ITR-2, ITR-3 Excel Utilities Are Now Live: Who Needs Them, What’s Changed, And Why You Should File Carefully

The Income Tax Department has now released the Excel-based filing utilities for ITR-2 and ITR-3, which means taxpayers in more complex income categories such as those who have to report capital gains, crypto, business or profession, can finally get started with their returns for assessment year 2025-26.

The forms have been updated to reflect the changes from the Finance Act, 2024, and while this is good news for those waiting to file, it also means there is more to be mindful of this time.

To be clear, only the Excel utilities are live for now. Online filing through the portal has not been enabled yet, which leaves you with the offline route if you are in a hurry. The deadline for filing, post the extension, is September 15, 2025.

So, who needs to file ITR-2?

ITR-2 is typically for salaried individuals or Hindu Undivided Family (HUFs) who don’t have income from a business or profession. It applies to those with income from capital gains, say, from selling stocks or mutual funds, or rental income, foreign income, or even income from crypto.

This form is not for those earning from a partnership firm (even as salary or interest) or running a business. It can also be used to report clubbed income from a spouse or minor child, if the nature of income falls under these categories.

What’s changed in ITR-2 this year?

There are a few key tweaks that might trip you up if you are not paying attention, such as:

• Capital gains split: You now need to report gains separately, those made before and after July 23, 2024, due to changes in the tax law.

• Buyback losses: From October 1, 2024, losses from share buybacks are allowed, but only if the related dividend income is declared elsewhere in your return.

• Asset reporting threshold: If your total income exceeds Rs 1 crore, you now need to disclose your assets and liabilities, regardless of business income status.

• More detail on deductions: You will need to provide slightly more granular data around deductions like Section 80C and House Rent Allowance (under the old tax regime).

• TDS schedule tweak: You now need to enter the TDS section code in the relevant schedule.

And what about ITR-3?

ITR-3 is for individuals and HUFs who earn an income from business or profession, and for whom maintaining books of accounts is mandatory. That includes freelancers, independent consultants, and those running a proprietary setup.

It shares some of the same updates as ITR-2 like capital gains split, asset disclosures beyond Rs 1 crore, buyback losses allowed, but also brings in a reference to Section 44BBC, which applies to cruise business income under presumptive taxation. Niche, but important for those it affects.

Common Mistakes, and How to Avoid Them

Several tax professionals have flagged recurring issues they see with Excel-based filing. Here are some key things taxpayers should keep in mind:

• Don’t skip pre-filled data: Download your pre-filled JSON file from the e-filing portal and import it into the utility. Manual data entry, especially PANs, bank details, TDS amounts, is where mistakes may creep in.

• Enable macros: The Excel utility doesn’t work properly unless macros are enabled. Also, keyboard shortcuts like Ctrl+C or Ctrl+V don’t work as expected. You will need to use F2 to activate a cell before editing.

• Validate as you go: Every schedule in the utility has a “validate” button. Use it before moving to the next section. Only after all validations are done should you click “Calculate Tax” to see your final liability.

• Save versions as backups: Many tax professionals make a copy of the Excel or JSON file at regular intervals while filling it. That way, if something gets corrupted, and it can, you will not have to start over from scratch.

Filing offline using Excel might feel like a head start, but unless you are confident with tax rules and the filing process, it is worth considering whether to wait for the online portal to open. The online form usually flags missing fields and auto-populates several sections, reducing chances of manual error.

However, if you are filing now, double-check everything. Tax authorities don’t necessarily distinguish between genuine errors and omissions, both can attract scrutiny. The bottom line? If your tax return involves capital gains, business income, or anything beyond basic salary and interest, ITR-2 and ITR-3 are now ready and make sure you are too before beginning to file your ITR.