ITR-2 Filing Enabled for AY 2026–27: Who Must File, Common Mistakes To Avoid and Why Early Filing Matters

The Income Tax Department has enabled online filing of ITR-2 for Assessment Year (AY) 2026-27, allowing taxpayers with capital gains, multiple properties, foreign assets and overseas income to begin filing their income tax returns for Financial Year 2025-26.

Tax experts have cautioned that selecting the wrong return form remains one of the most common mistakes made by taxpayers. Filing an incorrect form can result in defective return notices, delayed refunds and even the loss of valuable tax benefits such as carrying forward capital losses.

Who Should File ITR-2?

ITR-2 is meant for individuals and Hindu Undivided Families (HUFs) who do not have business or professional income but earn through capital gains, foreign assets, foreign income or multiple house properties.

Experts say taxpayers must use ITR-2 if they have short-term capital gains, long-term capital gains exceeding ₹1.25 lakh under Section 112A, foreign investments, overseas income, more than two house properties, unlisted equity shares, or if they qualify as non-residents or company directors. ITR Filing 2026: Which Income Tax Return Form Should Salaried Taxpayers and Freelancers Choose?

Many salaried taxpayers mistakenly assume they can continue using ITR-1 despite having stock market gains or mutual fund investments. However, even relatively small capital gains can make ITR-2 mandatory.

Common Errors That Can Trigger Notices

Tax professionals warn that using ITR-1 despite having capital gains, ESOPs, RSUs, foreign investments or foreign income can result in notices from the Income Tax Department.

If taxpayers fail to rectify defects within the prescribed timeline, their returns may be treated as invalid, potentially exposing them to penalties, interest and other compliance consequences. ITR Filing AY 2026–27: Income Tax Department Enables ITR-2 Excel Utility; Check Forms, Deadlines and Key Details.

Another common mistake is failing to disclose foreign bank accounts, overseas investments, foreign dividends or employee stock compensation received from international employers.

Foreign Assets and AIS Reconciliation Under Focus

Experts expect stricter scrutiny of Annual Information Statement (AIS) data, broker statements, capital gains reporting and foreign asset disclosures during AY 2026-27.

Resident taxpayers holding overseas bank accounts, RSUs, ESOPs or foreign investments are required to disclose these assets in Schedule FA. Tax professionals caution that non-disclosure could attract penalties under the Black Money Act.

Taxpayers are advised to carefully reconcile AIS data with broker reports and other financial documents before filing returns to avoid mismatches that could trigger notices.

Why Filing Early Is Important

Experts recommend filing ITR-2 well before the deadline, especially for investors. Capital losses from shares, mutual funds or property can only be carried forward if the return is filed within the due date.

Early filing also provides additional time to resolve AIS mismatches, gather missing documents and avoid last-minute technical issues on the income tax portal. Taxpayers may also receive refunds faster by filing returns early.

The due date for filing ITR-1 and ITR-2 for individual taxpayers is July 31, 2026, while taxpayers filing ITR-4 without audit requirements can submit returns until August 31, 2026.

(The above story first appeared on LatestLY on May 29, 2026 10:14 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).