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ITR-2

Name: Faiz Memon Subj: Tax Management Activity: 3 Submitted to: Bela Ma’am Sem: V Navrachana University

this Return Form can be used where such income falls in any of the above categories. or (b) Income from House Property.  Forms from ITR1 to ITR 8 were introduced to file income tax return. minor child.Digital signature in e-filing has become mandatory for Companies from AY2010-11 onwards. etc. in a case where the income of another person like spouse. It is mandatory for Companies and Firms requiring statutory audit u/s 44AB to submit the Income tax returns electronically from AY 2007-08 onwards. or (c) Income from Capital Gains.This report will show us the rules and instructions on filing ITR-2. is to be clubbed with the income of the assessee.  Further. or (d) Income from Other Sources (including Winning from Lottery and Income from Race Horses).Introduction  The process of electronically filing Income tax returns through the internet is known as e-Filing. .  ITR-2 Form is to be used by an individual or a Hindu Undivided Family whose total income for the assessment year 2012-13 includes:(a) Income from Salary / Pension.

The main portion of ITR-2 has two pages. This Return Form should not be used by an individual whose total income for the assessment year 2012-13 includes Income from Business or Profession. Some of the details in this form have to be filled out on the basis of the relevant codes. The user has to first fill up the schedules and then get around to filling up the two main pages. then ITR-2 is the form to be filled up. or if you own a house. (ii) By furnishing the return electronically under digital signature.  If you are a salaried individual and have made some money selling shares. there are four pages occupied by 15 schedules. i. .. The parts and the schedules are described below:(i) The first part.e. It mainly seeks general information requiring identificatory and other data. Part-A is spread over half of the first page of the return. (iii) By transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITRV. Instructions for ITR-2  This Form can be submitted to the Income Tax Department in any of the following manners:(i) By furnishing the return in a paper form. Other than these. (iv) By furnishing a bar-coded paper return.

e. Part-B on page 1 and page 2 is regarding an outline of the total income and tax computation in respect of income chargeable to tax. (g) Schedule. (iv) After Part-B. there are details to be filled if the return has been prepared by a Tax Return Preparer. (d) Schedule-OS: Computation of income under the head Income from other sources. there is a space for a statutory verification. (e) Schedule-CYLA: Statement of income after set off of current year’s losses (f) Schedule-BFLA: Statement of income after set off of unabsorbed loss brought forward from earlier years. . (vi) On pages 3 to 6. (h) Schedule-VIA: Statement of deductions (from total income) under Chapter VIA.(ii) The second part. there is a space for furnishing details of the transmission of the data of the form if the form has been furnished in the manner mentioned above in the form submission types point no(iii). on page 2. (b) Schedule-HP: Computation of income under the head Income from House Property (c) Schedule-CG: Computation of income under the head Capital gains.CFL: Statement of losses to be carried forward to future years. (v) On top of page 3. i. there are 15 Schedules details of which are as under(a) Schedule-S: Computation of income under the head Salaries. (iii) On page 2.

(ii) Schedules (iii) Part B-TI and Part B-TTI (iv) Verification (v) Details relating to TRP and counter signature of TRP if return is prepared by him.  Sequence for filling out parts and schedules: You are advised to follow the following sequence while filling out the form.General on page 1. (n) Schedule-TDS1: Statement of tax deducted at source on salary. (j) Schedule-SI: Statement of income which is chargeable to tax at special rates (k) Schedule-EI: Statement of Income not included in total income (exempt incomes) (l) Schedule-AIR: Information regarding transactions which are reported through Annual Information Return under section 285BA. (i) Part A. CG and OS. . (m) Schedule-IT: Statement of payment of advance-tax and tax on self-assessment. (o) Schedule-TDS2: Statement of tax deducted at source on income other than salary.(i) Schedule SPI: Statement of income arising to spouse/ minor child/ son’s wife or any other person or association of persons to be included in the income of assessee in Schedules-HP.

These statutory provisions decide what is to be included in your income. (vi) From gross total income. “Assessment Year” is the financial year immediately following the previous year. the previous year) under each head of income separately in the Schedules which have been structured so as to help you in making these computations as per provisions of the Income-tax Act.e. (B) “Income from house property”. “deductions” mentioned in Chapter VIA of . A separate Schedule is provided for such set-off. (iv) Set off. Computation of total income: (a) “Previous year” is the financial year (1st April to the following 31st March) during which the income in question has been earned.. and also what you cannot claim as an expenditure/allowance. as per procedures prescribed by the law. as per procedures prescribed by the law loss(es) and/or allowance(s) of earlier assessment year(s) brought forward. (b) Total income is to be computed as follows. Also. compute loss(es) and/or allowance(s) that could be set off in future and is (are) to be carried forward as per procedures prescribed by the law. (v) Aggregate the headwise end-results as available after(iv) above. in the following order: (i) Classify all items of income under the following heads of income(A) Salaries. (ii) Compute taxable income of the current year (i. this will give you “gross total income”. (C) “Capital gains”. (iii) Set off current year’s headwise loss(es) against current year’s headwise income(s) as per procedures prescribed by the law. Separate Schedules are provided for this. subtract. and (D) “Income from other sources”. what you can claim as an expenditure or allowance and how much.

“advance-tax” and “self-assessment tax”. surcharge. for rate purposes.the Income-tax Act. (d) Claim relief(s) as prescribed by the law. like “tax deducted at source”. in the tax computation procedure. on account of arrears or advances of salary received during the year or of double taxation and calculate balance tax and surcharge payable. The result will be the tax payable (or refundable). if any. (b) Add surcharge as prescribed by the law on the above tax payable. Include agricultural income.  Computation of income-tax. . education cess and interest in respect of income chargeable to tax: (a) Compute income-tax payable on the total income. Special rates of tax are applicable to some specified items. as prescribed. The result will be the total income. calculate agricultural income for rate purposes.. (f) Deduct the amount of prepaid taxes. (c) Add Education Cess as prescribed on the tax payable plus surcharge. (e) Add interest payable as prescribed by the law to reach total tax. Besides. surcharge and interest payable.

1.72.96. Allowances like leave travel allowance. Sharma.000 Leave travel allowance .600 Medical Reimbursement.44. Sharadh Unnithan has . Salary includes your basic salary and the bonus earned during the course of the year. Nevertheless.000 Bonus . these need to be mentioned in the form. Sharadh Unnithan: Mr.720 Transport Allowance.24. Sharadh Unnithan’s salary structureBasic. Allowances not exempt include allowances like special allowance.000 Salary income: The information to fill up this schedule comes largely from Form 16 and your salary structure.15.1. house rent allowance (if an individual lives in a rented accommodation) and transportation allowance.9. You don’t need to calculate this entry separately — your form 16 will have the numbers. It also includes the house rent allowance (HRA) if the individual owns a house and lives in it.80. In the case of Mr.15. medical reimbursement.400 House rent allowance. the basic and bonus amount to Rs 3.How to file ITR  Let us take an example of some Mr.000. Mr. etc are exempt from taxes.000 Special allowance.

50. The interest component for the year works out to Rs 2. his HRA is taxable. the entire interest part of the EMI can be set off against the rent earned during the course of the year.720) and HRA (Rs 72. His equated monthly instalment (EMI) for this works out to Rs 27.275. The income chargeable to tax under this head works out to Rs 4.bought a house for Rs 30 lakh this year and lives in it.98. whose housing loan you have.98. Income from house: If you don’t own a house. Sharadh Unnithan has paid an interest of Rs 2. this section is not for you. his income from house property is negative. the entry that matters to you is the interest paid on borrowed capital. Since he lives in the house.68. he can show an interest of only Rs 1. Sharadh Unnithan lives in the house he bought.275 during the year. In case of a self-occupied house. Given that Mr.720. To make this entry.527. So. take a look at the certificate issued by the bank. interest of up to Rs 1.000) works out to Rs 1. For those who rent out their house. He has taken a loan of Rs 25 lakh and paid the remaining amount from his own savings.92.000. The total of his special allowance (Rs 96.720. Sharadh Unnithan has a 20-year housing loan of Rs 25 lakh at a fixed interest rate of 12%. .50. even though Mr. Mr. If you have a house and you live in it. That entry has been made in the table below. and he pays an interest on the home loan he has taken.000 can be shown in a given year.

But this loss cannot be set off against long-term capital gain on selling shares. Hence the need for a separate entry. long-term capital loss on selling shares is also tax-free. you can set off the short-term capital loss against any other taxable long-term capital gain like sale of gold or property or debt mutual funds. Short-term capital gains from equity are taxed at the rate of 15% for the financial year 2008-09. any long-term capital loss incurred on selling shares or units of equity mutual funds cannot be set off against any long-term capital gain. Indexation is essentially a process that takes inflation into account while deciding the cost of acquisition of a particular asset. index numbers are available in the instructions that come with ITR-2. Long-term capital gains made through stocks sold through a stock exchange. which are not taxed. Other short-term capital gains are lumped with income and taxed according to the tax bracket you fall in. even taxable long-term capital gain made on selling units of debt mutual funds or for that matter property. Other long-term capital gains are taxed at the rate of 10% without indexation and 20% with indexation. Put simply. For this. What about long-term capital loss on selling shares? Long-term capital gain on selling shares or units of equity mutual funds is tax-free. A short-term capital loss can be set off against any short-term capital gain you have made on selling shares or any other taxable short-term capital gain. As a result. . which is not shown here) for that. are not to be mentioned in this section.Income from capital gains: All capital gains are not taxed at normal tax rates. Nevertheless. because longterm capital gain made on selling shares is not taxable. There is a separate schedule EI (exempt income.

000 ( Rs 50. The difference between sale value (Rs 1. Mr. Short-term capital gain under section 111 A is the capital gain made by selling shares.000. In Mr. which is the entry to be made here. putting the total cost of acquisition at Rs 1. Hence. works out to a loss of Rs 18.000 on FDs. In his case. In Mr.000.32.Income from short-term capital gains: Full value of consideration indicates the total value of sale of the assets.14.32.14. Cost of acquisition is the price at which the assets are bought.000 — Rs 84.000 and liquid funds for Rs 50. this remains blank. So.000).000 and liquid fund units for Rs 48. Sharadh Unnithan receives an interest of Rs 4. the total value comes to Rs 1. Mr. is the remaining capital gain.000. Sharadh Unnithan bought the shares for Rs 84. This. Sharadh Unnithan’s case.000 (Rs 64. Sharadh Unnithan sold shares for Rs 64. in Mr.00) and cost of acquisition (Rs 1. Short-term capital gain other than section 111 A&nbsp. Other income: Dividend income from stocks and mutual funds is tax-free.000. Sharadh Unnithan’s case. . Mr.000). this is Rs 2. Interest income includes interest received on fixed deposits (FDs) and money in the savings accounts. there is a loss of Rs 20. In Mr. Sharadh Unnithan’s case. dividend entry should include only dividend from foreign stocks.000.00) is the short-term capital gain or loss. Sharadh Unnithan’s case.000 — Rs 48.

Mr. Section 80 C allows a maximum of Rs 1 lakh for investments into life insurance. Tax deductions: There are 13 sections (only 3 are shown below) under the schedule VIA of the Income Tax Act. Mr.519. Public Provident Fund. This still leaves Rs 14.50.000 against short-term capital gain and Rs 3. It will therefore have to be carried forward and entered in schedule CFL (carried forward loss) and also as entry 14 in computation of total income.481 against longterm capital gain. he can adjust these losses against other sources of income to reduce his tax liability. Sharadh Unnithan has utilised this limit. This remaining loss cannot be set off this year as there are not enough capital gains available to do so.000 on selling shares. Losses can be carried forward for a maximum of 8 years.000 or Rs 20. Sharadh Unnithan. tax saving mutual funds. which allow you to get tax deductions. Sharadh Unnithan has also suffered a short-term capital loss of Rs 20. The maximum limit is Rs 15.000. repayment of home loan principal etc.Losses of current year: If an individual has made a loss under any of the sources of income. Section 80 D allows a deduction for payment of health insurance premium. Capital losses can be adjusted only against capital gains and not against any other source of income. For Mr. He has been able to adjust Rs 2. Employees Provident Fund. the loss from house property is Rs 1.000 for . The schedule CFL is not shown here.

8. the total interest on the education loan works out to Rs 10. Since he has faced a loss. . The company has already deducted a tax of Rs 10. he has suffered from capital loss.000.500. Sharadh Unnithan.842. On his part. The entire amount will be taxed at normal taxes rates. The deduction is allowed only for the interest portion of the EMI up to a maximum of Rs 40. it is mandatory to quote the MICR code.000 and his tax liability on Rs. As we have seen. This is primarily because Mr.29.000. Sharadh Unnithan has no capital gain. Mr. Sharadh Unnithan pays a premium of Rs 7.senior citizens. Sharadh Unnithan will get a refund of Rs 1.29. Total tax to be paid: As can be seen in entry 13 in computation of total income. In case of Mr. Section 80 E allows a deduction for repayment of education loan. In case of refunds.200 work out to Rs. 2. So . the total taxable income is Rs 2.200. no special rates come into play.158.