AY 2026-27?
File ITR-2 if you are an individual or HUF with no business/profession income and any of the following.
| Situation | ITR-2 required? |
|---|---|
| Capital gains (shares, mutual funds, property, gold, crypto/VDA) | Yes |
| Short-term capital gains of any amount | Yes |
| LTCG above Rs 1.25 lakh, or any non-112A gains | Yes |
| Total income above Rs 50 lakh | Yes |
| More than two house properties | Yes |
| Foreign assets, foreign income, or foreign signing authority | Yes |
| NRI or RNOR residential status | Yes |
| Director in a company / holds unlisted shares | Yes |
| Agricultural income above Rs 5,000 | Yes |
| Brought-forward losses to carry forward | Yes |
Simple test: If your income is too complex for ITR-1 but you have no business or professional income, you file ITR-2. Add any business/profession income and you move to ITR-3.
Who Should NOT File ITR-2?
- You have business or professional income. A proprietor, freelancer, consultant, or F&O trader files ITR-3 or ITR-4 Sugam. (Example: a doctor in private practice cannot use ITR-2.)
- You are a partner in a firm earning remuneration or interest from it. That is treated as business income → ITR-3.
- Your income fully fits ITR-1 (salary/pension, up to two houses, only 112A LTCG up to Rs 1.25 lakh). Use the simpler ITR-1.
- You are a company, LLP, firm, trust, or AOP. Those use ITR-5, ITR-6, or ITR-7.
ITR-1 vs ITR-2 vs ITR-3
Comparison
ITR-1 vs ITR-2 vs ITR-3 : Which Form?
The dividing lines are capital gains and business income
| Parameter | ITR-1 (Sahaj) | ITR-2 |
|---|---|---|
| Capital gains | Only 112A LTCG up to Rs 1.25L | All capital gains, any amount |
| Income limit | Up to Rs 50 lakh | No upper limit |
| Foreign assets | Not allowed | Allowed (Schedule FA) |
| Business income | Not allowed | Not allowed (use ITR-3) |
| Due date | 31 July 2026 | 31 July 2026 |
Takeaway: ITR-2 = capital gains / foreign assets / high income, but NO business. Add business income and you need ITR-3.
Source: CBDT ITR Instructions AY 2026-27 : incometax.gov.in/iec/foportal/
Capital Gains Tax Rates (Post 23 July 2024)
The most important part of ITR-2 is reporting capital gains at the correct rate. Budget 2024 changed the rates and removed the old 10% and 15% fields.
| Asset / section | Term | Tax rate (transfers after 23 Jul 2024) |
|---|---|---|
| Listed equity / equity MF, STCG (Section 111A) | Short-term | 20% |
| Listed equity / equity MF, LTCG (Section 112A) | Long-term (>12 months) | 12.5% on gains above Rs 1.25 lakh |
| Other LTCG (Section 112): property, gold, debt, unlisted | Long-term | 12.5% without indexation |
| Land/building bought before 23 Jul 2024 (resident individual/HUF) | Long-term (>24 months) | Lower of 12.5% (no index) or 20% with indexation |
| STCG on other assets | Short-term | At slab rate |
The Section 87A rebate (income up to Rs 12 lakh tax-free) does not apply to income taxed at special rates such as 111A STCG and 112A LTCG. Capital-gains tax is payable even if your total income is modest.
See the capital gains tax guide and the cost inflation index table for indexation.
What Changed in ITR-2 for AY 2026-27
- Capital gains date-split aligned to 23 July 2024. Old 10% and 15% rate fields are removed; gains are reported pre/post that date at the new rates.
- Buy-back loss reporting. Since 1 October 2024, company buy-back proceeds are taxed as deemed dividend in the shareholder's hands; the cost of those shares is allowed as a capital loss. ITR-2 has a row to report it.
- Date of acquisition and date of sale are mandatory for most capital-gains exemption claims (Sections 54/54F/54EC).
- Asset & Liability (Schedule AL) continues for total income above the prescribed limit.
- Representative-assessee and dual contact fields captured.
Required Documents
| Document | Mandatory? | Purpose |
|---|---|---|
| PAN, Aadhaar (linked) | Yes | Login, e-verification |
| Form 16 | If salaried | Salary and TDS |
| Broker / AMC capital-gains statement | If capital gains | Schedule CG accuracy |
| Form 26AS + AIS + TIS | Yes | Reconcile income and TDS |
| Sale/purchase deeds | If property sold | LTCG computation, exemptions |
| Foreign account / broker statements | If foreign assets | Schedule FA |
| Crypto/VDA transaction report | If VDA traded | Schedule VDA |
| Home loan / rent / deduction proofs | If claimed (old regime) | Chapter VI-A |
| Pre-validated bank account | Yes | Refund |
Reconcile everything using the AIS vs Form 26AS vs TIS guide before you start.
Step-by-Step: How to File ITR-2
Step-by-Step Guide
How to File ITR-2 for AY 2026-27
On the income tax e-filing portal : incometax.gov.in/iec/foportal/
Log in and select ITR-2
Log in with PAN. e-File > Income Tax Returns > File Income Tax Return. Select AY 2026-27 and ITR-2.
StartChoose regime and verify Schedule S
New regime is default. Verify pre-filled salary from Form 16, add previous-employer salary if any.
SalaryFill Schedule HP
Report all house properties (no two-property limit here). Enter rent, municipal taxes, and 24(b) interest.
House propertyFill Schedule CG (Capital Gains)
Enter each asset sale: equity, MF, property, gold. Use the broker/AMC statement. Apply the correct 111A/112A/112 rate and date-split. Claim 54/54F/54EC exemptions with dates.
Capital gainsFill Schedule OS, VDA, FA
Other-sources income, crypto in Schedule VDA, and foreign assets/income in Schedule FA. Foreign-asset omission carries heavy consequences.
Other / foreignApply deductions and Schedule AL
Chapter VI-A deductions (old regime). Fill Schedule AL if total income exceeds the threshold.
DeductionsSet off and carry forward losses
Schedule CYLA/BFLA/CFL: set off current-year losses and carry forward capital losses for up to 8 years.
LossesCompute tax, pay, validate, e-verify
Pay any self-assessment tax via e-challan, validate, submit, and e-verify within 30 days.
FinalSource: CBDT ITR-2 Instructions AY 2026-27 : incometax.gov.in/iec/foportal/
Worked Examples
1. Equity investor. Neha (Rs 9 lakh salary) booked Rs 3 lakh LTCG on equity MF and Rs 40,000 STCG on shares. LTCG above Rs 1.25 lakh and any STCG bar ITR-1, so she files ITR-2: LTCG of Rs 1.75 lakh taxed at 12.5%, STCG at 20%.
2. Property sale. Ramesh sold a flat for Rs 90 lakh with Rs 20 lakh LTCG and reinvested in a new house under Section 54. He files ITR-2, reports the gain in Schedule CG with acquisition and sale dates, and claims the Section 54 exemption.
3. Foreign shares (RSUs). Aditya, a resident salaried employee, holds US RSUs and sold some. He must report the holding in Schedule FA and the gain in Schedule CG. ITR-2 is mandatory; ITR-1 is barred by the foreign asset.
4. NRI with rental income. Sara, an NRI, earns Indian rent and bank interest. NRIs cannot use ITR-1, so she files ITR-2.
Common Mistakes
- Filing ITR-1 instead of ITR-2 when any capital gain (beyond 112A up to Rs 1.25 lakh) exists. This causes a Section 139(9) defective notice.
- Omitting Schedule FA for foreign shares/RSUs. Non-disclosure of foreign assets carries serious penalties under the Black Money Act.
- Wrong capital-gains rate or date-split. Use 20% (111A) and 12.5% (112A) for post-23 July 2024 transfers.
- Not reconciling broker statement with AIS. Mismatches trigger notices.
- Missing acquisition/sale dates for 54/54F/54EC exemptions, which leads to disallowance.
- Not carrying forward losses by filing after the due date.
Common Notices and How to Respond
| Notice | Cause | Response |
|---|---|---|
| Section 143(1) intimation | Mismatch in income/TDS after processing | Reconcile, rectify u/s 154 or pay |
| Section 139(9) defective | Wrong form / schedule mismatch | Revise with correct form |
| Section 143(2) scrutiny | Detailed review (often large gains) | Respond via the scrutiny notice process |
| Black Money Act notice | Undisclosed foreign asset | Seek professional help immediately |
Penalties
- Section 234F: Rs 5,000 late fee (Rs 1,000 if income up to Rs 5 lakh) for filing after 31 July 2026.
- Section 234A/B/C: Interest on unpaid or under-paid tax and advance-tax shortfall.
- Belated return (139(4)): Until 31 December 2026, but most loss carry-forward is lost and you are taxed under the new regime by default.
- Foreign-asset non-disclosure: Penalty and prosecution under the Black Money Act.
Latest Changes
- New capital-gains rates and date-split fields (Budget 2024) carried into the AY 2026-27 form.
- Buy-back loss reporting row added.
- For AY 2026-27, the provisions of the Income-tax Act, 1961 apply (the new Income-tax Act, 2025 governs later years).
Meaning of Key ITR-2 Terms
| Term | Meaning | Why it matters |
|---|---|---|
| Schedule CG | Capital Gains schedule | Where every asset sale is reported |
| STCG (111A) | Short-term gain on listed equity | Taxed at 20% |
| LTCG (112A) | Long-term gain on listed equity/MF | 12.5% above Rs 1.25 lakh |
| Section 112 | LTCG on other assets | 12.5% without indexation |
| Indexation | Inflation adjustment of cost (CII) | Available on pre-23 Jul 2024 land/building |
| Schedule FA | Foreign Assets schedule | Mandatory for foreign holdings |
| Schedule VDA | Virtual Digital Assets | Crypto gains at 30% |
| Schedule AL | Assets & Liabilities | Required above income threshold |
| CFL | Carry Forward of Losses | Preserves losses for 8 years |
| Section 54 / 54F / 54EC | Capital-gains exemptions | Reinvestment relief |
Need Help Filing ITR-2?
Capital gains, foreign assets, and property sales are where filing errors get expensive. Tax Garden (4th Floor, CWS One, Kondapur, Hyderabad, 500084, Telangana) prepares Schedule CG from your broker and AMC statements, handles Schedule FA disclosures for RSUs and foreign holdings, and files ITR-2 accurately before the July 31 deadline. See our tax compliance services and pricing.
Looking for expert help with ITR-2 filing services for capital gains and foreign income in India? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant end-to-end: filings, notices, and advisory, all in one place.
Related Guides
- ITR-1 Sahaj guide · ITR-3 guide · ITR-4 Sugam guide
- Capital gains tax (LTCG/STCG)
- Section 54/54F/54EC exemptions
- Crypto/VDA tax and Schedule VDA
- AIS vs Form 26AS vs TIS
- How to e-verify your ITR
Frequently Asked Questions
Who should file ITR-2 for AY 2026-27?
Individuals and HUFs without business or professional income who have capital gains, more than two house properties, foreign assets or income, total income above Rs 50 lakh, NRI/RNOR status, or are company directors or unlisted-share holders.
What is the last date to file ITR-2 for AY 2026-27?
July 31, 2026 for non-audit cases. A belated or revised return can be filed up to December 31, 2026 with a Section 234F late fee.
What is the difference between ITR-1 and ITR-2?
ITR-1 is for simple income up to Rs 50 lakh with only Section 112A LTCG up to Rs 1.25 lakh. ITR-2 covers all capital gains, foreign assets, more than two houses, income above Rs 50 lakh, and NRI/RNOR filers, but still no business income.
What is the difference between ITR-2 and ITR-3?
ITR-2 is for those with no business or professional income. The moment you have business income, freelance income, F&O trading, or are a partner drawing remuneration from a firm, you must file ITR-3.
What are the capital gains tax rates for AY 2026-27?
For transfers after 23 July 2024: STCG on listed equity (Section 111A) at 20%, LTCG on listed equity/MF (Section 112A) at 12.5% above the Rs 1.25 lakh exemption, and other LTCG (Section 112) at 12.5% without indexation. Pre-23 July 2024 land/building can use 20% with indexation if lower.
Can I file ITR-2 if I have a small short-term capital gain?
ITR-2 is the correct form for any short-term capital gain. ITR-1 does not allow any STCG, so even a small STCG moves you to ITR-2.
Do I need ITR-2 for US stocks or RSUs?
Yes. Foreign shares, RSUs, ESPP, and overseas brokerage holdings must be disclosed in Schedule FA, which is only available in ITR-2 (or ITR-3). ITR-1 is barred.
What is Schedule FA?
Schedule FA is the Foreign Assets schedule where residents disclose foreign bank accounts, shares, RSUs, property, and signing authority. Omitting it can attract penalties under the Black Money Act.
How are crypto gains reported in ITR-2?
Virtual digital asset gains are reported in Schedule VDA and taxed at a flat 30% with no deduction except cost of acquisition, plus 1% TDS under Section 194S. See our crypto tax guide.
Does the Rs 12 lakh rebate apply to capital gains?
No. The Section 87A rebate does not apply to income taxed at special rates such as 111A STCG and 112A LTCG. You pay capital-gains tax even if your total income is low.
Can I claim Section 54 exemption in ITR-2?
Yes. Reinvestment exemptions under Sections 54, 54F, and 54EC are claimed in Schedule CG. Acquisition and sale dates are mandatory for the claim to be accepted.
Can I carry forward capital losses in ITR-2?
Yes, if you file by the due date. Capital losses can be carried forward for up to 8 assessment years to set off against future capital gains. Filing late forfeits this.
Is ITR-2 audited?
No. ITR-2 has no business income, so a tax audit under Section 44AB does not apply. The due date is July 31, 2026.
Can a pensioner with capital gains file ITR-2?
Yes. A pensioner who sold shares, mutual funds, or property and has gains beyond what ITR-1 allows files ITR-2.
What documents do I need for ITR-2?
PAN, Aadhaar, Form 16, broker and AMC capital-gains statements, Form 26AS, AIS, TIS, sale/purchase deeds for property, foreign account statements, crypto reports, deduction proofs, and a pre-validated bank account.
How do I report the sale of a house in ITR-2?
Report it in Schedule CG with the sale value, indexed or actual cost, acquisition and sale dates, and any Section 54/54EC exemption. Long-term gains on property are taxed at 12.5% without indexation, or 20% with indexation for pre-23 July 2024 purchases if lower.
Can I switch from new regime to old regime in ITR-2?
Yes, at the time of filing, but only if you file by the due date. A belated return is taxed under the new regime by default, losing old-regime deductions.
What is the buy-back loss change in ITR-2?
From 1 October 2024, company buy-back proceeds are taxed as deemed dividend in your hands, and the cost of those shares is treated as a capital loss. ITR-2 has a dedicated row to report this.
Do NRIs file ITR-2?
Yes. Non-residents and RNORs with Indian income such as rent, interest, or capital gains file ITR-2 (unless they have business income, in which case ITR-3).
What if I have both salary and capital gains?
If you have salary plus any capital gain beyond ITR-1 limits, file ITR-2. Salary goes in Schedule S and gains in Schedule CG.
How do I e-verify ITR-2?
After submission, e-verify within 30 days using Aadhaar OTP, net banking, bank/demat EVC, or DSC. An unverified return is treated as not filed.
Is dividend income reported in ITR-2?
Yes, under Schedule OS. Dividends are taxable at slab rates and TDS at 10% above Rs 5,000 per company applies; reconcile with AIS.
Can I report agricultural income in ITR-2?
Yes. Agricultural income above Rs 5,000 is reported in ITR-2 for rate purposes (partial integration), unlike ITR-1 which caps it at Rs 5,000.
What happens if I miss the July 31 deadline for ITR-2?
You can file a belated return until 31 December 2026 with a Section 234F fee, but you cannot carry forward most losses and are taxed under the new regime by default.
Where can I get ITR-2 filing help in Hyderabad?
Tax Garden, based in Kondapur, Hyderabad, prepares Schedule CG and Schedule FA and files ITR-2 for investors, NRIs, and property sellers across India. See our pricing page.
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Sources
Verified against the CBDT notification of ITR forms for AY 2026-27, the ITR-2 instructions and e-filing utility on the Income Tax Department portal (incometax.gov.in/iec/foportal/), the Income-tax Act, 1961 (Sections 54, 54EC, 54F, 87A, 111A, 112, 112A, 139, 143, 234F), the Finance Act 2024 (capital-gains rate changes), and the Finance Act 2025. Confirm the current rates, schedules, and due dates against the official CBDT notification before filing.