📌 ITR 2 and ITR 3: Which Income Tax Return Form Should You File for AY 2025–26?

Filing your income tax return (ITR) is essential, and choosing the correct form—ITR 2 or ITR 3—can make all the difference. For Assessment Year (AY) 2025–26, understanding the eligibility, rule changes, and filing options for ITR-2 and ITR-3 is crucial. This guide will help you decide which form suits your financial profile best.

📄 What is ITR 2?

ITR 2 is meant for individuals and Hindu Undivided Families (HUFs) who do not have income from business or profession.

✅ Eligibility Criteria for ITR 2

You should file ITR-2 if you earn:

• Salary or pension
• Income from more than one house property
• Capital gains (short-term or long-term)
• Foreign income or assets
• Dividend income exceeding ₹10 lakh

🚫 Who Should Avoid ITR-2?

Avoid ITR 2 if you:

• Have any business or professional income
• Are a freelancer or a partner in a firm

📃 What is ITR-3?

ITR 3 is applicable to individuals and HUFs who earn income from business or profession.

✅ Eligibility Criteria for ITR-3

You should file ITR-3 if you are:

• A freelancer or independent consultant
• A stock trader (including intraday and derivatives)
• A professional like a doctor, architect, or lawyer
• A partner in a firm (not the firm itself)

👨‍⚖️ Common Professions Covered Under ITR-3

• Legal professionals
• Medical practitioners
• Tech consultants
• Stock market traders

⚖️ ITR-2 vs ITR-3 – Quick Comparison

🧾 Filing Availability for AY 2025–26

📁 Offline Filing (Excel Utility)

Both ITR 2 and ITR 3 Excel-based utilities are available for download and use.

🌐 Online Filing Status

As of July 14, 2025, online filing is not yet enabled for either ITR-2 or ITR-3 on the Income Tax Portal.

📥 Download Links

• Download ITR 2 Excel Utility (AY 2025–26)
• Download ITR 3 Excel Utility (AY 2025–26)

🖥️ System Requirements for Offline Utilities

📌 Microsoft Excel Compatibility

Use Excel 2016 or newer.

⚙️ Enable Macros

Enable macros to ensure full functionality of the utility forms.

🆕 Key Changes & Updates in AY 2025–26

1. Capital Gains Segregation
   Gains must be reported separately for periods before and after July 23, 2024.
2. Buyback Loss Reporting
   Losses from share buybacks post October 1, 2024, are claimable only if related dividend income is declared.
3. Asset & Liability Threshold
   Reporting is now required only if total income exceeds ₹1 crore.
4. Detailed Deduction Reporting
   More detailed disclosures are required under sections 80C, 10(13A), and others.

🛠️ Step-by-Step Filing Process Using Offline Utility

Step 1: Download & Enable Macros

• Visit the Income Tax portal
• Download ITR 2 or ITR 3 Excel utility
• Enable macros

Step 2: Fill Personal & Income Details

• Enter PAN, name, address
• Report income from salary, capital gains, or business

Step 3: Verify Deductions & Tax

• Enter deductions
• Verify auto-generated tax computation

Step 4: Generate & Submit XML

• Click ‘Validate’ and ‘Generate XML’
• Upload XML once online filing is enabled

📆 Important Deadlines for AY 2025–26

• Non-Audit Taxpayers: September 15, 2025
• Audit Cases: October 31, 2025

⚠️ Common Mistakes to Avoid

• Filing ITR-2 when you have business income
• Forgetting to enable macros
• Missing foreign income disclosures
• Not separating capital gains timelines
• Overlooking audit applicability for ITR-3 if turnover exceeds ₹10 crore

❓ FAQs About ITR 2 and ITR 3

Can I file ITR 2 if I have occasional trading income?
No. Use ITR 3 for any trading income.

When will online filing be available?
No official date yet. Check the Income Tax Portal regularly.

Do I need a CA to file ITR-3?
Not always. But if your books require an audit, consult a CA.

Can salaried individuals with stock trading use ITR-2?
No. They must use ITR-3.

Is it mandatory to declare foreign bank accounts in ITR-2?
Yes, if you meet foreign asset reporting criteria.

✅ Conclusion

Choosing between ITR 2 and ITR 3 is the first step toward accurate and compliant tax filing. With offline utilities available and new updates in place, filing your return for AY 2025–26 is easier than ever. Whether you’re a salaried individual or a freelancer, make sure you understand the differences and file before the deadline.

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