India has one of the complicated income tax systems in the world that is very difficult for a normal people to understand. Every financial year (FY) starts from April and ends with subsequent yes March month. Individual and businesses have to file income tax before July 31st unless the date is extended by the income tax department. However, when filing income tax, you have to use the term assessment year (AY) which is following year. For example, FY10-20 is same as AY20-21. If you are new and looking for filing ITR2, then here is how you can do using online portal.
Note: the deadline of income tax filing in India FY19-20 and AY20-21 is extended to November 30 due to Covid-19 pandemic.
Filing Income Tax and ITR2
There are many ways to file income tax in India like sending physical form, using third-party agencies, through your internet banking account, etc. However, the easiest way is to use the formal Indian income tax website and submit through online process. Depending upon your applicability, you have to choose one of the forms ITR1 to ITR5. ITR2 is generally meant for individuals and HUFs not having income from profits and gains of business or profession. In addition, you have to file ITR2 if you are non-residential Indian (NRI) during the financial year.
Many non-residential Indians stay outside the country for a while. However, you may have savings account, FDs and other income that comes within India. In most cases, you have to file the ITR2, in order to get the tax deducted at source (TDS) as a tax refund. The main purpose of this article is to help first time NRIs to file ITR2 using Indian income tax website and claim tax refund.
Recently, income tax department introduced the possibility of complete filing online for ITR1. However, you still need to follow the lengthy process for ITR2.
Steps in Filing ITR2
- Register for an account
- Prevalidate your bank account
- Generate EVC
- Download pre-filled XML
- Download the Excel or Java utility
- Import pre-filled XML in Excel utility
- Calculate tax
- Use Excel to generate XML
- Upload XML file and e-Verify
- Processing timeline
Let us explain, each step in details.
Step #1 – Register an Account
First step is to go to Indian income e-filing website and create a new account. Select the usage as “Individual” and fill up your details. Select your residential status as “Non Resident” and complete the registration process. Your PAN number is your user account name and link your Aadhaar under “Profile Settings > Link Aadhaar”.
Note, you can access income tax website from outside India and file the returns. If the site is blocked in your country, you may need to use VPN to access the site. Also, remember that the form will capture your IP address before you finally submitting.
Step #2 – Prevalidate Bank Account
After creating an account, login to the income tax e-filing site using your PAN and password.
Go to “Profile Settings > Prevalidate Your Bank Account” menu.
Add your bank account details with IFSC code, mobile number and email id. Make sure the status is showing as “Validated and EVC enabled”. Remember, your tax refund will be sent to the prevalidated bank account.
Now, you can use your email address to receive the electronic verification code (EVC). This will be useful as each year you can quickly complete the process with your email.
Step #3 – Generate EVC
Go to “My Account > Generate EVC” and choose “Generate EVC through Bank Account Number” option.
You will receive an email with a verification code that is valid for 72 hours. Therefore, after generating the code, you should file the returns within 3 days. After 3 days, you have to regenerate the code again. Remember, you will get the same code if you try to generate the code multiple times within 3 days.
Step #4 – Download Pre-filled XML
Earlier you have to manually collect the TDS and other paid taxes through from 26AS. This is tedious process as you have to go to “My Account > View Form 26AS (Tax Credit)”. You will be taken to TDS-CPC website to view and download all your tax credit for the financial year. Now, you DO NOT need to do this, as income tax website automatically collects the tax credit details and generate a pre-filled XML file.
Go to “My Account” menu and click on “Download Pre-filled XML” option to download the XML file to your computer.
Step #5 – Download the Excel or Java utility
In order to generate the ITR2 form, you have to download an Excel utility from the website. Go to the downloads section, choose the correct assessment year and click on the Microsoft Excel tool against ITR2 option.
The tool will be downloaded as a ZIP file which you can extract to access the Excel. Unfortunately, this is a tricky macro enabled Excel and needs the following requirements to work. For example, Excel tool will NOT work in MacBook and you have to go to for Java utility instead.
- Excel Utilities: Macro enabled MS-Office Excel version 2010/2013/2016 on Microsoft Windows 7 / 8 /10 with .Net Framework (3.5 & above)
- Java Utilities : Microsoft Windows 7/8/10, Linux and Mac OS 10.x with JRE (Java Runtime Environment) Version 8 with latest updates.
We will explain further sections with Excel utility in Windows computer. This macro enabled Excel (XLSM file) will create problems like disabling cut, copy, paste, delete or insert functions in your Excel app. If you have some problems with Excel after accessing this income tax utility, check out more on how to enable those options back in Excel.
Step #6 – Import Pre-filled XML in Excel Utility
Open Excel utility and enable Macros when prompted. It is necessary to understand the format of the Excel in order to use it properly.
- It has many sheets and you need to fill up the applicable sheets for your case. In most cases, you only need to fill details in few sheets.
- Each sheet has some buttons on the right side.
- You can validate each sheet by clicking on “Validate” button and click “Next” or “Previous” to navigate.
- After successfully filling the details, you can generate XML file that is to be uploaded on the income tax website for filing your returns. It is also possible to take a printout of the filled ITR2 form so that you can verify the details with someone.
Go to “Part A – General” sheet and click on “Import General Info, Income, Deductions and Tax Details from downloaded Prefill XML”. Choose the pre-filled XML downloaded in step #5 and import the data in the utility. This will update your general details, TDS and all other income details. Check all the details, especially make sure to choose the “Residential Status in India” as “NRI – Non-Resident” in “Part A – General” sheet.
Now, go to “Home” sheet and select yes or no to the applicable sheets for you. If you are planning to print the ITR2 form, choose Y/N in the last column and save your changes. All non-applicable sheets will disappear and you will only have fewer sheets that are applicable for you.
Step #7 – Calculate tax
Go to “CYLA-BFLA” sheet and click on “Compute Setoff” button. Then, navigate to “PartB – TI – TTI” sheet and click on “Calculate Tax” button. In this sheet, you can find the overall earnings, deductions and final tax payable or refund.
Step #8 – Generate XML
Finally, go to the “Verification” sheet and click on “Validate” button. This will show you the errors of mandatory fields that you have missed to fill.
If your main purpose is to get tax refund from TDS, probably you will get some errors in the “TDS” sheet. Make sure the “TDS 2 22C(1)” section is pre-filled properly from the pre-filled XML (that comes from form 26 AS). You may need to enter the same amounts in “Deducted in own hands” and “Claimed in own hands” to make the sheet valid.
After successful validation, click on “Generate XML” button. Excel utility will show the details of the pages filled and allow you to download the XML file to your computer. If you want, click on the “Print” button to take a printout of the filled ITR2 form. However, this is not necessary to be used anywhere.
Step #9 – Upload XML File and e-Verify
After generating the XML file for filing your tax returns, go back to income tax e-filing website.
- Navigate to “e-File > Income Tax Returns” menu.
- Fill up the details of PAN, assessment year, ITR form as ITR2, filling type as original/revised return and submission mode as upload XML.
- Select “Already generated EVC through…” option and click on “Continue” button.
- Upload the generated XML in previous step and enter the EVC obtained from step #3.
- Submit your income tax filing of ITR2 form.
- You will get an acknowledge form in your registered email. You DO NOT need to send this to income tax office.
For any reason, if you do not want to e-Verify at the time of submission then choose “I would like to e-Verify late…..” option. In this case, you have to go to “My Account > e-Verify” menu to view and verify the submitted ITR2 returns before the deadline.
Step #10 – Processing Timeline
After submission, go to “View e-Filed Returns/Forms” menu. Your PAN will be prefilled, select “IncomeTax Returns” and click on “Submit” button.
Here you will see current and all previously e-filed income tax returns for your PAN. The status of e-filing should show “Successfully e-Verified” and click on the acknowledge number to download the acknowledgement for your returns.
Normally, income tax department will take couple of months to process the filed returns. Therefore, you have to wait till the time of status changing to “ITR Processed”. After processing, it may take additional couple of weeks to settle the tax refund to your prevalidated bank account.
In case of errors in the submitted form, you can submit the revised returns by selecting the option in “Part A – General” section of the Excel utility.
As you can see, the process needs lot of details to keep ready and will take few hours to days depending upon your details to be filled. Though, PAN is a single way of tracking all your financial transactions, you have to manually fill deductions and other details. Unfortunately, the process also changes constantly that every year you may need to follow different rules. This is quite complex for normal people to spend long time in filing the form. Obviously, that is the reason many do not bother to file tax returns.