ITR filing: New ITR-2 utility rolls out with big changes; experts say choose form with caution
The Income Tax Department has revamped the ITR-2 Excel Utility for AY 2025–26 with six key upgrades. Experts warn that filing the wrong form—like ITR-1 instead of ITR-2—can invite notices or penalties.
- Jul 15, 2025,
- Updated Jul 15, 2025 3:59 PM IST
The Income Tax Department has unveiled six pivotal enhancements to the ITR-2 Excel Utility for the Assessment Year 2025–26. These upgrades are aimed at streamlining the tax filing experience while reinforcing compliance with evolving regulations. Taxpayers are advised to understand these changes thoroughly to ensure a smooth and error-free filing season.
Among the most significant changes is a redesigned user interface that simplifies the return-filing process. The new, intuitive layout allows taxpayers to fill out forms more easily, reducing the likelihood of errors. Additionally, the utility now includes advanced validation rules to automatically flag inconsistencies and ensure greater data accuracy, particularly useful for less experienced filers.
Another key update is the inclusion of new fields aligned with recent amendments to tax laws. These additions ensure that all requisite disclosures are captured accurately, allowing for comprehensive and compliant returns. Alongside this, the utility now incorporates robust encryption protocols, reinforcing data security and user privacy.
The updated ITR-2 Utility also introduces expanded reporting requirements, calling for more detailed disclosures in specific areas. This step mirrors global best practices, bringing India’s tax reporting standards closer to international norms and promoting transparency.
Further, the Income Tax Department has refined the utility’s computation logic to improve the precision of tax calculations. This ensures that the tax liability reflected in the final return is both accurate and aligned with current legislation. These changes are particularly beneficial for taxpayers with complex financial profiles, helping them avoid potential misreporting.
Lastly, the updated utility boasts broader compatibility across various devices and operating systems, making it easier for users to access and submit their returns regardless of their technical setup. An enhanced help section has also been integrated, offering detailed, step-by-step filing guidance.
Together, these six updates mark a major upgrade to the ITR-2 Excel Utility, improving usability, accuracy, security, and compliance for taxpayers across the board.
Meanwhile, CA Chirag Chauhan, Founder of C A Chauhan & Co, has issued a clear warning: picking the wrong ITR form can get you into trouble. With utilities for ITR-1, ITR-2, and ITR-3 now available, Chauhan listed 11 conditions where individuals must not use ITR-1. These include being an NRI, having income above Rs 50 lakh, capital gains over Rs 1.25 lakh, more than one house property, or agricultural income above Rs 5,000. Also ineligible for ITR-1 are those with lottery earnings, unlisted equity investments, directorships, business income, TDS under Section 194N, or deferred ESOP tax from startups.
Using ITR-1 despite falling into any of these categories can trigger a defective return notice or outright rejection. “Even one wrong selection can lead to penalties,” Chauhan cautioned. “It’s essential to match your income profile with the correct form before filing.”
With new tech, tighter scrutiny, and upgraded tools, accuracy and awareness are key this ITR season.
The Income Tax Department has unveiled six pivotal enhancements to the ITR-2 Excel Utility for the Assessment Year 2025–26. These upgrades are aimed at streamlining the tax filing experience while reinforcing compliance with evolving regulations. Taxpayers are advised to understand these changes thoroughly to ensure a smooth and error-free filing season.
Among the most significant changes is a redesigned user interface that simplifies the return-filing process. The new, intuitive layout allows taxpayers to fill out forms more easily, reducing the likelihood of errors. Additionally, the utility now includes advanced validation rules to automatically flag inconsistencies and ensure greater data accuracy, particularly useful for less experienced filers.
Another key update is the inclusion of new fields aligned with recent amendments to tax laws. These additions ensure that all requisite disclosures are captured accurately, allowing for comprehensive and compliant returns. Alongside this, the utility now incorporates robust encryption protocols, reinforcing data security and user privacy.
The updated ITR-2 Utility also introduces expanded reporting requirements, calling for more detailed disclosures in specific areas. This step mirrors global best practices, bringing India’s tax reporting standards closer to international norms and promoting transparency.
Further, the Income Tax Department has refined the utility’s computation logic to improve the precision of tax calculations. This ensures that the tax liability reflected in the final return is both accurate and aligned with current legislation. These changes are particularly beneficial for taxpayers with complex financial profiles, helping them avoid potential misreporting.
Lastly, the updated utility boasts broader compatibility across various devices and operating systems, making it easier for users to access and submit their returns regardless of their technical setup. An enhanced help section has also been integrated, offering detailed, step-by-step filing guidance.
Together, these six updates mark a major upgrade to the ITR-2 Excel Utility, improving usability, accuracy, security, and compliance for taxpayers across the board.
Meanwhile, CA Chirag Chauhan, Founder of C A Chauhan & Co, has issued a clear warning: picking the wrong ITR form can get you into trouble. With utilities for ITR-1, ITR-2, and ITR-3 now available, Chauhan listed 11 conditions where individuals must not use ITR-1. These include being an NRI, having income above Rs 50 lakh, capital gains over Rs 1.25 lakh, more than one house property, or agricultural income above Rs 5,000. Also ineligible for ITR-1 are those with lottery earnings, unlisted equity investments, directorships, business income, TDS under Section 194N, or deferred ESOP tax from startups.
Using ITR-1 despite falling into any of these categories can trigger a defective return notice or outright rejection. “Even one wrong selection can lead to penalties,” Chauhan cautioned. “It’s essential to match your income profile with the correct form before filing.”
With new tech, tighter scrutiny, and upgraded tools, accuracy and awareness are key this ITR season.