All About ITR 2 AY 2017-18

The Income Tax Department has issued ITR forms for AY 2017-18.
A taxpayer should be very careful while selecting the form no. for filing the return. In this article,let's discuss about ITR-2.

1. Assessment Year for which this Return Form is applicable:- This Return Form is applicable for assessment year 2017-18 , i.e., it relates to income earned in Financial Year 2016-17.

 2. Who can use this Return Form:- This Return Form is to be used by an individual or an Hindu Undivided Family who is not eligible to file Sahaj ITR-1 and whose income chargeable to income-tax under the head “Profits or gains of business or profession” is in the nature of interest, salary, bonus, commission or remuneration, by whatever name called, due to, or received by him from a partnership firm.

 3. Who cannot use this Return Form:- This Return Form should not be used by an individual whose total income for the assessment year 2017-18 includes Income from Business or Profession under any proprietorship.

 4. Manner of filing this Return Form:- This Return Form can be filed with the Income-tax Department in any of the following ways, -
 (i) by furnishing the return electronically under digital signature;
 (ii) by transmitting the data in the return electronically under electronic verification code;
 (iii) by transmitting the data in the return electronically and thereafter submitting the verification of the return in Return Form ITR-V; Tax-payers are advised to match the taxes deducted/collected/paid by or on behalf of them with their Tax Credit Statement (Form 26AS). (Please refer to www.incometaxindia.gov.in)

 5. Filling out the acknowledgement:- Where the Return Form is furnished in the manner mentioned at 4(iii), the acknowledgement should be duly filled in ITR-V. The assessee should print out two copies of Form ITR-V. One copy of ITR-V, duly signed by the assessee, has to be sent by ordinary post to Post Bag No. 1, Electronic City Office, Bengaluru–560100 (Karnataka). The other copy may be retained by the assessee for his record.

6. Obligation to file return:- Every individual or HUF whose total income before allowing deductions under Chapter VI-A of the Income-tax Act, exceeds the maximum amount which is not chargeable to income tax is obligated to furnish his return of income. The maximum amount not chargeable to income tax in case of different categories of individuals is as follows:-
 i. In case of individuals below the age of 60 years- Rs 2,50,000.
  ii. In case of individuals, resident in India, who are of the age of 60 years or more- Rs 3,00,000 but less than eighty years at any time during the financial year 2016-17.
 iii. In case of individuals, resident in India, who are of the age of 80 years or more at Rs5,00,000 any time during the financial year 2016-17.

 8. SCHEME OF THE LAW- Before filling out the form, you are advised to read the following-
(1) 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. “Assessment Year” is the financial year immediately following the previous year.

 (b) Total income is to be computed as follows, in the following order:

 (i) Classify all items of income under the following heads of income-
(A) Salaries;
 (B) “Income from house property”;
 (C) “Profit and gains from business or profession” (by way of salary, interest, commission, etc., from the firm in which the assessee is partner);
 (D) “Capital gains”; and
(E) “Income from other sources”.
[There may be no income under one or more of the heads at (A), (B), (C), (D) and (E)].

 (ii) Compute taxable income of the current year (i.e., 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. These statutory provisions decide what is to be included in your income, what you can claim as an expenditure or allowance and how much, and also what you cannot claim as an expenditure/allowance.

 (iii) Set off current year’s headwise loss(es) against current year’s headwise income(s) as per procedures prescribed by the law. A separate Schedule is provided for such set-off.

 (iv) Set off, as per procedures prescribed by the law, loss(es) and/or allowance(s) of earlier assessment year(s) brought forward. 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. Separate Schedules are provided for this.

 (v) Aggregate the headwise end-results as available after (iv) above; this will give you “gross total income”.

(vi) From gross total income, subtract, as per procedures prescribed by the law, “deductions” mentioned in Chapter VIA of the Income-tax Act. The result will be the total income. Besides, calculate agricultural income for rate purposes.

 (2) Computation of income-tax, surcharge, education cess including secondary and higher 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. Include agricultural income, as prescribed, for rate purposes, in the tax computation procedure.

 (b) If income includes income of the nature referred to in section 115BBE, surcharge @25% on such income is chargeable. If total income exceeds Rs. 1 crore, calculate surcharge on (total income minus income chargeable u/s 115BBE) at the rate of15%.

(c) Add Education cess including secondary and higher education cess as prescribed on the tax payable and surcharge thereon.

 (d) Claim relief(s) as prescribed by the law, on account of arrears or advances of salary received during the year or of double taxation and calculate balance tax payable.

(e) Add interest payable as prescribed by the law to reach total tax, and interest payable.

(f) Deduct the amount of prepaid taxes, if any, like “tax deducted at source”, “tax collected at source”, “advance-tax” and “self-assessment-tax”. The result will be the tax payable (or refundable).

9. SCHEME OF THE FORM :-The Scheme of this form follows the scheme of the law as outlined above in its basic form. The Form has been divided into two parts. It also has twenty work tables (referred to as ‘schedules’). The details of these parts and the schedules are as under:-

(i) The first part, i.e., Part-A mainly seeks general information requiring identificatory and other data.

(ii) The second part, i.e. Part-B is regarding an outline of the total income and tax computation in respect of income chargeable to tax.

(iii) After Part-B, there is a space for a statutory verification which is mandatory in case the return is furnished in paper form.

 (iv) On page 3, there are details to be filled if the return has been prepared by a Tax Return Preparer.

(v) On page 3 and 4, there is statement of tax payments on account of advance tax and self-assessment tax, tax deducted at source from salary, tax deducted at source on income other than salary and tax collected at source as per Form 27D issued by collector(s) are to be filled

(vi) There are 20 Schedules details of which are as under-
(a) Schedule-S: Computation of income under the head Salaries.
(b) Schedule-HP: Computation of income under the head Income from House Property
(c) Schedule-IF: Information regarding partnership firms in which assessee is a partner
(d) Schedule-BP: Computation of income under the head “profit and gains from business or profession” (income by way of salary, interest etc. from firms in which assessee is a partner)
(e) Schedule-CG: Computation of income under the head Capital gains.
(f) Schedule-OS: Computation of income under the head Income from other sources.
(g) Schedule-CYLA: Statement of income after set off of current year’s losses
(h) Schedule-BFLA: Statement of income after set off of unabsorbed loss brought forward from earlier years.
(i) Schedule- CFL: Statement of losses to be carried forward to future years.
(j) Schedule-VI-A: Statement of deductions (from total income) under Chapter VIA.
(k) Schedule 80G: Statement of donations entitled for deduction under section 80G.
(l) 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, BP, CG and OS. (m) Schedule-SI: Statement of income which is chargeable to tax at special rates
(n) Schedule-EI: Statement of Income not included in total income (exempt incomes)
(o) Schedule-PTI: Statement of income from Business Trust or Investment Fund as per section 115UA, 115UB.
 (p) Schedule-FSI: Statement of income accruing or arising outside India.
(q) Schedule- TR: Statement of tax relief claimed under section 90 or section 90A or section 91.
(r) Schedule- FA: Statement of your Foreign Assets and Income
(s) Schedule-5A: Statement of apportionment of income between spouses governed by Portuguese Civil Code.
(t) Schedule-AL: Statement of your Asset and Liability at the end of the year. It is mandatory if your total income exceeds Rs.50 lakh. 

Thanks And Regards
CA Shivam Gupta
Ph No:9634064288